Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

Starbucks

Corporation

Men Arrested At Philadelphia Starbucks Speak

Out; Police Commissioner Apologizes
April 19, 20185:01 PM ET
AMY HELD

Rashon Nelson (left) and Donte Robinson say they

hope their arrest at a Philadelphia Starbucks one week
ago helps elicit change and doesn't happen to anyone
else. A video of their arrest, viewed 11 million times,
has sparked outrage and protest.
Jacqueline Larma/AP

What began as an opportunity to talk real

estate at a Philadelphia coffee shop and
ended in the arrest of two black men has
launched a week of outraged protest, accusations of racial discrimination and vows from
Starbucks to do better. And now those men are speaking out for the first time about what it has
all meant to them.

Donte Robinson and Rashon Nelson — the 23-year-olds at the center of it all — say they just
hope the incident will lead to change.

Also Thursday, the Philadelphia police commissioner changed course, joining Starbucks in
taking at least partial responsibility for what happened.

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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

Richard Ross struck a conciliatory note at a news conference, saying, "I fully acknowledge that I
played a significant role in making [the incident] worse."

Last weekend, Ross had said in a video statement that "these officers did absolutely nothing
wrong" and that they were legally obligated to respond to Starbucks' report that the men were
trespassing. But on Thursday, he said, "I
should have said the officers acted within the
scope of the law, and not that they didn't do
anything wrong."
When he saw police entering the Starbucks
last Thursday, Robinson told ABC's Good
Morning America, it did not register that he
and his companion might be the ones in
trouble.

"They can't be here for us," he said he was

thinking as he and Nelson awaited a third
man for a scheduled meeting.

Nelson said that he had asked to use the

restroom and that an employee informed him
it was for paying customers only.

But the manager didn't.

A police report states the men cursed at the
manager after she told them bathrooms are
for customers only.

She called 911 to report that the men were

not making a purchase and were refusing to
leave.

It reportedly took just two minutes from their

arrival to her call for help.

Last weekend, Ross said officers had asked

the men "politely to leave" three times
because Starbucks said they were
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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3

• Contingency Planning
• Corporate Social Responsibility
5.7
• Ethical Objectives

trespassing. After the men refused, Ross said, the police made the arrest.

"It didn't really hit me what was going on — that it was real — until I'm being double-locked
and my hands [are] behind my back," Robinson told ABC News.

In a separate interview with The Associated Press, Nelson said that he was worried about the
situation spinning out of control and that he might possibly die.

"Anytime I'm encountered by cops, I can honestly say it's a thought that runs through my
mind," Nelson said. "You never know what's going to happen."

The AP reports that the men — who have been best friends since the fourth grade — had
never been arrested before. And Robinson said he had been a customer at the Rittenhouse
Square Starbucks since he was 15.

The men spent several hours in custody before being released.

Starbucks declined to press charges.

ABC's Robin Roberts asked the men how they would respond to those who say they violated
Starbucks policy by not buying anything.

"I understand that — rules are rules," Robinson said. "But what's right is right and what's
wrong is wrong."

Starbucks CEO Kevin Johnson — who met with the men on Monday — says the company was
in the wrong.

"Our practices and training led to a bad outcome — the basis for the call to the Philadelphia
police department was wrong," Johnson said in a statement Saturday.
Ross, the police commissioner, outlined the confusion over just what those practices are or
whether an official company policy about making a purchase exists or is known.

"While this is apparently a well-known fact with Starbucks customers, not everyone is aware
that people spend long hours in Starbucks and aren't necessarily expected to make a
purchase," he said, adding that he apologizes to Nelson and Robinson.

Ross said that he had initially misunderstood that business model and that it is "reasonable to
believe" the arresting officers did not know about it either.
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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

A Starbucks spokesperson told The Washington Post, "In this particular store, the guidelines
were that partners must ask unpaying customers to leave the store, and police were to be
called if they refused."
But for its part, Starbucks has been focusing its messaging on racial bias rather than on store
policy.

Starbucks says it will close its 8,000-plus stores in the U.S. for the afternoon on May 29 to
conduct "racial-bias education geared toward preventing discrimination in our stores."
The men's lawyer, Stewart Cohen, says a retired federal judge is overseeing mediation with
Starbucks.

