The recent arrest of two African American men in a Philadelphia Starbucks, captured on video, sparked racial protests, boycotts and a great deal of press. Higher ambition companies, like all companies, will inevitably make mistakes. What is important is that leaders act with integrity and transparency when things go wrong.
In his post, CHL Executive Fellow Doug Wilson describes the specific actions Starbucks has taken to respond since the incident, and details how these actions align with the company’s values and purpose. He includes a perspective from CHL Board member Dick Gochnauer, who predicts that ultimately this incident will have a favorable effect on the Starbucks brand and customer loyalty.
This reminds us of J&J’s reaction to the Tylenol disaster – when the company recalled 31 million bottles of Tylenol capsules following seven deaths from tainted bottles. This was a great example of a higher ambition company taking the high road. J&J initially lost significant dollars and market share, but in the end, the tough calls the company made served to strengthen the brand.
Customer trust and commitment is at the heart of the Starbucks brand and value proposition – as it is for all higher ambition companies. Going the extra mile to preserve and protect this sense of trust makes great sense.
Starbucks shot into the headlines this past week following a Philadelphia store manager’s phone call to the police that led to the arrest of Rashon Nelson and Donte Robinson for trespassing. The two African American men were waiting to order until the colleague they were meeting arrived. The video of their removal by the officers went viral on social media (as of this week it had been viewed 11 million times) and prompted near-immediate demonstrations and boycotts.
Today, mission and values are integral to the culture and brand of many organizations. Many companies rely on this as a differentiator – a reason customers should come to them instead of competitors. This inevitably opens the door to higher expectations and increased scrutiny. Starbucks is definitely one of these companies.
Starbucks Mission and Values
To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.
With our partners, our coffee and our customers at our core, we live these values:
- Creating a culture of warmth and belonging, where everyone is welcome.
- Acting with courage, challenging the status quo and finding new ways to grow our company and each other.
- Being present, connecting with transparency, dignity and respect.
- Delivering our very best in all we do, holding ourselves accountable for results.
- We are performance driven, through the lens of humanity.
The fact that this happened at a Starbucks made the whole situation more surprising and upsetting. We expect something more from Starbucks because of how explicit they have been about their values.
Many of us have spent time sitting in a Starbucks while purchasing next to nothing. Employees are trained to be respectful and gracious to everyone who enters their store, as happy customers will come back and spend money another day. This manager in Philadelphia clearly overreacted with her call to the police. And she acted against the welcoming values of the organization.
But mistakes will be made. We are talking about a big company with tens of thousands of employees. What stands out to me about this situation was how the executives at Starbucks acted in response. Many companies would spend time and energy placing blame, making excuses, pointing fingers, or finding a superficial fix. Instead, we saw Starbucks take near immediate action to respond and find meaningful solutions.
Here’s some guidance I have drawn from their response to this incident.
Move with Speed and Certainty
Often companies have a slow or underwhelming response which fuels the flame. By the time they act, it’s too late. It becomes more about damage control. Starbucks moved swiftly, with words and with actions.
The arrest happened on Thursday, April 12th, and the video was initially posted to Twitter at 5:12 p.m. Letters addressing the issue and the actions in process went out from Starbucks CEO Kevin Johnson to employees, customers, and partners on Friday, April 13th. On April 14th the company issued a public apology on Twitter. Johnson then appeared on ABC’s Good Morning America Monday morning to issue a personal apology. Next, he flew to Philadelphia to meet with the two men, as well as government officials and community leaders – to hear directly from those impacted about what should be done.
Be Direct and Honest in Your Communications
If you watch the video of Johnson on GMA, you will see he is unequivocal in his responses. He is direct, clear and accepts full responsibility. There is no side-stepping of questions, no recitation of a prepared statement. He demonstrates authentic concern and regret about what had happened.
“The circumstances surrounding the incident and the outcome in our store on Thursday were reprehensible. They were wrong. And for that, I personally apologize to the two gentlemen that visited our store. Now certainly, it’s my responsibility to understand what happened and what led to that and ensure that we fix it.”
The fact that this came from the very top of the organization was important here, as was the authenticity of Johnson’s words. Communicating honestly and openly when you are under fire makes you vulnerable and it’s hard to do. He did it with humanity and heart.
Do More Than People Expect, Not Less
The manager involved in this situation was dismissed. An apology was made to the men involved and publicly. Many organizations would have considered that adequate and moved on. But Starbucks has gone farther, announcing plans to close all of its U.S. stores for the afternoon on May 29 to conduct anti-bias training. The estimates vary, but this decision will likely cost Starbucks $12-20 million in lost revenue. This is a company looking at the long-term relationship it wants to have with its customers, rather than focusing only on short-term returns.
Keep Your Values and Purpose Close
Starbucks’ response is fully in line with their values. You can see that they really believe what they stand for and they are taking steps that reinforce this. This is what a purpose-driven company looks like in action.
Being clear and specific about your organization’s purpose and values really helps. No one can predict everything that is going to happen in business. There will always be unexpected situations and unforeseen challenges. That’s when a core understanding of your organization’s purpose can guide employees at every level in their responses and actions.
My colleague and former CEO Dick Gochnauer predicts that if we study this incident years from now, we’ll see that it ultimately will have a favorable effect on the Starbucks brand. Their response will create more loyalty and create a new standard of practice for how to respond when things go wrong.
Some CEOs I’ve talked with about these events have indicated it makes them nervous about touting their values and focus on social responsibility because of the increased scrutiny that it draws. But I think it’s better to set the bar high. You can’t be lofty in your aspirations when you are keeping your head down. Starbucks is showing us that the it’s possible to walk the line of a values-driven company successfully – no matter what comes.
This post originally appeared on Doug’s website and appears here with his permission.