Published On: Thu, Jan 30th, 2014

Howard Schultz Reorganizes Management At Starbucks To Get Ready For The (Digital) Revolution

If you wait for the tsunami you risk being washed out to sea with the debris; if you anticipate it correctly you can ride the wave.

That is how clear-headed managements should think, and no one thinks more clearly than Starbucks Coffee’s founder, Chairman and CEO Howard Schultz.

After reporting record results for 2013 and the first quarter of their 2014 fiscal year to December 31st, Starbuck’s yesterday announced some key management changes to align their management efforts with future business trends that they see pending over the horizon.

Howard Schultz has already pointed out publicly that, if the trend to online digital shopping should continue on its present trajectory, then walk by traffic to some of his stores could some day in the future be adversely affected, even though the bulk of Starbucks Coffee’s outlets are not in the malls themselves most likely to be impacted.

Even so it pays to ready, and to develop your own capabilities in digital payment forms that are on the brink of breaking out into the mainstream, including some of Starbuck’s own efforts in this space to date.

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 Howard Schultz / Getty


Accordingly Howard Schultz yesterday made the following key management appointments. First, he promoted current CFO and President of global business services Troy Alstead to a to the new role of Chief Operating Officer, reporting to Schultz himself. Second he appointed Alstead’s former deputy Scott Maw to become Executive Vice President and CFO, reporting to Alstead. And third he promoted Craig Russell to become Executive Vice President Global Coffee, and still reporting to Schultz. Russell also already plays a key role in Starbucks’ supply chain and its relationships with coffee growers worldwide.

With this new top-level team in place handling day to day operations this achieves two very important goals. First, in the general sense it permits Schultz himself to step back a little and see which of them ultimately can make it as a future CEO; long term succession planning is always a key task for a corporate leader.

Knowing both how and when to step back are the two most difficult, and most important, decisions any business leader can take – this in principle at least may resolve the how, though of course not the when – and it is unlikely to be any time soon. Both Alstead and Russell will continue to report directly to Schultz so perhaps both should now be considered potential successors for the top job some day.

Then, second the move now allows Howard Schultz to devote more of his own time to focus on how best to take strategic advantage of the digital shifts underway globally in ecommerce, payments and shopping.

As Schultz put it yesterday, “These organizational moves map our internal talent to the rapidly evolving retail environment and significant strategic and market opportunities ahead of us, ” continuing…

“Each of these experienced Starbucks leaders will be working closely with the entire senior leadership team, and me, to bring even greater financial and operational discipline to our business around the world.”

“They will partner with me as I focus on Starbucks’ mission, growth initiatives and the convergence and integration of our retail and e-commerce, digital, card and mobile assets around the world. There has never been a more exciting time to be a Starbucks partner.”

Digital and mobile payments systems, pre-ordering your latte on the way to the store on your mobile, paying with a click from your iPhone or Android deveice, loyalty programmes; these and other items are all up for grabs for those who choose to define their futures ahead of the tsunami.

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