Robinson told ABC News that he hopes the situation can serve as a lesson for "young men to
not be traumatized by this and instead [be] motivated, inspired."

Nelson said he wants to "help people understand it's not just a black people thing; it's a
people thing."

Ross, who is black, said, "The issue of race in this situation is not lost on me," adding that he
shouldn't be the one making it worse.

He said Philadelphia police have now come up with an unspecified new policy "that guides our
officers on how to deal with similar situations."

How did Stabucks

Was their respons

Could Starbucks’ r 4
 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

The Philadelphia Incident Was Terrible;

Starbucks' Response Was Admirable
EDITOR'S PICK
Rodd Wagner Contributor
Jun 1, 2018, 04:32pm

A sign at a Starbucks in Rosemead, California, informs

customers of the store's early closure for anti-bias training.

The challenge for those who work at 2401 Utah

Avenue South in Seattle was steep.

It was to be “training” to address flaws in human

tribal reflexes and fear responses, some of the least
trainable aspects of people. It needed to be simultaneously aspirational (“Creating a culture of
warmth and belonging, where everyone is welcome”) and remedial (Don’t call the cops on the
two black guys who didn’t buy something right off). Because it was an all-employee event at a
ubiquitous brand after a condemnable incident, all eyes were on the company.

Starbucks met the challenge well. The coffee behemoth did the right thing, a good thing, and
even communicated as it was with a foam of Pacific Northwest utopianism and
CorporateSpeak, it set a tone from which the country could benefit now.

Anyone who has coached a youth sports team should be able to appreciate the problem facing
Starbucks and every other major national retail operation. It is tough to get every player to
consistently follow the game plan, even when there are only six hockey players, 10 lacrosse
players or 11 football players in action at one time.

With 277,000 “partners” in motion - they mean “employees,” as they have to clarify
parenthetically in some of their releases - it is impossible to guarantee uniformity. Run the math
across more than 27,000 stores, that army of employees and the exponentially larger numbers
of customers and transactions, and the requirement quickly exceeds any Six Sigma
manufacturing process in scale and complexity.

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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3

• Contingency Planning
• Corporate Social Responsibility
5.7
• Ethical Objectives

This fact is the bane of every CEO, chief marketing officer, and brand manager who must
depend on people to deliver on the airline’s, bank’s or restaurant’s promises. It keeps them
awake at night, nervous that someone is about to do something dumb. It drives them to write
policies, scripts and, in at least one case, a flow chart of robotic conditional logic of how to
respond throughout a customer interaction. When I recommended to the brand EVP of one
national chain that perhaps the company could rely less on scripts and more on people’s
judgment to apply sound principles, she visibly shuddered. “Relying on the judgment of
people in the stores," she said, "is the last thing we want to do."

With very rare exception, people do get the order right, exercise discretion and treat people
with respect. Most people are kind enough and smart enough to navigate the idiosyncrasies of
everyday interactions with people different than themselves. But once in a long while, someone
somewhere messes up, sometimes excruciatingly so, as when a Starbucks employee called
police on two African-American men who arrived at a Philadelphia store 10 minutes early for an
April 12 meeting and did not promptly make a purchase.

So what to do when an incident so seriously contradicts founder and chairman Howard

Schultz’s aspiration that the coffee shops be “a third place between work and home”? This
week, Starbucks got it right in the following ways.

The company called a full stop. Closing all company-owned stores mid-afternoon is a dramatic
move, even if the calculated loss of sales is “barely a drip in the latté” of $4.4 million. It’s a
strong signal to employees and customers that Seattle takes the precipitating incident and the
larger issues seriously.

The materials were well produced. The “Team Guidebook,” “My Notebook” and videos,
since released to the public, were a well designed mixture of methods. They were neither
patronizing nor overly complicated. One would expect nothing less from a large company, but
it’s no small feat when the audience is so large and diverse, and the scrutiny is so great. When
companies set to writing manuals or producing videos, with all the levels of approvals and
vetoes, they usually fulfill the bromide that a camel is a horse built by committee. Starbucks
dodged the camel.

