The Washington Post Sunday

Star­bucks after Schultz: What will hap­pen to ac­tivism?

New CEO must reckon with his pre­de­ces­sor’s out­spo­ken so­cial views

- CASE IN POINT — Jef­frey P. Boichuk, Luca Cian, Bid­han L. Par­mar and Jenny Crad­dock Boichuk is an as­sis­tant pro­fes­sor of com­merce at the Univer­sity of Vir­ginia McIn­tire School of Com­merce. Cian is an as­sis­tant busi­ness pro­fes­sor, Par­mar is an as­so­ciate bus

The big idea: When he took the reins of cof­fee gi­ant Star­bucks in early 2017, CEO Kevin John­son faced a de­ci­sion: Fol­low in the foot­steps of his pre­de­ces­sor, Howard Schultz, and keep Star­bucks po­si­tioned as a brand that would be ac­tive on so­cial is­sues, or keep a qui­eter pro­file and fo­cus on the com­pany’s core propo­si­tion of sell­ing cof­fee?

The sce­nario: Ev­ery facet of Star­bucks bears Schultz’s im­print. It was his vi­sion of Star­bucks as the “third place” in con­sumers’ daily lives (home, work and Star­bucks) that re­de­fined cof­fee cul­ture and made the com­pany a ma­jor global brand. He served twice as chief ex­ec­u­tive, the sec­ond time reignit­ing growth and pro­pel­ling the brand to $21.3 bil­lion in sales.

Hav­ing 25,000-plus stores glob­ally and 90 mil­lion cus­tomers each week meant that Schultz, an out­spo­ken Demo­crat, had a big plat­form from which to speak on so­cial is­sues. In­creas­ingly, he used it. Star­bucks weighed in on mar­riage equal­ity, guns and the global refugee cri­sis. The com­pany’s stock soared, and Schultz’s lead­er­ship was lauded, but Star­bucks grap­pled with backlash, such as when its 2015 solid-red hol­i­day cup was seen as “an­tiChrist­mas.” The com­pany stum­bled with Race To­gether, a cam­paign meant to spark can­did con­ver­sa­tions about race be­tween baris­tas and cus­tomers. Not ev­ery­body wanted to have a so­cial or po­lit­i­cal dis­cus­sion while grab­bing their morn­ing joe.

Star­bucks, of course, is not alone in find­ing com­merce and so­cial com­men­tary an un­easy mix. Chick-fil-A, Pep­siCo, Dove — and most re­cently Papa John’s Pizza — have all ex­pe­ri­enced backlash when ex­ec­u­tives’ com­ments on so­cial is­sues or their mar­ket­ing cam­paigns missed the mark. But other com­pa­nies have suc­cess­fully used so­cial ac­tivism to strengthen sales and dis­cus­sions with cus­tomers. In 2016, for ex­am­ple, shortly after Pres­i­dent Trump’s elec­tion, out­door out­fit­ter Patag­o­nia an­nounced it would do­nate 100 per­cent of its Black Fri­day sales to grass-roots en­vi­ron­men­tal pro­tec­tion ef­forts. Patag­o­nia shat­tered its pre­vi­ous sales records, top­ping $10 mil­lion in a day.

The res­o­lu­tion: So what course will John­son steer? With the pres­sure on earn­ings and a fourth-quar­ter rev­enue miss, John­son needs to keep the core busi­ness brew­ing. He has pub­licly said he “wouldn’t shy away from con­tro­versy” and, in his ten­ure so far, Star­bucks has con­tin­ued to take a stand on so­cial is­sues. Along with Ama­zon.com and Mi­crosoft, Star­bucks sup­ported a law­suit fight­ing the re­peal of the De­ferred Ac­tion for Child­hood Ar­rivals pro­gram, the Obama-era im­mi­gra­tion pro­tec­tion. (Ama­zon CEO Jef­frey P. Be­zos owns The Wash­ing­ton Post.) But John­son may be look­ing harder to find a mid­dle way than his pre­de­ces­sor did. There was a Christ­mas Tree Frap­puc­cino on this year’s menu and a Christ­mas tree on this year’s hol­i­day cup. But also: a pair of gen­der-am­bigu­ous in­ter­locked hands, which some crit­ics saw as tout­ing a “gay agenda.”

The les­son: Cul­ture wars can be fraught. In­creas­ingly, how­ever, com­pa­nies are reck­on­ing with a new dy­namic as con­sumers align their spend­ing with their val­ues. Brands are con­sid­er­ing ways they can en­gage and stand for more than just a prod­uct or service. By re­pur­pos­ing sys­tems and pro­cesses that have served tra­di­tional busi­ness de­ci­sions well, com­pa­nies can limit their risk of backlash. Con­duct­ing stake­holder analy­ses and run­ning smallscale ex­per­i­ments be­fore so­cial ini­tia­tives are im­ple­mented at scale can help en­sure that a com­pany’s well-in­ten­tioned ef­forts are also well-re­ceived.

Fi­nally, and most crit­i­cally, com­pa­nies need to un­der­stand what they can stand for. Patag­o­nia, an out­door goods pur­veyor, has per­mis­sion, per­haps, be­cause it has pro­moted con­ser­va­tion for decades and be­cause it has a much smaller cus­tomer base than Star­bucks. When you serve 90 mil­lion peo­ple each week, it may be dan­ger­ous to pre­sume much in the way of com­monly held val­ues or be­liefs.

 ?? TAY­LOR WEIDMAN/BLOOMBERG NEWS ?? An espresso ma­chine at a Star­bucks cof­fee shop in Ph­nom Penh, Cam­bo­dia. The com­pany has more than 25,000 stores glob­ally and serves 90 mil­lion cus­tomers each week.
TAY­LOR WEIDMAN/BLOOMBERG NEWS An espresso ma­chine at a Star­bucks cof­fee shop in Ph­nom Penh, Cam­bo­dia. The com­pany has more than 25,000 stores glob­ally and serves 90 mil­lion cus­tomers each week.

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