Howard Schultz, CEO of Seattle-based coffeehouse chain Starbucks, clearly got more than what he bargained for when he launched on March 16 a campaign called “Race Together” to stimulate conversations on race issues. The plan called for Starbucks baristas to write the words “Race Together” on customers’ cups, but many saw that as an intrusion into their personal space. The outrage was intense on social media, compelling the company’s vice president of public relations to delete his Twitter account. A week later last Sunday, Schultz ended the campaign, which he said was the plan all along.
Wharton marketing professor Americus Reed identified the fundamental problem with the Starbucks campaign. “It is intention versus execution here,” he said. “From a marketing standpoint, it is always going to be a challenge because consumers are skeptical and they’ll always think there is an ulterior motive here: You’re trying to sell me more coffee [or] you’re trying to create a halo around the brand. If you can get past that in setting up a sustainable, credible track record with authenticity, you have a chance.”
“Schultz as activist CEO wants to have an impact on society,” added Kenneth L. Shropshire, Wharton professor of legal studies and business ethics and director of the Wharton Sports Business Initiative. “He steps in at a point where for years, we’ve heard presidents and others talk about the need to have a conversation about race. [I have] great applause for the step that was taken; let’s see if we can do it better.”
Reed and Shropshire discussed the takeaways from the Starbucks campaign for businesses at large on the Knowledge at Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)
“From a marketing standpoint, it is always going to be a challenge because consumers are skeptical and they’ll always think there is an ulterior motive here.” –Americus Reed
Both Reed and Shropshire felt that Schultz took on a challenging task with the “Race Together” campaign. “Whether or not he took the right steps to do what he wanted to do, it’s such a difficult issue,” said Shropshire. “I have a hard time critiquing him for stepping out in a way so many people won’t, and so many institutions won’t.” Added Reed: “It’s a very difficult challenge to start that conversation in a way that obviously came off as gimmicky, quite honestly.”
Authenticity, Credibility and Sustainability
To get it right with such programs, Reed said companies must first be clear about their purpose. “What is your end goal? Is [it to] start a conversation?” he asked. “Or are you saying that you are trying to move some set of relationships culturally forward?”
According to Reed, the key word in such activist initiatives is authenticity. “One of the things you want to do is to create a credible track record that you are involved in these issues over time,” he said. “That paves the way for you to at least begin to start to have that conversation when you open up that door.”
Shropshire said another important aspect is for companies to invest in a “sustained effort” around such programs. “You can stumble a lot if you’re going to be at it for the long haul,” he said. “That’s the piece I’m really watching — [is Starbucks] going to stay with this, as [Schultz] suggests? You pulled away quickly on Round One. So let’s see. Starbucks is the kind of enterprise that can really have an impact in the long run.”
The two Wharton experts identified other missteps in how Starbucks went about the “Race Together” campaign. Asking young store attendants to trigger conversations on complex issues like race may not have been a good idea, as Shropshire saw it. “You can figure out how to sell a 50-cent cup of coffee for $5,” he said. However, he was not as optimistic about “the idea of solving the race problem by having 20-somethings that may not understand the issue” stimulate conversations on it.
“[I have] great applause for the step that was taken; let’s see if we can do it better.” –Kenneth L. Shropshire
Reed agreed, and felt Starbucks was “equipping people for failure” by expecting young baristas to start talking about race issues. “Deeper conversations can come out when the context is right,” he said. “And that context is not going to be in the morning rush when someone’s handing over a cup of coffee that says ‘Race Together.’”
Reed also said companies must be careful when they engage in word-of-mouth campaigns. “You’ve got to be pretty aware of how that conversation is going, how it’s going to flow and how you’re going to be able to manage it,” he said. “That was a bit of an oversight [on the part of Starbucks].”
Starting with a Deficit
When companies launch programs supposedly for the social good, “the challenge is that … consumers already believe that you are up to something,” said Reed, citing research data. “You are already starting at a deficit. They don’t believe what your message is — they think there is an ulterior motive.” Reed said companies have to work hard to get around that obstacle. It would be wrong for companies to sneak in a business motive along with a social message, he warned. “You want a conversation, not a tag line.
“Here you have to have a credible track record, to [Shropshire’s] point about sustainability [and the other] efforts that go into this,” Reed continued. “That gives you a bank account to work with that allows for these little mistakes — these little hiccups in the road — to continue to try to move this conversation forward.”
Test marketing such campaigns “in a couple of little, under-the-radar markets to see what happens” is also important, Reed said. The resulting feedback would help company managements to refine their message and the approach before a national rollout, he added. “The overall goal would certainly be just to get a temperature.” He acknowledged that companies would get varying results in different places depending upon the racial profile of the local population.
“You can stumble a lot if you’re going to be at it for the long haul.” –Kenneth L. Shropshire
Where should Starbucks go next with its campaign? “Don’t let it die,” advised Shropshire. ”Now you’ve got our attention. It is a tremendous opportunity. Even if you say you’ve got to retool and re-think this, but are not going to give up, that would be powerful.”
The Starbucks episode could persuade “other institutions to be inspired to have these conversations,” he noted. “This whole dream about national conversations on race [has] been brought up so many different times. How often is race discussed if it is not a news story?”
Reed, too, felt Schultz doesn’t need to completely abandon the campaign. “Pulling back now and apologizing is a huge error,” he said. “But to say, ‘Hey, let’s retool this thing, let’s pivot a little bit, let’s keep this going because it is important to keep striving for’ is a smart signal.”
As it happens, Schultz is not giving up. The “Race Together” campaign was in line with his pledge at a company open forum last December “to stimulate conversation, empathy and compassion toward one another,” he said in a letter last Sunday to Starbucks “partners” (as he prefers to call his employees).
“But this initiative is far from over,” Schultz continued. He talked of plans to hire 10,000 “opportunity youth” over the next three years, hold more open forums and dialogues with community leaders, and forge “new partnerships to foster dialogue and empathy and help bridge the racial and ethnic divides within our society that have existed for so many years.”