I went to a breakfast yesterday morning sponsored by CNN, featuring Starbucks CEO Howard Schultz being interviewed by anchor Poppy Harlow as part of the American Opportunity series. The core message from this morning was the need for business to behave differently in today’s low trust environment. Schultz made a strong case for Starbucks as a brand which increases its equity with customers based on experience. “The rules of engagement are different now, “ he said. “You cannot just make money. You must demonstrate that you are also in business to serve the community and help your employees.”
He traced the company’s commitment to employees to an experience 25 years ago, when the company had only 20 stores. A young employee came into his office and told Howard that he had AIDS. “That was our moment of truth. We decided we would cover all of his insurance expenses, and those of his partner, who was also infected. The employee ultimately died but we knew we had a core purpose, to build an enduring business that would care for its employees.”
In recent years, Schultz has acted in a manner consistent with building trust from the inside out based on a deep connection with the Starbucks partners. A young barista can get a full tuition reimbursement for a college education through online courses offered by Arizona State University, courtesy of the company. Schultz noted that as job opportunities have dwindled for his employee force and their spouses, he is even more dedicated to giving meaningful wage and benefits offerings, including full health benefits offered to all who work over twenty hours per week. There has been an outreach to veterans’ groups to recruit and assist those who have come back from serving in Iraq and Afghanistan. Most recently, the company has updated its scheduling practices to giving employees notice of their schedule at least 14 days in advance so they can plan accordingly - whether for child care, school or other life needs.
The broader social contract endorsed by Starbucks is exemplified by its 100,000 Opportunities Initiative, in which the company was joined by CVS, Hilton, Microsoft and others to offer jobs to “Opportunity Youth”– 16-to-24-year-olds who are out of work and not in school, and disproportionately African American and Hispanic. Just last week, the Coalition announced that it met its goal of hiring 100,000 Opportunity Youth – two years ahead of schedule. Similarly, the Race Together campaign, which grew out of a dozen town hall meetings at the company, catalyzed important discussions of race in America, just after the ugly confrontations in Ferguson and New York City. “Top class financial performance is the price of admission for us to do these social acts. We accept that. And we build a great business by opening stores in places like Ferguson, MO or Jamaica Queens, in New York because residents there want a third place.”
The most interesting announcement this morning was the debut of a new series, UPSTANDERS, ten videos, essays and podcasts, which depict ordinary Americans achieving great things (the name comes from a town hall meeting in which a participant said he wanted to be an Upstander instead of a Bystander). I watched a segment on the high school in Baldwin, MI, which had a 13 percent rate of college matriculation before principal Ellen Kerens went out to the community to raise money for scholarships. In the class of 2016, 91 percent of the students in this largely African American school will go on to college or junior college because they were given the funding and the support to dream. Schultz and co-editor Rajiv Chandrasekaran (ex Washington Post editor), want to tell these good news stories, overlooked by mainstream media. “We are hopeful about the future of the country, as people at the grassroots are taking it on themselves to implement change,” said Chandrasekaran. For me, the lesson is that every one of our clients needs to be its own media company, to provide top class content to its social communities, replacing the hole left by a diminished media sector. The content will be promoted to the 20 million people who have downloaded the Starbucks app and to millennials via their news and social feeds thanks to partnerships with AOL, Mic.com and Upworthy.
Whenever I see Howard Schultz in New York City, I am reminded of his humble origins in a housing project in Canarsie, Brooklyn. “My mom felt deeply that our station in life did not define our future…there are six million kids 16-24 who are not in school, mostly African American males. We have one in six kids in America going to bed hungry. This is not an absolute, we cannot accept the status quo. We have a choice to stand by or stand up.” What I see is capitalism at its best at Starbucks, where people get the opportunity to work and thereby to learn, to be responsible to colleagues and customers, to provide for their families, to excel and move ahead. This enables America to be a nation of inclusion instead of inequality. This is the best possible response for a business community stunned by the virulence of populism.
Richard Edelman is president and CEO.