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 / Winter 2011 / Issue 65(originally published by Booz & Company)


Best Business Books 2011: Ethics and Aspirations

The Good Company Revisited

Howard Schultz with Joanne Gordon
Onward: How Starbucks Fought for Its Life without Losing Its Soul
(Rodale, 2011)

Edward E. Lawler III and Christopher G. Worley, with David Creelman
Management Reset: Organizing for Sustainable Effectiveness
(Jossey-Bass, 2011)

Michael Beer, Russell A. Eisenstat, Nathaniel Foote, Tobias Fredberg, and Flemming Norrgren
Higher Ambition: How Great Leaders Create Economic and Social Value
(Harvard Business Review Press, 2011)

Not since the 1980s has so much been written about the social role of business enterprises. An Internet search of such key terms as business purpose, values, ethics, responsibility, and sustainability yields page after page of references to recent articles in business journals, of both the popular and scholarly persuasions. This renaissance of interest in the topic is also reflected in a bumper crop of books published during the last year, the quality of which runs the gamut from the sublimely inspiring to the patently ridiculous.

A Perfect Brew

The pick of the 2011 harvest is Howard Schultz’s Onward: How Starbucks Fought for Its Life without Losing Its Soul, the renowned coffee purveyor’s tale of how he resuscitated the global chain after it nearly expired during the recent recession. Most business readers will be familiar with the story: Over 37 short years, Seattle’s little coffee shop expands around the world, growing to some 17,000 outlets, seemingly two on every block in major cities. During this time, Starbucks can apparently do no wrong. The chain becomes so successful that its founder and CEO, Howard Schultz, feels comfortable enough to kick himself upstairs to the chairman’s office and turn the company’s operating reins over to his chosen successor.

All seems right in Schultz’s world until 2007, when suddenly everything goes wrong. Just as the global financial crisis looms, Starbucks hits the wall, suffering from over-expansion and a widely perceived decline in the quality of its products. Customers disappear, the stock price drops from US$26 to $7 a share, and about $21 billion in market value evaporates in 10 months. With Wall Street bears predicting the company will go belly-up (one rumor has McDonald’s acquiring it in a fire sale), Schultz does exactly what the experts counsel against: He un-retires as CEO and moves back into the corner office.

On one level, Onward is Schultz’s explanation of why he chose to return to his old post and a chronicle of what he did to get Starbucks back on track. He reports in considerable detail the pain of terminating some 6,700 jobs, closing 800 stores, and bidding adieu to the CEO he had recruited to succeed him. He then describes the managerial steps he initiated to restore the company to its former, profitable self. But that turns out to be the least interesting part of the book, particularly for those familiar with the efforts of other CEOs who have had even greater managerial obstacles to conquer, such as the transformational challenge Louis Gerstner faced at IBM, which was, comparatively speaking, a colossal wreck when he assumed command in Armonk in 1993. Doubtless, Schultz’s task felt overwhelming to him, and he deserves much credit for leading a fast and full business turnaround, but that’s not the main reason to read his book.

What is special about Onward is that Schultz comes across as an authentic avatar of socially responsible capitalism. He seems to be a business leader of great conscience who tries always to do the right thing, practice what he believes in, and stick to his high principles in bad times as well as good. He is also that most unusual of celebrity CEOs — one who admits his mistakes, says he is sorry, and takes personal responsibility when things go awry. Schultz is far from perfect: He acknowledges making egregious product decisions against the advice of his management team, and although he tries hard to show humility, delegate authority, and be patient with subordinates, it’s clear he doesn’t always succeed in these endeavors. Nonetheless, he’s about as humble as American top executives get.

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