How has the Starbucks recent scandal in Philadelphia - involving the arrest of two black men who were sitting in the store without making a purchase - affected the company’s corporate reputation? How has it affected the stock price and more importantly, the company’s stock and trade as a responsible corporate "citizen" that has, for decades, lead the way for other companies to give back?
Starbucks CEO Kevin Johnson, in the aftermath of the latest Starbucks scandal, delivered a public "mea culpa" last month with an emotional on-camera interview where he said, “This shouldn’t happen in today’s society ... and yeah, I’m gonna fix it.” He was emotional and honest and on point. Afterward, he met with the two black men, and removed the manager who called the police from the Philadelphia store where the incident happened.
Finally, he is closing all Starbucks stores on May 29 for a few hours to provide sensitivity training around unconscious bias. In a FOX Business interview, Johnson described taking the five hour training course himself with other company leaders.
Companies have to take a stand
Today, Johnson and other CEOs face a much more volatile and dynamic universe of internal and external stakeholders. As in this instance with Starbucks, CEOs and their companies are increasingly caught in the middle – forced to choose a side. In this new era, the public and media will increasingly look to CEOs to voice their positions on a widening range of issues. While every position carries risks, the failure to take a position will carry greater and greater risk. Inertia causes more damage today than ever before.
Americans may not always pay attention to every detail of the news – who could – but they will react viscerally to a negative news story, and an increasing percentage of the population is willing to take action with their purse strings. In today’s highly competitive marketplace, customers are increasingly making decisions based on moral and ethical values. The companies that do the best job connecting to what matters to their customers – and doing so authentically – will win.
The current environment is one where 87% of Americans will purchase a product because a company advocated for an issue they cared about and 76% will refuse to purchase a company’s products or services upon learning it supported an issue contrary to their beliefs, according to a survey from Cone Communications. And so, Starbucks is in a position where they can either advance the conversation and lead the way, or they can hope it all blows over.
Starbucks chose to try to make an impact. And I think it was the right thing to do. Let's look at what they did and why we think it matters.
Make an Immediate Response.
First, Starbucks responded right away. CEO Johnson didn't wait for all the facts and he didn't wait to craft the perfect statement. He got in front of the camera and owned the problem, promising to do something about it.
Be Vulnerable and Emotional.
Because crises are emotional, companies’ responses should be too. Addressing it takes vulnerability. Johnson not only displayed emotion, he nearly shed tears on screen, real tears. The signal was: this is not the company I represent. It signals that he cares, and that they represent more. And that he is willing to take the heat.
Create a Symbol That Demonstrates Commitment.
Next, they created a symbol and a signal that they're committed to more than words. Shutting down every Starbucks store for two hours on May 29 may not have a huge impact on Starbucks' bottom line, but it's a highly visible and tangible symbol that this is a real problem and they're really doing something about it.
Think about what Howard Schultz did when he came back to Starbucks years ago. He didn’t just commit to making better coffee. He shut the door for two hours so that every barista could learn to brew the perfect cup. Starbucks can’t just offer a free cup of coffee. They have to show they won’t stop until this is made right. Today they are symbolically shutting the doors again for two hours, to make sure they get this one right too.
Trust cannot be rebuilt without transparency. You can’t say you are trying to make it right, without taking action. Customers have a long memory if they feel they are being cheated. By making the announcement – and the closing of the stores for two hours – a very public event – Johnson is letting the public in on his strategy. Sure, he could have done this training in private. But doing so publicly means he is committed to it, and he is willing to be held to his ideals in an open forum.
Stay in the News Cycle.
Finally, Starbucks made a choice to stay in the news and own the news cycle. Many companies would prefer to sweep this under the rug. Instead, Starbucks immediately announced that they're going to let anyone use their bathrooms - a move that, whatever its merits, ensures that the sensitivity training isn’t the only story. By continuing to make news, Starbucks is saying they want to be held accountable to making progress.
Repeat. Repeat. Repeat.
If the executives at Starbucks aren’t nauseous from talking about how they are going to make this right, they won’t gain any traction, and they won’t start to change the conversation. In this case, they took a leap away from being a fence-sitter, and toward taking responsibility in a big way that signals 'it’s time to make a change and we are not afraid to be the ones to do it.'
Lee Carter is president of maslansky + partners and oversees a diverse range of communication and language strategy work for Fortune 100 and 500 companies, trade associations, and non-profits in the U.S. and globally. A communication research veteran, Lee has conducted and analyzed more than one thousand instant response dial sessions, traditional focus groups and client strategy sessions. Lee has also written and overseen hundreds of language surveys and polls in more than 15 countries.
*The original article stated the training was two hours, it has been updated to reflect that the sessions lasted longer, in some cases 5 hours.