Starbucks’ future CEO seen as ‘superstar leader’
All eyes are on Kevin Johnson, who is poised to take the helm of Starbucks when its iconic CEO Howard Schultz steps away from that post in April.
Johnson, the coffee giant’s COO, will move into the top position on April 3. and also hold onto the title of president.
But while Johnson’s strong technology background and leadership skills have been lauded by Schultz and other, past co-workers, investors seemed to be taking a wait and see attitude. Shares slid 2.2% to close at $57.21 on Friday, the day after the leadership change was announced.
“I don’t think anybody’s going to be able to really fill Howard’s shoes,” says Peter Saleh, managing director, restaurants, for the global financial services firm BTIG. “I think the company will do just fine, because I feel like they are on more stable footing today than they’ve ever been. ... But Howard is a visionary, and I think the loss is being seen in a little bit of a negative light this morning by the overall market.”
The stock price dipped 2.2% on Friday to close at $57.21, but Saleh said that was actually a more modest drop than he would have predicted with the company “changing leadership from someone who is extremely successful.”
But in a call with investors Thursday, Schultz emphasized that he had personally asked Johnson to move into the CEO position. Johnson’s knowledge of technology made him the “ideal CEO for Starbucks at this moment in our journey.”
Johnson started his career as a systems engineer for IBM. He went on to spend 16 years at Microsoft. He then spent five years in Silicon Valley as CEO of Juniper Networks, a Sunnyvale, Calif-.company that develops networking products. When he left there in 2014, he was rumored as a candidate to succeed former Microsoft CEO Steve Ballmer.
Brad Brooks, chief product, engineering and marketing officer at DocuSign, worked with Johnson at Microsoft and Juniper Networks. “There are few people you would strap on your soldier gear and go to war with,” Brooks says. “Kevin is one of them.”
Brooks also called Johnson a “superstar leader” whose business philosophy of the four Cs — courage, conviction, connections and communication — led to successful launches of Microsoft operating systems Windows Vista and Windows 7, and stewardship of Juniper after the financial markets meltdown in 2008.
In 2009, Johnson joined the Starbucks’ board and became the coffee giant’s president and COO in March 2015, overseeing its businesses as well as the behindthe-scenes logistics of marketing, supplies and the company’s online platforms.
“Given the seismic shifts in consumer retail behavior, we have seamlessly extended our brick-and-mortar experience to the digital world, and we are now focused on a multiyear strategy to elevate the entire brand,” Johnson said during the investors call. He added that he and Schultz “share common values, a love for the company, and a commitment to always do the right thing.”
Umesh Ramakrishnan, senior partner at executive search firm Kingsley Gate Partners, says that he believes Johnson’s “skill set can be transformative, one that can move Starbucks from a legacy business to a company that takes advantage of a digital retail omnichannel business.”
Saleh, who maintained a “buy” rating for Starbucks, added that Schultz’s confidence in Johnson should calm investors.
Schultz “basically grew this company from one or two stores to thousands globally,” Saleh says. “The vast majority of his wealth is in Starbucks. He must have a significant amount of confidence in Kevin and the management team around him to be able to step away and say, ‘ Hey, I’m giving you my baby. Go run with it.’ ”
Still, following an executive like Schultz whose values, persona and entrepreneurial skills are so integrated into the company will require Johnson to clearly outline Starbucks’ plans for growth. In addition, he will need to be a motivator, like his predecessor.
“In the end, this is a people business,” Ramakrishnan says. “He needs to be able to inspire and encourage. Also, he needs to give every employee a reason to believe in the long term. During his tenure, Schultz implemented great employee retention policies like providing education. Johnson will do well to continue that tradition.”
“Howard (Schultz) is a visionary, and I think the loss is being seen in a little bit of a negative light.” Peter Saleh, managing director, restaurants, for the global financial services firm BTIG