05.01.18

A PR Crisis Brewing: Lessons from Starbucks

KARL R. LAPAN, PRESIDENT & CEO, THE NIIC

I have a confession to make. I have never been a huge Starbuck’s fan. Their social activism, overpriced drinks (why does anyone think a tall is anything more than a small at double or triple the price?), their elitist chairman of the board, and their over-rated brand positioning as a third place has not scored major points with me. I don’t know about you, but I have never liked the design of the in-store experience in a Starbucks. It seems like Starbucks is always in the news for something-whether it’s to test-market new concepts or introduce new sustainability initiatives. But the press hasn’t been so positive in the past few days, as news broke that two African-American men were likely discriminated against in a Philadelphia store.

The arrests have left the coffee behemoth scrambling to reframe the story. However, I have to admit, they have artfully handled crisis communication following this incident. Here are two important lessons you can glean from how Starbucks has responded to this unfortunate situation:

  1. Intentional culture drives change.Smart leaders know that people look to brands to feel like they are part of something larger than themselves. (Think “It’s a Jeep Thing.”) Therefore, you must identify and address brand inconsistencies that don’t affirm your organziation’s core values and beliefs. That means diversity and inclusion must be at the forefront if you are Starbuck’s.

    Starbucks’ move to shut down company-owned stores on May 29 for employee training shows a certain level of sensitvity and awareness. Employees need to be empowered with the knowledge and resources to make everyone feel valued. In lieu of merely issuing a statement reiterating its commitment to core values, like inclusion, Starbucks is going a step further with an investment in employee-wide training and education.

    The lesson for other businesses? Meaningful and lasting change requires a culture shift. Does your culture affirm and align with your business goals and values? If not, it may be time for some soul-searching before you end up with a PR crisis like Starbuck’s crisis of confidence on your hands. As Angie Hicks reminded us at the The Northeast Indiana Innovation Center Ideas @ Work event, culture must be intentional. As Angie shared with us, she has office hours once a week to better connect with and engage with employees. As she reflected, if you don’t work at culture intentionally and deliberately, you will certainly have a bad culture by design!

  2. Act quickly; worry about financial impact later.The move to close stores for part of a day is part strategic and part face saving giving the enormous backlash. They could have rolled out a phased approach that wouldn’t impact the flow of business. Instead, they are putting operations on hold for part of an afternoon (8,000 store locations, over 175,000 associates at an estimated cost of $12 million) while employees at all levels go through racial-bias education and training, at the same time. This is a strong leadership lesson that they are making efforts to learn from their mistakes, foster diversity, inclusion, and belonging – potentially at the expense of short-term profitability to create “a safe and welcoming environment for every customer.”

Food for thought here? Take the long view. When you treat customers, employees, vendors, etc. right, long-term brand equity and dividends (in theory) should flow from that decision.

What can you take away from this teachable moment to apply to your business?

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