Starbucks US President Jim Alling '83 Talks of Company's Challenges and Recalls DePauw Days in Ubben Lecture
March 13, 2007
March 13, 2007, Greencastle, Ind. - [Download Video: "Finding Fulfillment" - 812kb] "What I wish for all of you students -- what I really wish for you -- is that you find work that makes you feel good, that fills you up," Starbucks U.S. President Jim Alling said tonight. Delivering the Timothy and Sharon Ubben Lecture at DePauw, Alling, a 1983 graduate of DePauw, told a crowd that nearly filled Meharry Hall, "Most jobs in the world today are too small for people's spirits. Be in something that fills you up. Be in something that plays to your strengths. Be in something at the end of the day that inspires you."
Alling's speech, "Growing Big, Staying Small at Starbucks," described the difficulty of staying true to a company's core principles as the business grows at a rapid rate. Starbucks has gone from one store in Seattle to more than 13,000 locations in 40 countries around the globe. A recently leaked internal memo from chairman Howard Schultz expressed concerns about -- in the document's words -- "the watering down of the Starbucks experience, and what some might call the commoditization of our brand."
An economics and Spanish major at DePauw, Alling talked of how strangers will often express to him their concern that Starbucks has become "too big" and "on every corner," but that the same people will tell him that "my store" is different, often citing the people who work there.
[Download Audio: "The Core Value" - 131kb] "I will tell you at the core of Starbucks -- and every company should know what's at their core -- there are two things: it's coffee and it's people," Alling stated. "And if you really pressed me to say you've gotta pick one, I will tell you we are in the people business, serving coffee."
He told the audience of 380 composed largely of students, [Download Audio: "My Store" - 176kb] "When Starbucks is small, we are 'my store,' we are a local coffeehouse that just happens to have a big name endorsing it. When we've gotten too big and we've lost that 'my store' community feeling, we become this big, faceless corporate chain. So the challenge is, how do you stay small? How do you stay true to your roots?"
The original employees of Starbucks, Alling told his audience, took personal ownership in the success of the business. Seeing the fledgling firm succeed was a source of pride to them, and they had positive outlooks. [Download Audio: "Optimism" - 200kb] "They were very optimistic about their business, but I will tell you what they were most optimistic about was how they treated people. They had this sense that if they took better care of the people they work with -- their partners -- than anyone else in the industry thought was wise that, in return, those partners, those people that were working for them, would want to excel beyond any job description."
Starbucks offers even its part-time employees comprehensive health care coverage and stock options. In fact, the company spends more on insurance each year than it does on coffee. Alling also noted, [Download Audio: "Investing in People" - 184kb] "Starbucks spends more on training the people that work in our stores than we do on advertising. Our brand success was built on word of mouth; it was built on people having a good experience that made them want to come back the next day. It was a good enough experience that maybe they wanted to recommend it to a friend or family member. And as they did that, they did it at 'my store.'"
Alling shared several stories to illustrate his point, and talked of an executive retreat where it came to his attention that the aprons worn by Starbucks baristas originally had pockets sewn in the front. As years went by, the pockets were eliminated because -- at some level -- there was a fear that they made it easier for employees to steal from their cash drawer. That, he believes, represented a betrayal of one of the company's key values.
[Download Audio: "An Unfortunate Message" - 84kb] "This sends a message that we don't trust anyone," Alling asserted. "This sends a message that we think we're better off managing to the crooks than we are believing in people."
When partners at Starbucks outlets heard from Alling that the pockets were returning, what excited the workers was [Download Audio: "Managing to the Good" - 181kb] "that we believed in them," the president says. "That we were not going to manage to the lowest common denominator. That we trusted them. That we trusted that the good that the people we can believe in will more than outweigh the thieves that are in our midst, and there will always be thieves in our midst. But you manage to the good."
Last year, Alling says, Starbucks contributed more than 383,000 hours to volunteer programs in communities across the United States, "and almost half of those hours were donated by customers who wanted to join in with us," proof that the firm creates a sense of loyalty and belonging among its clients that helps more than its bottom line. The company also matched $1.5 in grants that supported those service efforts.
