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Reprinted from Onward by Howard Schultz. Copyright (c) 2011 by Howard Schultz. By permission of Rodale, Inc., Emmaus, PA 18098.

By Howard Schultz, CEO of Starbucks


The name was printed across the bottle in white capital letters, but the product's symbolism was also imprinted on my psyche: Celebrate, learn from, and do not hide from mistakes.

Mazagran, a cold, effervescent beverage infused with



coffee, had been my first attempt--in collaboration with board member Craig Weatherup when he was at PepsiCo--to extend Starbucks' coffee outside the walls of our stores in an unfamiliar form. This was before the company sold whole and ground coffee in grocery aisles and prior to iced coffee's popularity. I was proud of our courage to create a new beverage category, and its failure to win over consumers, while intensely disappointing, did not sour my taste for creating.

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But over the years, Starbucks deviated from its once unquenchable desire to truly innovate. Not since Frappuccino had we really shocked the marketplace and created a significant product platform with a multimillion-dollar revenue stream. The company's will to risk had dimmed. Was it laziness? Fear of failure? Perhaps, but failure often leads to great things. Mazagran may not have succeeded, but its development helped lead us to Frappuccino, a product line that by 2009 would be a $2 billion business.

I have always taken pride in the fact that Starbucks chases the unexpected, and part of my role as chief executive officer is to instill in the organization the same excitement about and courage for developing new products that has gripped me since Starbucks' earliest days. It is a responsibility that I try to live up to by pushing people further than they think they can go, yet not further than I believe they are capable of going.

As I tried to reorient our people to think boldly, I was also reorienting myself, learning how to innovate the right way for the multibillion-dollar global organization that Starbucks had become since I was last in charge. Going into 2009, I was insistent that Starbucks go after big, bold, original ideas, but I also appreciated that those ideas, such as Sorbetto, could not be fueled by instinct alone. They had to be relevant to our business, scalable, thoroughly tested, integrated across business channels, and embraced by our partners in Seattle and in our stores.

In short, a new idea's execution had to be as good as the idea itself.

Taking a more cautious, calculated approach to innovation goes against my just-do-it entrepreneurial nature, which plays off my gut and pushes for speed. But I was recognizing that the company and I needed to shift the way we brought products to market, bringing to the process the same degree of mastery that we had historically applied to roasting coffee. And because I no longer wanted the company's growth to rely only on building more stores, Starbucks' future depended on its ability to innovate on several fronts, in multiple channels of global distribution.

One seemingly natural extension of the brand that I had long entertained introducing was having Starbucks become a larger player in the health and wellness market, beyond just offering healthier food and beverages in our stores. To explore this option, I asked Richard Tait--who, as the cofounder of the award-winning Cranium game and toy company, has a knack for reinventing the status quo--to apply his innovative muscle to articulating how Starbucks might succeed in the health and wellness market. Richard made a compelling case that included some exciting but risky new ideas, and Starbucks' leadership team and I would have to decide if the company had the resources to take them on at this time in our evolution.

In 2009, as we explored future options for innovative, disciplined growth, we were asking ourselves several questions.

How could we re-create and improve the store experience, which is our heritage and the foundation of the brand's identity?

How might we expand on our value proposition, which has always been about emotional and human connection?

How should we strengthen our voice to better tell our story?

And how could the company extend its coffee authority beyond the stores, as I'd once envisioned happening with Mazagran?

Personally I did not fear failure. While I did not like or want to fail, I was willing to take risks. And I did worry that the company, given its battered stock price and morale, would not be able to emotionally or financially survive a high-profile setback. Whatever we chose to do had to be done right and done well.

The risks were huge. But the way I saw it, Starbucks had no choice but to forge ahead and create. After all, innovation is in our DNA.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.