LEADING BUSINESSES

LEADING BUSINESSES

Part 1

  1. Why is a systematic understanding of leadership theories and organizations beneficial for aspiring leaders?
  2. What are the two fundamental questions that leaders need to ask themselves?

Two fundamental questions that leaders should be asking themselves are:

  1. What is the level of skills of one’s team members?
  2. What should be the leadership style that should be adopted?
  3. What are the two key aspects of leadership?

The two key aspects of leadership are motivation and delegation.

  1. What is a leadership theory (style)?

A leadership theory can be referred to as a way of facilitating a process of management with the help of mentoring and guidance (Spears and Lawrence, 2016).

  1. Name two very different leadership styles that are appropriate for the current volatile, uncertain, complex and ambiguous (VUCA) business environment.

Two appropriate leadership styles would be: Democratic leadership and servant leadership.

  1. Why do aspiring leaders need an in-depth understanding of a range of leadership styles?

Aspiring leaders need to understand different kinds of leadership as they should be flexible in their way of leading depending on their employees. As commented by Yahaya and Ebrahim (2016), knowledge of leadership is also needed as the global business scenario is constantly changing.

  1. Why is an ability to evaluate the contribution that individuals, leaders and stakeholders make in creating and executing the mission and vision of an organization important for aspiring leaders?
  2. What is an organizational mission and vision?

An organization is required to have a specific mission and vision. A mission for an organization is required as this provides the organization with specific short term goals which helps it to develop plans (Jones, 2019). A vision, on the other hand refers to the long term goals of an organization.

  1. What contribution do individuals typically make in executing the mission and vision?

A mission and a vision of an organization are executed by all levels of employees. It needs be understood that the employees should provide the organization with completed responsibilities to achieve its mission and vision.

  1. What contribution do leaders typically make in executing the mission and vision?

The leaders align and motivate the employees to complete their responsibilities.

  1. What contribution do stakeholders typically make in executing the mission and vision?

Stakeholders contribute to the profitability of the organization which helps achieving its mission and vision.

  1. Why do aspiring leaders need to be able to evaluate the contributions of the above?

The leaders would be able to understand the extent of each contribution and how to increase that extent.

  1. Why is an ability to apply appropriate leadership strategies (including change management) in order to maximize organizational potential in a variety of different business contexts important for aspiring leaders?
  2. What is a leadership strategy?

A leadership strategy is to develop a plan following which a leader would complete their responsibilities. As commented by Yahaya and Ebrahim (2016), a leadership strategy would include both organizational aspects and human resource management.

  1. What is change leadership?

Change leadership is referred to the model of leadership which helps in facilitating change in an organization (Spears and Lawrence, 2016). This change could be taking place in organizational structure or any other vertical of the company.

  1. What is organizational potential?

Organizational potential is referred to as the potential an organization possesses in terms of their human resources.  

  1. What is a business context?

A business context can mean that it is discussed in terms of business negotiations or in the global world of business.

  1. Why do aspiring leaders need to understand a broad range of leadership strategies that can be applied in a variety of different business contexts?

Aspiring leader needs to understand leadership as business contexts differ from one industry to another. Each industry has its own modes of leadership. 

  1. Why is an ability to critically evaluate a range of motivational) theories (employee engagement) within a specific organizational context important for aspiring leaders.
  2. What is a motivation theory?

A motivation theory is considered to be the theory which deals with the process of providing motivation to employees. There are multiple motivation theories which deal with different ways of providing motivation.

  1. What are the two categories of motivational theories?

Two categories of motivation theories are process theories and content theories.

  1. What is the contemporary term for employee motivation?

The contemporary term for employee motivation is human resource management.

  1. What is the ‘appreciative inquiry technique’?

Appreciative inquiry technique is considered to be a change management technique. This technique finds out what is going well for an organization and evaluates why it is going well.

  1. Why do aspiring leaders need to be able to critically evaluate a range of motivational theories within a specific organizational context?

The aspiring leaders should be familiar with multiple motivational theories as they would be applicable in various contexts (Spears and Lawrence, 2016).

  1. How would you define your potential leadership style?

There are four elements in my potential leadership style. My leadership would be democratic leadership. I would also be empathetic towards my employees. I would try to motivate my employees using multiple motivational theories. Moreover, I would instil a sense of collaboration in them.

