STARBUCKS GOT IT WRONG. BUT THEY’LL BE REMEMBERED FOR WHAT THEY DID RIGHT.

Starbucks Got It Wrong. But They'll Be Remembered For What They Did Right by Mike Sullivan, president of The Loomis Agency, the country's leading challenger brand advertising agency and the voice of the underdog

If you work in advertising, or marketing, or any other kind of business, you’re going to get it wrong sooner or later. We all do. If you’re lucky, nobody notices. But sometimes, the gaffe happens on a national, or even international stage. A month ago, that happened to Starbucks. They got it wrong. Really wrong. But then just as quickly, they got it right. In a matter of just a few days, Starbucks reminded all of us that when it comes to brand loyalty, how you react to unfortunate action can be far more influential than the action itself and that, in the court of public opinion, the road to redemption is paved with sincerity, vulnerability, and personal connection.

WHEN IT COMES TO CORPORATE DISASTER, NEWTON’S LAW DOES NOT APPLY.

In physics, Newton’s third law states that “For every action, there is an equal and opposite reaction.” In the world of business – especially in the case of corporate disaster – that is not always the case.

For anyone who missed the story, in April, two African American men were sitting in a Philadelphia Starbucks, waiting for a meeting with a business associate. Neither of the men had ordered anything, and when one of them asked to use the restroom, the manager declined the man’s request and then called the Philadelphia police to come remove the men from the store. Minutes later, policemen were leading Rashon Nelson and Donte Robinson out of the Starbucks in handcuffs, arresting the two men for trespassing.

A few hours later, the men were released without charge. But, for Starbucks, the damage was done. A customer in the store at the time of the arrest recorded the entire encounter on her phone and by the time the sun rose the next day, the video was everywhere. Every morning show from Today to Good Morning America to Morning Joe had the story and an interview with the woman who shot the video. An angry crowd gathered outside the store. Racial protests were planned for Starbucks in major cities around the country and it seemed as though Starbucks could be in real trouble.

But then something extraordinary happened that diffused the entire situation. Starbucks and its leaders did the right thing. Again. And again. And again.

The corporation fired the manager whose values and judgment were so grossly out of step with what Starbucks says they stand for. At the same time, the corporation apologized to Nelson and Robinson — and not in some impersonal, corporate press release. Starbucks apologized in person. Twice. The day after the incident, Starbucks regional VP Camille Hymes flew to Philadelphia and apologized to the two men face-to-face. Days later, Starbucks CEO Kevin Johnson flew in and did the same thing.

Prior to his meeting with Nelson and Robinson, Johnson wrote a letter to Starbucks stakeholders. This is what he said:

Dear Starbucks Partners and Customers:

By now, you may be aware of a disheartening situation in one of our Philadelphia-area stores this past Thursday, that led to a reprehensible outcome.

I’m writing this evening to convey three things:

First, to once again express our deepest apologies to the two men who were arrested with a goal of doing whatever we can to make things right. Second, to let you know of our plans to investigate the pertinent facts and make any necessary changes to our practices that would help prevent such an occurrence from ever happening again. And third, to reassure you that Starbucks stands firmly against discrimination, or racial profiling.

In the coming days, I will be joining our regional vice president, Camille Hymes – who is on the ground in Philadelphia – to speak with partners, customers and community leaders as well as law enforcement. Most importantly, I hope to meet personally with the two men who were arrested to offer a face-to-face apology.

We have immediately begun a thorough investigation of our practices. In addition to our own review, we will work with outside experts and community leaders to understand and adopt best practices. The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome – the basis for the call to the Philadelphia police department was wrong. Our store manager never intended for these men to be arrested and this should never have escalated as it did.

We also will further train our partners to better know when police assistance is warranted. Additionally, we will host a company-wide meeting next week to share our learnings, discuss some immediate next steps and underscore our long-standing commitment to treating one another with respect and dignity. I know our store managers and partners work hard to exceed our customers’ expectations every day – which makes this very poor reflection on our company all the more painful.

Finally, to our partners who proudly wear the green apron and to customers who come to us for a sense of community every day: You can and should expect more from us. We will learn from this and be better.

