Brand Activism at Starbucks—A Tall Order?

Abstract

In April 2017, Kevin Johnson took over the reigns as CEO of Starbucks, the iconic coffee giant. He faced a number of key decisions to keep the global retail giant competitive, but one in particular loomed large. Over the last few years, Johnson's predecessor, Howard Schultz, had increasingly used Starbucks as a progressive platform in an attempt to influence the world around its stores, whether he was aiming to smooth out race relations in the United States or support marriage equality. (Schultz was so vocal about these issues, in fact, that many people speculated he harbored secret political ambitions for his post-Starbucks career.) The case examines Schultz's memorable 2015 Race Together campaign and invites students to debate whether Johnson's work should be focused on (1) similar attempts to align Starbucks with progressive ideals and social causes, or (2) Starbucks' profitability and shareholder value alone. Were there certain times or circumstances where it was appropriate to engage in brand activism, and what impact might these initiatives have on brand integrity and the bottom line?In addition to inviting students to analyze the financial, branding, and employee- and customer-relations implications of social activism at Starbucks, the case also allows them to develop a framework for when and how brand activism might be appropriate in the future. Excerpt UVA-M-0964 Jul. 10, 2018 Brand Activism at Starbucks—A Tall Order? On April 3, 2017, Kevin Johnson, the newly minted CEO of coffee giant Starbucks Corporation (Starbucks), stepped into his Seattle office for his first day on the job. Johnson knew he faced a number of key decisions and competition from both large and small players as he led the company into its next phase. (For recent stock price performance compared to competitor Dunkin' Donuts, see Exhibit1.) One issue at the top of his mind was whether to continue the tendency of his predecessor, long-standing CEO Howard Schultz, to make public corporate declarations on divisive social issues, ranging from how to discuss racism to the legalization of marriage equality. Indeed, Schultz's legacy loomed large, as the legendary leader had gained consistent praise as one of the world's best-performing CEOs for the past few years. (For Harvard Business Review's 2015 CEO rankings, see Exhibit 2.) At a time when the United States seemed to be as divided as ever, with a new president (Donald Trump) in the White House and growing concerns about gun violence, bigotry, and homophobia worrying many in the nation, an increasing number of brands such as Starbucks were choosing to take public stances to support the missions in which they believed. Johnson, however, came to Starbucks from a technology background, where he sold to businesses and had limited interaction with individual consumers, and he was unfamiliar with how to best strike an intimate and nonalienating chord with customers walking into Starbucks cafes every day. . . .