I grew up in federally subsidized housing in Brooklyn. I was part of a generation of families that dreamed about the American dream. My dad had a series of blue-collar jobs. An uneducated man, he was kind of beaten by the system. He was a World War II veteran who had great aspirations about America, but his dream was not coming true.
At the age of seven, I came home one day to find my dad sprawled on the couch in our two-bedroom apartment in a full-leg cast; he had fallen on the job and broken his leg. This was way before the invention of Pampers, and he worked as a delivery driver for cloth diapers. He hated this job bitterly, but on this one day, he wished he had it back. In 1960 in America, most companies had no workers’ compensation and no hospitalization for a blue-collar worker who had an accident. I saw firsthand the plight of the working class.
That experience had a significant effect on how I see the world. When I got into a position of responsibility at Starbucks, what I wanted to try and do was build a kind of company that my father never got a chance to work for.
We at Starbucks have been trying to create an industry that did not exist, and a kind of brand that was very unusual. One real anomaly is that we have spent very little on advertising. We’ve had corporate executives try and understand how a brand could become so powerful and ubiquitous with so little promotion. The truth is we had no money to advertise, so we had to figure out a different way. We said to ourselves that if we wanted to build a large enterprise and a brand that had meaning, relevance and trust for all its constituencies, then we first had to build trust with our employees. So we tried to co-author a strategy in which those who worked for the business were really part of something. As a result, in 1989 we began to provide equity in the form of stock options to our employees.
When we did this, we had a couple hundred employees and fewer than 50 stores. Today, we have close to 50,000 employees, whom we call partners, and we will open up our 3,500th store at the end of this month. We have built, I think, an enduring business upon a premise that says the experience that we create inside our company will be the defining mechanism of building our brand. We said we must first take care of our people.
It’s critically important in building a business that every single strategic decision go into the imprinting of that brand. If you don’t tell the truth to some constituency, you can’t later say that decision just didn’t matter. Everything matters. A business must be built on a set of values, a foundation that’s authentic, so you can look in the mirror and be proud of what’s going on.
Recently I was walking down a street in London that was a very high-fashion piece of real estate. It had one designer store after another: Armani, DKNY, Versace. Expensive stores, expensive rents. Out of the corner of my eye, I saw a storefront that just did not fit. It was about 12 feet wide, and no more than a 500 square foot store. In the midst of all these fancy signs and fancy stores, this store had one word on top of the door: “Cheese.” I couldn’t figure out what it was, so, curious, I went in.
Behind the counter was a poorly dressed 70-year old guy, and I was the only customer. As soon as I walked in, he came to life. I said, “I don’t know much about London, but it appears to me that this store really doesn’t fit on this street.” He replied, “Many people have said that to me, young man. But the truth is, it’s been here over 100 years.”
I said, “I’m sure you can make a lot more money on this store if you leased it or you sold your business.” He replied, “Well, I wouldn’t lease it because I own the building. The legacy, responsibility and pride that I have is to the generations of my family who have come before me. That is why I come to work every day to be a purveyor of cheese to honor the people who’ve come before me.”
With that, he started giving me samples of cheese, one little piece after another, on a tray. He had a precise description of every one while it was in my mouth. The cheese just came to life with his words. I bought $50 worth of cheese, in the middle of the afternoon, and alone!
Think about all our experiences every day. How often does anybody honor us as a consumer? Rarely. But when it does happen, the power of the human spirit really does come through. At the end of the day, when business is really good, it’s not about building a brand or making money. That’s a means to an end. It’s about honoring the human spirit, honoring the people who work in the business and honoring the customer.
When I was in Israel, I went to Mea Shearim, the ultra-Orthodox area within Jerusalem. Along with a group of businessmen I was with, I had the opportunity to have an audience with Rabbi Finkel, the head of a yeshiva there. I had never heard of him and didn’t know anything about him. We went into his study and waited ten to 15 minutes for him. Finally, the doors opened.
What we did not know was that Rabbi Finkel was severely afflicted with Parkinson’s disease. He sat down at the head of the table, and, naturally, our inclination was to look away. We didn’t want to embarrass him.
We were all looking away, and we heard this big bang on the table: “Gentlemen, look at me, and look at me right now.” Now his speech affliction was worse than his physical shaking. It was really hard to listen to him and watch him. He said, “I have only a few minutes for you because I know you’re all busy American businessmen.” You know, just a little dig there.
Then he asked, “Who can tell me what the lesson of the Holocaust is?” He called on one guy, who didn’t know what to do—it was like being called on in the fifth grade without the answer. And the guy says something benign like, “We will never, ever forget…” And the rabbi completely dismisses him.I felt terrible for the guy until I realized the rabbi was getting ready to call on someone else. All of us were sort of under the table, looking away—you know, please, not me. He did not call me. I was sweating. He called on another guy, who had such a fantastic answer: “We will never, ever again be a victim or bystander.”
The rabbi said, “You guys just don’t get it. Okay, gentlemen, let me tell you the essence of the human spirit.
“As you know, during the Holocaust, the people were transported in the worst possible, inhumane way by railcar. They thought they were going to a work camp. We all know they were going to a death camp.
“After hours and hours in this inhumane corral with no light, no bathroom, cold, they arrived at the camps. The doors were swung wide open, and they were blinded by the light. Men were separated from women, mothers from daughters, fathers from sons. They went off to the bunkers to sleep.
“As they went into the area to sleep, only one person was given a blanket for every six. The person who received the blanket, when he went to bed, had to decide, ‘Am I going to push the blanket to the five other people who did not get one, or am I going to pull it toward myself to stay warm?’”
And Rabbi Finkel says, “It was during this defining moment that we learned the power of the human spirit, because we pushed the blanket to five others.”
And with that, he stood up and said, “Take your blanket. Take it back to America and push it to five other people.”
Howard Schultz is chairman and chief global strategist of Starbucks. Through CARE and the Starbucks Foundation, the company works to give back to the communities in which it does business. Schultz received the Columbia Business School’s Botwinick Prize in Business Ethics last September. This article is excerpted from his acceptance speech. Reprinted from Hermes magazine, Columbia Business School, Spring 2001.