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Howard Schultz on ‘How Starbucks Fought for Its Life’

Tuesday, 29 Mar 2011 | 11:58 AM ET

“I deeply wanted people to fall back in love with Starbucks” — Howard Schultz, CEO of Starbucks.

People who seek love often do crazy things - but what Howard Schultz did in February 2008 to get his customers and his employees to "fall back in love with Starbucks," made history - and probably saved his company.

Starbucks
Oliver P. Quillia for cnbc.com
Starbucks

Eight years after he left the day-to-day operations of the company to become its chairman, Schultz returned to Starbucks and returned as CEO.

Starbucks was hurting, it had lost its way. The stock had dropped by 42 percent and even more alarming — store traffic was the worst in the company's history. Schultz says, "The company was in trouble and I felt the threat personally."

So under threat, he wrote what was supposed to be one of those "for your eyes only" memos, and as fast as you can say Caramel Macchiato the memo was on the internet.

In the memo "Commoditization of Starbucks" Schultz laid out what he thought was wrong with the company including its growth explosion, the height of the automatic espresso machines at stores' counters and he added, that something just didn't smell right at the stores: Schultz wrote the stores were missing the "smell" of coffee.

When the memo went viral - it was hugely embarrassing to Schultz and to the company. But now he says, "In retrospect, the memo served as a galvanizing force inside the company, spurring conversations that we desperately needed to have because it brought to light concerns that many people were already thinking."

Onward Starbucks
Onward Starbucks

In his new book, "ONWARD: How Starbucks Fought for Its Life Without Losing Its Soul" Schultz recounts those dark days and how he and his team found their way back. Theirs was a journey filled with historic-making events.

On February 26 2008 Schultz ordered 7,100 Starbucks stores to shut their doors for the day so that he could — despite the enormous financial and PR hits — retrain the company's baristas on the art and technique of espresso making.

It was a bold act but one according to Schultz was needed because, “Doing so meant taking a step back before we could take many steps forward.” Explaining more he writes, "Often, organizations need bold, grand gestures to galvanize people towards a new mission or refocus their attention… It sent a message that Starbucks was once again decisive and mission-driven.”

In "ONWARD" he writes, “There are moments in our lives when we summon the courage to make choices that go against reason, against common sense and the wise counsel of people we trust. But we lean forward nonetheless because, despite all risks and rational argument, we believe that the path we are choosing is the right and best thing to do. We refuse to be bystanders, even if we do not know exactly where our actions will lead.”

This is Schultz's second book about his life at Starbucks. His first"POUR YOUR HEART INTO IT" (1997) was the story of the then young company's founding, in "ONWARD" Schultz takes a look at a more mature company - a company very much like a teen-ager in need of constant oversight, nurturing and yes, a dose of some tough love.

Schultz thinks this book will help business leaders because it offers, “insights about leading in today’s ever-changing, fast-paced, interconnected world; about building, sustaining and reinventing great companies and brands.” And Schultz is hoping his journey in "ONWARD" will help a broader audience because as he puts it, "ONWARD" is a universally inspiring story that will resonate with readers faced with reinventing or rethinking their own lives.”

Tune in: This week, on "The Wall Street Journal Report with Maria Bartiromo" Maria sits down with Howard Schultz to discuss why he left, why he came back, and his love affair with Starbucks.

WSJR with Maria Bartiromo airs on Sunday on CNBC at 7:30p Eastern, also, check your local listings to see when the show airs on your local station.

Email me at bullishonbooks@cnbc.comAnd follow me on Twitter @BullishonBooks

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