  1. What are your key strengths?

My key strengths are:

  • Communication skills: I can easily communicate in a multicultural setting.
  • Persuasion skills: I can persuade people for the better or for establishing change.
  • Training skills: I can provide trainings due to my in depth knowledge of the subject.
  • Mentorship: I can provide mentorship beyond training.
  • Agreeability: Due to my personality, I can easily be familiar with people.
  1. What are your key challenges?

My key challenges are:

  • Lack of listening skills: Even though I am a good speaker, I lack in listening skills.
  • Lack of domination: I cannot dominate very easily which is needed for leadership.
  • Lack of networking skills: I am still working on my networking skills.
  • Lack of experience: I do not have relevant industry experience for leading a team.
  • Lack of exposure: I do not have relevant industry exposure for leading a team.
  1. What personal development do you need to undertake in order to develop your leadership ability?

These are my personal development plans which I would undertake.

  • SMART objectives
  • Attending webinars
  • Online courses

Introduction

Kevin Johnson is the current President and the CEO of Starbucks. The company has 330,000 employees all over the world, and over 80% of them approve of Kevin as a CEO and leader. Prior to Starbucks, he worked at Microsoft for 16 years and Junipexteenr Networks for 5 years. He has a Bachelor’s Degree in Business Administration, and is a firm believer in innovation and following his heart.

He joined Starbucks in 2009 and in 2017; he succeeded Howard Schultz as the CEO of the company. Since then, he has been known to employ a disciplined approach in order to fully and efficiently enable the company to be able to achieve its goals and survive the ever-increasing competition in the coffee market.

This report is a critique on Kevin Johnson and his leadership style with respect to Starbucks. The report begins with a short note on the servant leadership style and discusses the merits and demerits of the style. The next part of the report deals with Kevin Johnson himself, analysing his leadership style within the organisation and discussing how stakeholders may react positively and negatively to it.

Then, the report focuses on how Kevin has worked throughout the years to develop his own personal brand, followed by a few suggestions on how Starbucks could better improve its performance from a managerial standpoint. The report is then concluded.

Servant leadership style

As argued by Spears and Lawrence (2016), servant leadership is a form of leadership that argues that leaders are servants of their workers. These leaders aim to get better results for their organization through a more holistic approach by ensuring that everyone benefits from the progress and growth made by the company.

It was formed as a contrast to other leadership styles, which focus primarily on how the manager can further increase his influence by motivating and inspiring his subordinates. As commented by Yahaya and Ebrahim (2016), the servant leadership style states that a good leader functions on a foundation of ethics, empathy, collaboration, and trust.

The primary desire motivating the leader should be to serve others, and not to accumulate more power, wealth, or influence for him. The main principle and reasoning behind this method is that if the leader or manager is sensitive and attentive to the desires and problems faced by his subordinates, then the subordinates will also reciprocate in terms of greater productivity and more efficiency.

Several major multinationals including Starbucks have successfully employed the servant leadership style to their advantage. This is because they have cared and paid attention to what their employee’s desire and what they are looking for. As per the argument of Anderson and Sun (2017), this will give the employees a sense of belonging and increase their sense of team spirit.

Hence, this tends to boost their contribution and dedication towards the work that they do. Starbucks has also used psychological methods like calling all its employees “partners”. They say that this is because all the employees are partners in the success of the organization. This is in direct accordance with Henri Fayol’s principle of Espirit de Corps.

However, it has been suggested in the works of Ricard et al. (2017), several leading business analysts have questioned the applicability of the servant leadership style in the current management context of VUCA. VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity.

This represents the typical workplace climate in the 21st Century. Volatility refers to unstable change that cannot be predicted and cannot be prepared against. Uncertainty refers to an unclear cause and effect relationship between several different variables.

Complexity states that managers do not know what they do not know, compounding the severity of the problem (Yu, 2019). Ambiguity simply states that relationships are unclear and that the management faces several “unknown unknowns”.

In the current VUCA context, the servant leadership style is, in fact, more important and useful than ever before. In a dynamic and unpredictable business environment, workers will always prefer an organization that puts their needs before the organizational needs.

A leader who works for the welfare of the people and who is determined to ensure that all his employees are happy and satisfied can motivate a subordinate to work more than any financial need ever could. This is because of the need for Affiliation in a human being according to Maslow’s Hierarchy of Human Needs and Wants (Rawat et al. 2019).

Therefore, contrary to what most business analysts believe, the VUCA business environment is actually the perfect time to practice the servant leadership style, since it will inevitably result in the formation of a loyal and hardworking workforce for the organization, thus giving it a good competitive edge over its competitors.

