Like any entrepreneur, Howard Schultz, the founder and CEO of Starbucks, is used to making tough decisions. But he also is willing to tackle tough issues, even those other founders and CEOs routinely duck.
Nowhere, perhaps, is this more evident than in Schultz's recent comments on race relations. Starbucks has been holding a number of "Open Forums" for its employees, where they are encouraged to talk about their experiences of race. The forums have been held in Seattle, Oakland, California, St. Louis, New York, and Los Angeles; each includes about an hour of open mic time, with Schultz presiding.
Like Schultz's other crusades, this one is directly related to his business, even if it's not obvious at first glance. A close look at his efforts, and his business, show why maybe other entrepreneurs should be bolder in this area, too.
Each day, beginning at 4:30 am, Schultz gets the first of four daily sales updates, according to a recent story in Time. Those updates bring together data from his company's nearly 12,000 stores. "Sales will rise and fall with the national mood," says Time, "tanking quickly during events like the New York City police protests." So on the most basic, how-much-are-we-selling-today level, Starbucks' business is profoundly linked to events that center on race.
In addition, about 40 percent of Starbucks' baristas are racial minorities, which implies that most teams in its stores would qualify as diverse. The research on diverse teams--even though it was conducted to measure gender, not racial, diversity--suggests that this has the potential to be very good news for Starbucks.
In one recent study, from Massachusetts Institute of Technology and George Washington University, researchers found that changing the composition of a team in the professional services industry from all-male or all-female to a mixed-gender team boosted revenue by 41 percent.
That's a huge jump, of course, so even if the results of mixed-race teams are more modest, they could still be substantial. The researchers explained the increase in revenue by speculating that greater social diversity gives a team a wider range of experiences they an apply to a particular problem. The researchers also suspected the more diverse teams spent less time chit-chatting and more time doing actual work.
But that same diversity may make a gig at Starbucks a bit more stressful on the team members themselves. The study's office workers were less happy with their jobs if they worked on a diverse team. Taking time to understand another's point of view, and incorporate it into one's own work, uses up mental energy and creates friction.
It's good to see Schultz acknowledge that while race is a difficult topic, that doesn't mean it should simply be ignored. In a December letter to employees, Schultz writes that "doing what is right for society and doing what is right for business cannot be mutually exclusive endeavors. While it is always safer to stand on the sidelines, that is not leadership."
With these forums, Schultz is encouraging Starbucks' employees to embark upon the work necessary to turn in a peak performance. The forums are just a start, of course, and it remains to be seen just how far Schultz will go--and how many entrepreneurs are brave enough to follow his lead.