#Fail, says one.
#RaceTogether: 3 Reasons Behind Starbucks’ Failure, goes another.
Backlash is loud and largely repetitive around Starbucks’ Race Together initiative, which launched to encourage a national dialog around race relations in the United States.
Starbucks and its leader, chairman and CEO Howard Schultz, are even accused of using racial tensions to boost the company’s bottom line following ongoing national protests over police-related killings of black males.
Each of these views place an oversimplified, short-term lens on how truly socially conscious brands and business leaders look at the world and the efforts they undertake to affect social policy in their communities.
There are those who say social policy is no place for business to engage, that corporate social responsibility is just a waste of money that adds nothing to the company’s duty to serve its shareholders.
But I maintain, and there are decades of research and examples to back me up, that companies must be actionably involved in the communities they seek to serve, particularly in a socially connected world. Such involvement is necessary if a company seeks to be a leader in an industry or sector and operate in the best interests of both its stakeholders and shareholders.
A 2009 report by McKinsey & Company put it this way in a report on valuing social responsibility programs of companies: “Companies need broad legitimacy in the societies where they operate if they are to sustain their long-term ability to create shareholder value. Equally important, society depends upon big business to provide critical economic and other benefits. This relationship forms the basis of an overarching contract between business and society.”
The report concluded, “As the social contract has come under more and more pressure, companies are realizing that they just can’t ignore environmental, social and governance issues.”
As both a business journalist and corporate communicator, I have observed plenty of efforts by companies to boost their image or react to a crisis by creating a corporate social responsibility (CSR) campaign. Too often when companies issue-grab for short-term benefit, there is no there, there.
This is not the case with Starbucks and Schultz. While I question some of Race Together’s tactical execution, as a communications professional and citizen I cannot question the motives or sincerity behind what Starbucks as a brand and Schultz as a societal leader seeks to achieve through the effort. Starbucks and Schultz have a strong record of social policy engagement around issues driven by what should be viewed as “enlightened self-interest,” or “doing well by doing good.”
J&J, Its CEO and Minimum Wage
My thinking on this was shaped some years ago, in part, by reading the biography of Robert Wood Johnson II, one of the first great businessmen to grasp the importance of corporate social responsibility.
Johnson, known by many as General Johnson for distinguished military service during World War II, served as the president and/or chairman of Band-Aid brand maker Johnson & Johnson from 1932-1963.
“He was a dynamic, restless, unconventional businessman with a sense of humor as well as a sense of duty,” Johnson’s obituary in The New York Times read. “Mr. Johnson was a vigorous advocate of decentralizing business operations, raising minimum wages, improving manufacturing plants and increasing the social responsibilities of business.”
In 1932, in the midst of the Great Depression, Johnson, a registered Republican, wrote Franklin Roosevelt a long letter outlining a four-point proposal for economic recovery as the Democrat prepared to assume the U.S. presidency following a landslide election. Johnson called for wages to be increased so that employees could purchase more and work hours to be decreased so that more people could be employed.
“We should have a working day short enough to re-employ those who are unable to find work,” Johnson wrote. “We should have minimum wages high enough for the people to buy what they produce.”
To powerful interests of the day, such as Johnson’s fellow business leaders struggling to keep their businesses afloat, shortening workdays, raising wages, and creating a minimum wage were not popular ideas. Johnson soldiered on.
Johnson’s frustration at the unpopularity of his ideas about corporate social responsibility and how to help the nation overcome the Depression led him to write a pamphlet in 1935 targeted at his fellow business leaders called “Try Reality”. This pamphlet provided the seeds of an idea that became the cornerstone of Johnson & Johnson’s Credo penned eight years later. He wrote:
“Out of the suffering of the past few years has been born a public knowledge and conviction that industry only has the right to succeed where it performs a real economic service and is a true social asset.