Kevin Johnson’s Leadership Style

As per the research of Yaheya and Ebrahim (2016), there are 8 main leadership styles: Democratic, Autocratic, Laissez-Faire, Strategic, Transformational, Transactional, Coach-Style, and Bureaucratic Leaderships. Democratic leadership is a style wherein the leader listens to all of the suggestions by the subordinates and makes the decision accordingly.

Both the manager and the subordinate are involved in the decision-making process. On the contrary, Autocratic leadership is where the leader makes all the decisions on his own without consulting his subordinates. He does not listen to anyone and does not welcome any form of suggestions.

As a contrast to this, a Laissez-Faire leadership is where the subordinates make all the decisions by themselves within a specific set of guidelines that have been set by the leader. Strategic leaders work towards the executive goals of the company whilst ensuring that the work environment is suitable for all the employees (Choi et al. 2017).

Transformational leaders are always pushing their employees beyond their comfort zones. Transactional leaders are, as the name suggests, very transactional in nature and reward their employees exactly for the work that is done by them. Coach-Style leadership focuses on giving every employee an opportunity to improve according to their skills and strengths.

The Bureaucratic Leader abides by company policies like the Gospel, and rejects any suggestions made by employees that are not in line with the existing company policies (Gandolfi and Stone, 2018).

Based on this information, it can be concluded that Kevin Johnson is a strategic leader. Ever since becoming the CEO, he has been aiming to reach the executive goals that have been decided by the Board of Directors and the former CEO Howard Schultz.

It has been said about Johnson that his goals are the same as the goals of Schultz, however he has a very strategic and disciplined plan and method to go about achieving the goal. However, Johnson is also very mindful of the company policies and the current work environment of the organization.

This is the reason he took such a drastic measure when the racism incident happened in a Starbucks outlet. He shut down over 4000 stores all over the country and sent all his partners to implicit racism training.

All this suggests that the image and the public perception of his company matters a lot to Johnson (Asrar-ul-Haq and Kuchinke, 2016).

There are several upsides to Johnson’s leadership style. The first is that his prudent, goal-oriented approach will help Starbucks in maintaining its competitive edge in the ever-increasing coffee market that is continually becoming more and more populated.

However, Johnson is not one to blindly grasp at straws without a fair amount of due diligence. This is evident from the Reserve and Roastery Stores. While Schultz was going to launch 1000 stores directly without any assurance on whether or not the idea would work,

Johnson limited himself to launching only 10-15 in order to see whether or not the returns were feasible. This shows a prudent approach and leadership on the part of Johnson (Gandolfi and Stone, 2017).

However, there are some negative aspects to this form of leadership as well. The main disadvantage is the negative employee reaction to these steps. This is apparent from the negative employee testimonials provided in the case-study.

To finance the expansion plans for Starbucks, Johnson had to let several employees go and reduce the wages of the remaining employees. This resulted in under-staffing in several branches of Starbucks, which has caused a huge amount of employee disappointment.

This is because employees are no longer able to serve customers properly since the volume of orders and customers is not manageable for the number of employees that are present. Several employees have commented that they felt like “robots” while working at Starbucks (Cummings et al. 2018).

Any organization has several stakeholders whose interests and needs it needs to keep in mind during the course of its operations. These include the customers, employees, shareholders, the government, the managers, as well as consumer organizations etc.

Under the current regime of Kevin Johnson, most of the stakeholders are happy. This includes business analysts, shareholders etc. since the growth of the business has been uphill ever since 2017. However, other stakeholders like employees and customers are not happy (Yu, 2019).

Employees claim that they are being overworked and underpaid, whereas customers claim that they are not getting the best service from their stores during peak hours. Several incidents of errors in the drinks and money have occured, further compounding the customer dissatisfaction.

To combat this and increase employee productivity, Starbucks has rolled out an incentive program providing employees with free coffee and educational scholarships, however it is yet to be seen how successful this will be for the future of the company.

Kevin’s Personal Brand

As evidenced by Jones (2019), every strong business leader needs a personal brand by which he is known to the world, and Kevin Johnson is no exception. Ever since his first day at Starbucks, he has been focussing on building his own personal brand and coming out of the shadows of his predecessor Howard Schultz. This has taken several interesting manifestations.