Alling, who also holds a master's degree in international management from the American Graduate School of International Management, joined Starbucks in September 1997 after a lengthy career with Nestlé USA. He talked of how his company has adopted environmentally-friendly policies, including using cups that utilize some recycled paper, switching to more efficient light bulbs and composting.
[Download Audio: "Doing Good and Well" - 194kb] "The smartest companies start recognizing they want to be a good neighbor, they want to be good to their environment, they want to be good to their communities," the executive says. "But they also recognize (that) by doing good, you also enable yourself to do well financially, and that's what we've found. But it's a journey -- I don't want to pretend that we're there, we've got a ways to go. And I think there's a lot of our fellow companies in the Fortune 500 and beyond who have the same challenge."
In the end, Alling says success in business boils down to listening in, believing in and taking good care of people. [Download Audio: "Creating 'That Sense'" - 198kb] "When we do it right, when we're really small, when it's 'my store,' not this big chain of stores, we create those little moments. We create a sense of gathering, a sense of community, a place where you see your friends. You have someone who remembers your name. For a lot of the people we see, we are the first person they talk to in the morning and they're not all happy -- they just want it, and they want to get going. But when we do it right, we do create that sense."
Jim Alling's day at his alma mater included an hour-long afternoon question-and-answer session with students in the Management Fellows program. He was also interviewed by Inside Indiana Business for a segment that will air on the statewide television program this weekend. And following his Ubben Lecture, Alling and Starbucks treated DePauw to a coffee tasting in the atrium of the Julian Science and Mathematics Center. All guests also received a "goodie bag" of Starbucks products and had an opportunity to visit with the guest of honor.
Returning to DePauw was like being "transported back in time," Alling said in a speech that included much humor and even a brief Elvis Presley impersonation. He talked of feeling "18 to 22 again" as he walked through the campus and past his Sigma Alpha Epsilon fraternity house, and watched students enjoying the 80 degree March weather.
[Download Video: "DePauw's Opportunities" - 1912kb]"It just struck me as I was on the campus that there was one message I really wanted to share with the students," he said as he casually strolled the stage in an entirely extemperaneous speech. "And that is to really take advantage of everything that DePauw has to offer. You do have something that maybe you recognize (and) maybe you don't, but there is a special feel -- there is a community feel -- on this campus. And it's different -- trust me -- it is different than other places."
Alling continued, "When I say take advantage of all that's here, I'm talking about all the educational opportunities. I'm not talking about just the stuff you learn in the classroom." While stating, "You've got great faculty, great curriculum," the Starbucks president says there's much to learn from other people and the many opportunities the campus offers.
Some of the lessons Alling views as most memorable [Download Video: "More on DePauw" - 2322kb]"were things in my fraternity house, when I rode Little 5, when I met new people in my classrooms. You are surrounded by very interesting, very educated people with different backgrounds from you. They come from different places. And don't miss this opportunity." He continued, "What you will learn is considered emotional intelligence, and EQ ranks up there in importance with IQ as far as how successful you'll be. DePauw will help you open doors, but what you do once you're inside those doors has a lot to do with what you did as you experienced DePauw."
Of his four years on this campus, Alling added, "What I did experience, I guarantee you, set me up better for success in my future."
The Ubben Lecture Series' recent visitors have included For One More Day author Mitch Albom and biologist E.O. Wilson in Fall 2006. Other past Ubben Lecturers have been: Mikhail Gorbachev, Peyton Manning, Spike Lee, Shimon Peres, Benazir Bhutto, General Colin Powell, Mike Krzyzewski, Jesse Jackson, L. Paul Bremer, ice cream entrepreneurs Ben & Jerry, Rev. Jesse Jackson, General Wesley Clark, Hotel Rwanda's Paul Rusesabagina, Ross Perot, and Harry Belafonte. To view a complete list of Ubben Lecturers, which includes links to video clips and news stories, click here.Back