Starbucks: Schultz Passes the Torch

In early April, Howard Schultz made good on his December announcement that he would be stepping down as CEO of Starbucks, handing the reins to Kevin Johnson, who had been the company’s president. Schultz will remain as executive chairman.

The transition is being watched with great interest. Schultz has been CEO for much of the past 30 years—having left and come back twice—and Johnson is only the third CEO other than Schultz to run the company in that time frame. And often, when a CEO is closely connected to a company’s success and brand—which Schultz certainly is—it can be hard for him or her to let go. That type of CEO also can be a hard act to follow. As Johnson himself pointed out, “I know I have ‘venti’ shoes to fill.”

Schultz is leaving the CEO job at a point where Starbucks is healthy, but changing. The business has reached a more-mature point, where the focus is likely to be on efficient operations and careful growth, rather than rapid expansion—which may make the transition easier.

“In making this move, Starbucks is demonstrating the importance of CEO succession planning,” said Dr. Jeff Kirschner, a partner at RHR International, which has joined with Chief Executive Group in launching the CEO1000 Tracker. “By putting Kevin Johnson into the president and COO role for two years before announcing the transition, they enabled Johnson to gain valuable retail leadership experience. The result positions the company to take advantage of Johnson’s technology expertise in the CEO role and frees up Schultz to focus on new ventures. This should minimize business disruption and ensure company stability and continuity.”

As chairman, Schultz plans to turn his attention to Starbucks’ high-end Reserve Roastery & Tasting Room brand, which features stores that offer small-batch roastings of exotic coffees. He also is expected to remain involved in the company’s many social initiatives, which have included everything from hiring veterans and refugees to offering college benefits to employees. And some observers have speculated that Schultz may eventually be running for office—perhaps even U.S. president. He has denied it, but as he told CNN last fall, he would “never say never” to the possibility.

Note to readers interested in learning more about Starbucks’ Roastery: Attendees at Chief Executive’s Smart Manufacturing Summit, to be held May 16 and 17 in Seattle, will have a tour and a coffee tasting at the company’s first Roastery, located in downtown Seattle.

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