What is the Real Role of a CEO?

  “Do not go where the path may lead, go instead where there is no path and leave a trail.”             

                          -Ralph Waldo Emerson

I recently heard an interview with Howard Schultz, CEO of Starbucks, about his perspective as the leader of this iconic global brand.  Those who follow Mr. Schultz’s approach to running Starbucks know that his focus is on much more than just leading a profitable enterprise.  In his recent Global Responsibility report he stated In business, success is most often measured by numbers; store counts; revenues; comps. For Starbucks, these metrics are important indications of how we are growing our brand and returning value to our shareholders. But equally important to the value we create are the values we live by.”  He continues, “Not only is standing for something beyond making a profit the right thing to do, it is the way business must be conducted in the 21st century. Only by doing business through the lens of humanity can an organization establish a crucial reservoir of trust with its people and its customers.” He goes on to describe the way Starbucks works fairly, humanely and responsibly with its suppliers, partners, employees and customers to create sustainable lasting value.  Truly an inspiring executive, notwithstanding whether you prefer their coffee products or not.

At one point the interviewer, who is well-known as a right-wing conservative capitalist who will remain nameless in this blog, challenged Mr. Schultz. “But isn’t the primary role of the CEO to make money for the shareholders?”  In a nano-second Schultz retorted “Definitely not!”  Atta boy Howard!  Schultz also walks his talk using his role to make a difference far beyond Starbucks. For example, in December 2011, as the U.S. Congress debated the so-called “fiscal cliff,” he asked employees at its approximately 120 Washington D.C. area stores to write “Come Together” on coffee cups when serving customers. Earlier that year Schultz lead a group of more than 100 CEOs who pledged to halt all political campaign contributions until lawmakers, as Schultz put it, “stop the partisan gridlock in Washington, D.C..” Schultz has also taken high-profile positions on several other controversial issues that have little to do with Starbucks’ business. A while ago he issued a public plea asking customers not to bring their guns into Starbucks.  He has also been an outspoken advocate of same-sex marriage, telling shareholders who don’t agree “you can sell your shares of Starbucks.” 

However, there is no oversight that he and his senior team DO make a lot of money for Starbucks shareholders.  Recent financial reporting this year for Q3 2013 showed net revenue increases of 13%, store traffic up 7% globally, consolidated operating income increased 25% and EPS up 28% along with 341 net new store openings.  2014 is going to be even rosier with a forecast of 10-13% revenue growth, an additional 1,400 net new stores and 18-22% increase in earnings per share.  Not too shabby. 

I, for one, believe Schultz and other CEOs like him have it right.  A prevailing perspective that being socially, environmentally and financially responsible, while also being empathic  and compassionate with the employees and community AND making money for shareholders is mutually exclusive.  This makes the issue binary…. which is rubbish.  Schultz, and there are increasing numbers like him, are proving that you can do both well.  This is not just great leadership for leadership sake, but simply a good sustainable value creation business practice.  The CEOs role is to create sustainable value and that is far more than just financial value.  It is about value for the whole eco-system of customers, suppliers, employees, partners and stakeholders the company interacts with.

For any CEOs or senior executives reading this I would ask that you reflect on one question “Will you leave the world of multiple stakeholders you lead (however you define your larger eco-system) a better more sustainable place than when you found it?”  After all, as someone said, if you don’t stand for something, you will fall for anything.

Put that in your grande-skinny -extra-wet cappuccino and drink it!

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