It began with Kevin addressing all meetings with the statement, “I am Kevin not Howard” in order to establish his identity as a separate one from Schultz. His management and leadership style was also unique, since prior to Johnson the servant leadership style was not being followed at Starbucks (Ricard et al. 2017).

Johnson also rethought many of Schultz’s decisions and made changes to them as he saw fit. One of the main examples of this is the reserve and Roastery Stores. Whilst Schultz was all in favor of setting up 1000 stores all over the country, fitted with the latest devices and baristas who could even mix cocktails, Johnson vetoed the idea. Instead he opted for opening only 10-15 Reserve stores and seeing whether they would be a viable avenue for investment.

Another major move made by Johnson that directly contradicts the ideals of Schultz was to shut down all 379 of the Teavana stores across the US due to underperformance. Johnson is now aiming for healthier coffee with less sugar and cream, in order to appeal to the more fitness-minded individuals (Choi et al. 2017).

He has also taken several risky moves, including starting a coffee delivery service. Several analysts have criticised this move, stating that a coffee delivery service obviates the need for a coffee break. However, Johnson has stayed true to his word, and the delivery service has been mildly profitable so far.

Johnson is very careful about avoiding negative publicity, and for this reason, he overcompensates sometimes. When a racially charged incident occured in one of the Starbucks stores, he shut down all the stores across the country and sent all the employees for a training on implicit racism (Choi et al. 2017).

Therefore, over a course of three years, Johnson has built quite a name for himself, and the Kevin Johnson brand is well-recognized all over the world. With his combination of a well-thought out strategy, penchant for risky yet prudent decisions, and a desire to maintain a good public image, Johnson has not only enabled Starbucks to grow despite the competition, but he has also facilitated the transition of Starbucks from a coffee making company to the largest coffee shop chain in the US.

Recommendations

There are several ways in which Johnson can further improve on his current management strategy and maintain the sustainability and competitive advantage in the coming years. Two of them are discussed below:

Increasing Employee Satisfaction and Motivation

According to Kanyurhi and Akonkwa (2016), there is a direct relationship between the motivation levels of the employees and their productivity, and consequently the satisfaction level of the customers of the organization.

Therefore, in order to maintain its current market share and further improve on its customer base, Starbucks needs to focus primarily on improving the level of motivation of employees in the organization. This can be done in several ways, the first and foremost of them being listening to and addressing employee complaints (Ricard et al. 2017).

The main employee complaints at present are that the stores are under-staffed. This leaves the employees with no time to chat with their customers and build up a rapport with the regulars. The employees say that they feel like “robots” while working. This can be solved in several ways.

One would be to increase the number of employees per shift in all the stores where such problems are taking place. This would ease the burden on an individual employee and enable them to be more relaxed while working.

Another option would be to begin some employee recognition program to reward the employee who has the best rating for the whole month (Cummings et al. 2018). The reward can be financial, or simply a certificate or a badge in front of their peers which will definitely give any employee a sense of achievement and motivate all the others to perform at their very best.

Bonuses and increments can be provided, and some perks like free transportation can be given to the employees to make up for the low wages.

Boosting Sales through the Website and App

In the modern age of technology, the best way for any business to promote its sales is to increase the awareness about its mobile app and enable online ordering. This can be done by providing discounts and coupons as well as freebies when someone orders online using the mobile app.

This would not only reduce the workload for the employees, but also increase the convenience for the customers since they could order and drink the coffee without even having to step out of the comfort of their homes.

Conclusion

In summation, Kevin Johnson has been a very effective leader for Starbucks throughout the last 3 years. Under him, sales have improved, targets are being met, and Starbucks is in a very good position to maintain and expand its market share. This has been possible due to the servant leadership style employed by Johnson at Starbucks. By offering perks as well as monetary benefits in terms of scholarships and counselling, Starbucks has managed to build for itself a loyal and motivated workforce.

Johnson is a follower of the Strategic leadership model, and he believes in maintaining the present while also preparing for the future. He now plans to appeal to the fitness-conscious members of the society by reducing the sugar and cream content in his coffees.

This, in addition to the home delivery service that he has started, is expected to make Starbucks a household name in the USA. By all of these steps, Johnson has managed to carve himself a good and reputable brand name, and subsequently Starbucks is among the top admired organizations in the world.

However, there are still a lot of challenges that need to be overcome. These include employee dissatisfaction with the recent lay-offs and the underutilization of the mobile app as a means of ordering coffees. If these are dealt with, then Starbucks can manage to maintain its growth as the largest coffee chain in the US.

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