Starbucks Makes Organizational Changes

In an email message to all its current employees, Howard Schultz, CEO and Chairman of Starbucks, outlined a reorganization for the coffee giant.  (See message) In the message, Schultz mentions that his return to the helm has been difficult especially with the decision to let go over 600 partners (employees).

According to one partner that I spoke to, the company has simply gotten too big too fast. But that may be oversimplifying the obvious.  Jim Donald took over as CEO a couple of years when Schultz stepped down.  Unfortunately, Donald took the approach of - If it ain't broke, don't fix it attitude.

The company did do well for a couple of years and showed great returns on Wall Street.  But the stores were losing its core values and soul. (Read Schultz's email to Jim Donald on Starbucks Gossip blog)

Over the past year, stores in the Southern California market were closed due to not meeting company expectations financially.  But much of this was probably predicated on the fact that those stores could not meet the high company sales expectations because of the self-cannibalization the company has undertaken.  Gone now are the hot sandwiches but back is a rededication to what Schultz explains is focusing on core values.  For most of the partners that I have talked to the coffee is the most important part of the Starbucks experience. Not the music, books or even the WiFi.

The company will rebound from this.  And Schultz's return is very much a welcome one. The bigger issue will be succession. Obviously, Donald was not the right person to lead the company and have the same vision that Schultz had.  As with most companies, it is difficult to replace the founder, especially one that had so much invested in the company - emotionally and strategically.