The group workbook included real examples. Turning concept into action requires real-life
scenarios, a number of which were included in Tuesday's training. A woman in dirty sweatpants
is circling the cups for sale. Customer or shoplifter? A guy comes in to return a pound of coffee,
but has no receipt. Process it or not? A guy with a really thick accent comes in and you can’t
understand him saying his name so it can be written on the cup. What do you do?
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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

Starbucks surrendered some editorial control to the right people. An external expert
sometimes conveys the message more forcefully and with a different type of authority than the
company’s leaders. This is true of the eight-minute Stanley Nelson Jr. short film underwritten
by Starbucks to be included in these sessions. It’s the highlight of the work. The juxtaposition
of a young African-American man explaining the concerns he has about others’ perceptions
(“People feel uncomfortable when I walk in”) and a white man saying he has no such burden
(“I’m not walking out the door thinking, ‘What kind of hurdle am I going to run into today?’”) is
poignant.

The materials encouraged introspection without being accusatory. While there were some
questions in the workbooks that sounded as if they came from a yoga session (“What inspires
and nurtures your spirit?”) most were direct and constructive. “In your life, where do you feel a
sense of belonging?” one page asks. “Describe the place. Why does it make you feel like you
belong?” And then: “How can you create that feeling with every person that visits your store?”
Good food for thought in or out of a coffee shop.

The company focused on core intentions. Starbucks’ curriculum did not dictate any scripts, but
instead aimed for a higher level of empathy and understanding. It sometimes couched these in
nouveau spiritualisms such as “being present,” “color brave” and “othering,” but it’s the
thought that counts, and the thought was honorable.

It made clear where the leaders of Starbucks stand. Through videos loaded on iPads,
employees heard from Starbucks EVP Rossann Williams, president and CEO Kevin Johnson,
chairman and founder Howard Schultz, board member Mellody Hobson and COO Roz Brewer.
It should be no shock that on the question of everyone feeling welcome at one of their stores,
they are unanimously affirmative. Nonetheless, people actually do take their cues from their
leaders, and at a time when a pernicious minority of elected officials and celebrities are
troglodytes on racial matters, it is reassuring to see a group of leaders talking like grown-ups.

The company is not proclaiming “mission accomplished.” In the final video of the training,
CEO Johnson declares, “Today was just a start. It was not perfect - because we are all human.
And we are all learning.” Tuesday’s training does not appear to be strictly legal air coverage or
public relations, although it clearly would serve as both, but rather part of a broader pattern of
Starbucks endeavoring to be something more than a financial vehicle for shareholders.

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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives

Starbucks chairman and founder Howard Schultz

From all appearances, it appears heartfelt. Videos of

executives are a gamble. Some of the most caring
leaders lock up on camera and falsely look evasive.
Some of the least sincere can go all Mister Rogers
when the red light goes on. Despite a bit of stiffness in
the case of one or two Starbucks leaders on the videos
played for employees on Tuesday, the sentiments they
expressed appear genuine. Founder Howard Schultz’s message on “who we are and who we
aspire to be” is particularly compelling. There is no left-right eye movement indicting he was
working from a teleprompter. There are cuts between segments suggesting the folks at
corporate fired up the camera, let him talk and pieced it together later. He seems to mean it.

“I want to ask something of you, which actually is quite personal,” he told the employees on
that video. “Over these many years, we’ve built this company out of love, out of responsibility,
and we’ve done it together. On a personal level I want to ask you that together we do
everything we can to build that third place in your store in your community, in every
neighborhood in an ever-changing America where everyone is welcome, in an ever-changing
America where we will be the kind of company, the kind of third place where our values, our
love, our humanity, our respect and our dignity for everyone will create the most welcoming
environment for every single person. That’s my hope for the company. That’s literally my hope
for the country. And I think we will all be better for it.”

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 Business Management CASE STUDY

CURRICULUM
TOPICS GLOSSARY
• Crisis Management

1.3 • Contingency Planning
• Corporate Social Responsibility
5.7 • Ethical Objectives


Starbucks ceo: Reprehensible outcome in Philadelphia incident
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

Should/could Star 9