November 28, 2012
Howard Schultz on the “drift towards mediocrity” in the United States

Starbucks’ CEO was a star turn at last night’s event in celebration of Harvard Business Review's 90th anniversary. Schultz has been outspoken about the management of the United States over the past eighteen months, and he didn't hold back in conversation with HBS professor, Nancy Koehn. Acknowledging that it is “somewhat unorthodox and unprecedented” for the CEO of a public company to speak out about government, he was nonetheless unapologetic, training his sights on the current state of the United States and, in particular, the looming fiscal cliff. How is it possible to have got within 34 days of this impending catastrophe? he asked. In whose interest are the politicians working? And, he warned, while not dealing with the fiscal cliff would be catastrophic, the Bandaid-based solution that politicians will likely paper over the crisis is “equally as irresponsible.”

For us to face $16 trillion in debt, with 14 million unemployed, the budget deficit, municipalities declaring bankruptcy… We’re all dressed up here in New York City, we’re getting ready for the holiday season. But America is not the America our parents fought for and promised us. The issue as business leaders, as citizens, is to understand we cannot embrace the status quo. 

"I didn’t come here to depress anybody," Schultz added, to rueful laughs from an audience which, it should be said, comprised a classic HBR crowd of senior corporate leaders and management thinkers. "I came to speak the truth." And the truth as Schultz sees it is that national leaders have lost the trust of the people. "Leadership are not putting their feet in the shoes of the American people. They’re putting their feet in the shoes of their own party and extremists. That’s a disaster."

Given the goings-on that Americans (and those who live here) have recently endured in the endless run-up to the Presidential election, it’s hard to disagree. And it turns out it was the election itself that spurred Schultz into voicing his concerns, when he discovered the many billions of dollars set to be spent on campaigning by the candidates and their parties. 

I was stunned by that. And once you’re exposed to something so inconsistent with what you believe, the question is, ‘are you a bystander? Do you walk away?’

For Schultz, walking away was not an option, and in 2011 he issued a Starbucks-wide email, Leading Through Uncertain Times, and called on his C-suite friends to boycott campaign donations “till people play nice and move the country forward for benefit of people, not party.” Back at the HBR event, he added:

Everyone in this room, Republican, Democrat, Independent, will agree with this statement: we all know that something is wrong. We absolutely know it. Yet we’re sitting here as if everything is going around like a merry-go-round, like everything’s fine.

"Do you feel alone in this?" asked Koehn of Schultz’s stand against the establishment. Delightfully, Starbucks’s founder was blunt in reply. "Everyone I talked to had a sense of understanding and sensitivity about the issue but they were afraid," he said, as the audience shifted uncomfortably in their seats. "It’s not that I’m alone. I think people do not have the courage to step out right now."

Schultz wasn’t all doom and gloom. Asked to nominate a leader who motivates him, he recommended two speeches by RFK: the "Ripple of Hope" speech given in South Africa in 1966, and the impromptu announcement of the assassination of Martin Luther King in 1968 (embedded below.) Why these particularly?

Those two speeches define leadership, courage, conviction, what it means to believe in something, what we’re lacking as society around the world… We need to find heroes once again. I don’t think we fully realize how high the stakes are, how we are allowing the greatest nation in the history of the world to drift towards mediocrity. I don’t understand why we are here. We have such greatness, possibilities, and optimism and we’re allowing this to take place. 

It was a sobering conclusion, but inspiring to see a leader take a stand on what we all know. President Obama, you should call Mr Schultz into your meetings with business leaders.