business news in context, analysis with attitude

Excellent piece in Inc. that analyzes a story from earlier this week, in which Starbucks CEO Howard Schultz, back for his third turn of duty, said that he will remain in the job until next spring rather than leaving in the fall as originally planned.  In addition, Schultz said that the decision has been made to find his replacement outside the company, because Starbucks "needs a different kind of leader."

The Inc. judgement:  " The Starbucks board has failed to deliver upon its most important corporate governance responsibility: CEO succession planning."

Here's how this conclusion is framed:

" Think about that for a second. Of the many thousands of managers and executives in the company -- and the tens of millions of dollars the company proudly spends on leadership development -- the Starbucks board has determined and publicly announced that not one single person in the company is capable of being promoted internally to fill the CEO spot. Leadership development is the opposite side of the same succession planning coin. Starbucks has failed on both sides.

"That's a major, board-level meltdown. Heads should roll."

The story goes on:

"It's not as if Starbucks is creating the next rocket to Mars or artificial intelligence algorithms for Google. It sells coffee, tea, and other delicious beverages, for heaven's sake. Sure, consumer tastes are changing, and the global pandemic has changed business fundamentals. But this stark reality is true for everyone - companies of all shapes and sizes. And many boards have already updated their approach to succession planning, recognized that new leadership skills are needed, and are now helping their internal, high-potential talent master these competencies well ahead of an actual CEO transition."

And here's the business lesson:

"Hopefully, the Starbucks CEO succession meltdown is a siren song to other boards of directors. Disruption is happening in industry after industry, and your succession planning process likely needs some fine-tuning, if not a complete overhaul. Start thinking more carefully about the kinds of leadership skills future CEOs will need to not only handle disruption, but also to be the ones doing the actual disruption … boards need to create a pipeline of intentionally disruptive leaders."

KC's View:

I think this is an exceptionally perceptive point, and I wish I'd thought of it when writing my original commentary.

But I still think there could be something else going on here.

As I pointed out on Monday, Kevin Johnson, who was sent packing so Schultz could return, was an outside hire - he was a technology guy who spent most of his career at Microsoft, and then was CEO at Juniper Networks before moving to Starbucks.

Before that, Jim Donald was an outside hire - he'd been at Walmart, Safeway and Pathmark - when Schultz stepped away from the CEO role the first time, only to get fired the first time (that we know of) that Schultz indulged his messiah complex.

It is not hard to imagine that they'll find some outside person to be the new Starbucks CEO, only to have Schultz engineer that person's departure at some point.

It'll be hard to do with Schultz planning to remain on the Starbucks board, but I think number one on its agenda as to be carving out the company's future without the presence of Howard Schultz.  He cannot be like a security blanket that the company clings to, believing that in the end, he's the only person who can fix its problems.