“Such permanent success is possible only through the application of an industrial philosophy of enlightened self-interest. It is to the enlightened self-interest of modern industry to realize that its service to its customer comes first, its service to its employee and management second and its service to stockholders last. It is to the enlightened self-interest of industry to accept and fulfill its share of social responsibility.”
Following years of political debate, votes and legal challenges, a limited national minimum wage was finally established in the United States at $0.25 per hour in 1938 ($4.15 in 2015 dollars), six years after Johnson’s initial letter to President-elect Roosevelt.
A Shared Sense of Community Building
As head of Johnson & Johnson, General Johnson worked with the long soup lines of the Great Depression and impending world war as his backdrop. As the leader of Starbucks, Schultz is charging forward with unrest in the streets of an America wounded by economic and racial strife.
Like Johnson who fought for social policy to strengthen American communities by seeking to improve their economic well-being, Schultz and the company he runs have similarly taken on a leadership role. This time, the fight is to help make the “American Dream” possible in the neighborhoods and communities it relies upon to support and grow its business.
Neither Schultz nor Starbucks are one-trick opportunists.
“We recognize the relationship between the success of our company and the strength and vitality of the communities where we operate. Investing in our communities is not only the right thing to do; it also creates better places for all of us,” Schultz noted more than a decade ago in the company’s 2001 social responsibility report. “In the end, there is no conflict between doing good and doing well. At Starbucks, we believe the two go together.”
The company has backed those words with actions ever since.
Both Schultz and the company have a strong record of social policy engagement around issues driven by what should be viewed as “enlightened self-interest.” Starbucks was an early champion of part-time employees getting company-sponsored health care and has led the charge since for benefits for same-sex partners of employees, stock options and college education financial support to its line workers (baristas). Schultz even called for a national political campaign contribution boycott until both political parties stopped the gridlock in Washington and supported a movement to employ military veterans.
As far back as 1998, Starbucks and basketball great Earvin “Magic” Johnson’s company, Johnson Development Corporation, formed a joint venture partnership called Urban Coffee Opportunities, LLC (UCO) to place Starbucks Coffee locations in underserved urban communities throughout the U.S. The company maintains the joint venture helped Starbucks reach more customers, provided employment to local residents and helped to strengthen the economies of the communities in which the UCO stores operate.
Starbucks took full control of UCO in 2010 after more than 100 locations were opened. Now the company’s Race Together initiative promises to build upon a foundation laid by its UCO work. In addition to encouraging discussion around race relations in America, the company and Schultz have promised that Starbucks it will hire 10,000 at-risk youths who are neither in school nor in the work force and open stores in disadvantaged neighborhoods, including in Ferguson, Missouri where racial tensions exploded last year. Now, Baltimore will likely not be far behind.
Words – and Brands – In Action
This is “enlightened self-interest” for a brand in action, and good PR and CSR programing to boot. Such action over time has ingrained more than 12,000 stores in the U.S. communities where Starbucks operates, provided a “real economic service” and allowed the company to fulfill its goals of making a profit and being a “social asset.”
Over time, all of Starbucks’ “enlightened self-interest” efforts – including its Race Together initiative – will benefit the brand, perception and reputation of Starbucks with its customers, employees and the majority of the communities it which it operates. It may also do some real good too.
The past teaches us that Schultz and Starbucks will not realize social policy success in all they seek to impact. Nor will it happen quickly. Schultz appears to understand this and, like Johnson, seems unready to give up in the face of adversity.
“The heart of Race Together has always been about humanity: the promise of the American Dream should be available to every person in this country, not just a select few,” Schultz wrote in a letter to his employees after criticism of the initiative escalated. “We leaned in because we believed that starting this dialogue is what matters most. We are learning a lot. And will always aim high in our efforts to make a difference on the issues that matter most. An issue as tough as racial and ethnic inequality requires risk-taking and tough-minded action. And let me reassure you that our conviction and commitment to the notion of equality and opportunity for all has never been stronger.”