Deja Vu ~ Spilling the Beans

What is currently unfolding at Starbucks has left me with a sense of Deja Vu. The Starbucks saga reminds me of the return of Steve Jobs to Apple when he came back to lead that company out of the black hole in which it was slowly (or quickly) sliding. In both cases, the respective Boards turned to the Founders of the company to steady the sinking ship. The question is "why do Boards look to the Founders in time of need?"

If strategy defines the arena in which execution is played and if there is no doubt that bad strategy begets poor execution, then the strategy followed by James Donald, the former CEO of Starbucks, to accelerate market penetration by increasing the number of stores across the USA appears in hindsight, to have been a bad strategy. But hindsight is a wonderful thing and Donald did not have the benefit of hindsight. In addition, I can not believe that Donald did not have the backing of his Board, one of whom was none other than the man who has now replaced him, to pursue such a strategy. So what went wrong? Simply, the answer lies in an aspect of execution that although difficult to measure, is often overlooked when pursuing strategy but which is the fundamental reason why Boards so often turn to the Founders to bail them out.

Execution decisions take place within an organizational context and there are generally a number of contextual factors that will impact the degree of success of a particular decision. One of these factors is the organization's culture. You need only to read what incoming CEO and Founder, Howard Schultz has said to analysts recently to understand the importance of this factor and to understand how far Donald had strayed from this particular context of execution decisions. Schultz spoke about the "Starbucks experience"; the fact that they had gone from being "quintessentially entrepreneurial" to being "soft," and "we had lost the focus on what we once had, and that is the customer experience."

And, therein lies the main reason Boards turn to their Founders. Culture is a difficult variable to measure, to put your arms around, but we know it exists. Who better to understand that culture than the person who engineered the meteoric rise of the company from its infancy? Founders know the cultural context within which change must happen. Whether Donald consulted with Schultz on a regular basis, I do not know. Whether Jobs was consulted on a regular basis, history would suggest not.

But the lesson for leaders at all levels is simple - understand the cultural context and its impact on execution decisions when implementing strategy. For leaders that are brought into the company from the outside, this can be difficult; but the benefits of consulting with those in the "know," which in alot of instances may well be the Founders, will be great.

ian