Respectfully,

Kevin Johnson, CEO

Kevin Johnson could have easily attributed the entire situation to an inexperienced manager making a bad decision and nobody would have thought twice. But he didn’t. He didn’t mention the manager’s name once in his letter, nor assign her any real blame. HE took the bullet. HIS training of her was inferior. It was HIS fault and he would be the one to make it right.

That’s what real leadership looks like.

As promised in the letter, Johnson did meet with the two men. Starbucks did make things right with an undisclosed settlement and as for his note about a company-wide meeting, Starbucks is closing more than 8,000 stores on May 29 for anti-bias training, a move that market experts say will cost the company $12 million in revenue. Could they achieve the same thing with a mandatory study employees had to read and sign? Perhaps. But the way Starbucks is handling this proclaims to the world, “we take our values and culture seriously and we will live into them, no matter the cost.” Starbucks isn’t in short term damage control. They are playing the long game and committing themselves to being the company they know they can and should be.

Consider how different that looks from the way United Airlines CEO Oscar Munoz handled the David Dao incident last year. On April 9, 2017, United Airlines overbooked a flight from Chicago to Louisville as many airlines do. But when they couldn’t entice passengers to give up their seats to make room for four United employees who needed to get to Louisville, the airline chose instead to force random passengers to give up their seats. One of those passengers was pulmonologist David Dao who was flying home to treat his patients. When Dao refused to get off the plane, security physically dragged him out of the plane, screaming and bloodied. When video footage of the incident went viral, United CEO Oscar Munoz blamed Dao saying he was being “disruptive and belligerent.” It was only after national outrage that Munoz offered a real apology.

THE RIGHT THING IS THE RIGHT THING, REGARDLESS OF THE SCALE.

Three months from now, most of us will have forgotten about the incident at Starbucks and for all the right reasons. But before that happens, as leaders, we would be remiss not using it as a platform to discuss the power of doing the right thing with the people empowered to represent our brands.

When companies like Starbucks do the right thing on a huge scale and good things happen, it seems like such an obvious decision. And for them, it was. Now think about your own company. Would you be as quick to make the same decisions with your own brand, even if the stakes were vastly smaller and less expensive? Would the people you work for? Or the people you work with?

In 1982, seven people in the Chicago area died when someone laced bottles of Tylenol with potassium cyanide. The city, and the country, immediately felt the panic. But miraculously, it only took investigators a matter of days to determine the connection between the victims and to be relatively certain the crime was restricted to the Chicago area. Johnson & Johnson, the maker of Tylenol, said that wasn’t good enough and VOLUNTARILY recalled 31 million bottles of Tylenol valued at more than $100 million. They halted advertising, warned hospitals, and paid to tell people NOT to take their products.

At the time of the scare, Johnson & Johnson’s market share collapsed from 35 percent to eight percent. Some analysts argued no brand could survive it. But thanks to their prompt and aggressive response to the crisis, Johnson & Johnson bounced back within a year. It invested in tamper-resistant packaging that revolutionized drug packaging and within just a few years, Tylenol had the highest market share for over-the-counter painkillers in the U.S.

Johnson & Johnson’s response to the Tylenol crisis remains the Gold Standard for how to handle a corporate disaster. Why? Because even when it was hard and extremely costly, they put people over profit and doing the right thing over damage control.

As one of the country’s leading challenger brand agencies, we’ve had the privilege to work with dozens of companies both large and small. Many for more than a decade. Along the way, we’ve seen all kinds of corporate structures, myriad value systems, and every kind of leader there is. What I can tell you from that experience is that choosing to do the right thing isn’t a decision made in the moment. It’s a commitment that’s interwoven into every corner of your culture, every hire you make, and everything that you say. For the great companies, doing the right thing isn’t a choice. It’s a given.

Want to know more? Let’s go have a Starbucks and talk about it.  

MIKE SULLIVAN is the president at LOOMIS, the country’s leading challenger brand advertising agency. For more about challenger branding, subscribe to our blog BARK! The Voice of the Underdog