Only the Innovative Survive

The streets of Seattle were still dark as Howard crunched his way through the morning frost. Bleary-eyed merchants were beginning to fill the alleyways as the bluish glow of dawn seeped across the horizon. When a storefront framed with rustic green wood was within sight, Howard pulled out the key he kept with him at all times and unlocked the door with a familiar click. 

The rich aroma of fresh coffee beans washed over him, followed by a rush of nostalgia. He contemplated the magnitude of the coming day's events as he ran his hand along the oak counter. Later that day, Howard Schultz would be announcing his controversial return as CEO of Starbucks. 

Schultz would be joining a long lineage of “boomerang” executives, including Steve Jobs and Michael Bloomberg. It’s a tradition that remains strong today—witness Bob Iger’s recent return to Disney. But for all the drama of these stories, a 2019 study of over 6,000 CEO tenures found that returning executives perform significantly worse compared to their first-time counterparts. 

So the odds would’ve been stacked against Schultz even under normal circumstances, let alone during a year like 2008. Only a handful of people were aware at the time, but Starbucks was on the brink of collapse. By his calculations, they were mere months away from insolvency. The timing couldn’t be worse: just as Starbucks was beginning to fall apart, one of the most cataclysmic financial disasters in history was gearing up to shatter the world’s economy. 

Schultz was knowingly taking the wheel of a sinking ship and sailing headfirst into a hurricane. He had no idea whether it was possible to steer Starbucks away from ruin, never mind how to do it. But it was there, standing in the darkness of the original Pike Place Market store, surrounded by rows of porcelain mugs and four decades of history, that he made two commitments to himself.

First, he would not blame anyone or point fingers for the mistakes that had created this situation. It would be essential to instill everyone with a sense of confidence about the future. 

Second, and perhaps most important of all, he promised to innovate. 

All of the above and forthcoming details about Starbucks’s turnaround are sourced from Schultz’s book Onward: How Starbucks Fought for Its Life Without Losing Its Soul. It offers one of the most detailed accounts of recession leadership on record. 

The innovators’ paradox 

The idea that a crisis is a good time to innovate may seem counterintuitive. Surely it’s better to play it safe and steady during precarious times.