New Starbucks CEO to Learn Role Alongside Schultz

2 weeks ago 55

Now helium faces a caller challenge: starring 1 of the world’s astir recognizable brands, alongside three-time CEO Howard Schultz.

Starbucks Corp. SBUX 0.43% earlier this period named Mr. Narasimhan arsenic the java giant’s adjacent main executive, though helium won’t presume that rubric for astir 7 months. When helium joins Starbucks successful October, his rubric volition beryllium “incoming CEO.” Mr. Schultz, who built the java institution into a planetary brand, volition proceed to service arsenic interim CEO, the relation helium has held since April.

“I’m going to beryllium learning from Howard,” said Mr. Narasimhan, 55 years old, existent CEO of U.K.-based consumer-products company Reckitt Benckiser Group RBGLY 1.24% PLC, during an interior Starbucks worker forum astatine its Seattle office past Wednesday.

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Mr. Narasimhan is inheriting the presumption with the road representation mostly acceptable by Mr. Schultz and different Starbucks executives done a strategical program nether way, and Mr. Schultz volition clasp a important relation astatine the institution arsenic a shareholder, committee subordinate and civilization keeper.

Mr. Schultz and different executives person spent months devising a strategy aimed to assistance Starbucks navigate the future. The plan, which is expected to see changes to store operations and much worker perks, is expected to past until 2025, Starbucks said, making it portion of Mr. Narasimhan’s complaint arsenic CEO. Mr. Schultz and different existent executives are expected to little investors connected the program and what it is expected to outgo during the company’s capitalist time Tuesday.

Howard Schultz has worked with different Starbucks executives to devise a strategy for navigating the future.

Photo: Meron Menghistab for The Wall Street Journal

Over the coming months, Messrs. Narasimhan and Schultz said, the 2 are expected to question crossed Starbucks’s markets, visiting stores and roasting plants to larn astir the company’s operations and culture. By adjacent April, Mr. Narasimhan is slated to instrumentality the reins from Mr. Schultz, who volition stay connected Starbucks’s committee of directors.

Mr. Narasimhan, who likes to portion a doppio espresso macchiato with beverage connected the side, said helium would usage portion of his modulation play to instrumentality 30 hours of barista grooming and hopes to gain 1 of the company’s signature greenish aprons. “I’m beauteous disquieted astir it,” helium said astir learning to go a barista, garnering laughter astatine the worker forum.

Mr. Schultz bought a six-location java concatenation successful 1987 and built Starbucks into a planetary brand, and the institution is tightly coiled into his identity. The 69-year-old businessman has written 3 books astir lessons from his clip astatine Starbucks, and helium is the company’s fifth-largest shareholder, according to FactSet.

Mr. Schultz near the CEO relation doubly earlier and held a spot connected the committee until 2018, erstwhile helium explored a statesmanlike run. Mr. Schultz continued to support a adjacent oculus connected the institution and stayed successful regular interaction with executives there.


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Starbucks chairwoman Mellody Hobson said that Mr. Schultz volition person a peculiar dependable astatine the institution portion holding a regular spot connected the board.

“[Mr. Narasimhan] volition beryllium the CEO and I volition stay the chair, and that’s what Howard wanted,” Ms. Hobson said successful a caller interrogation astir Mr. Narasimhan’s appointment.

Mr. Narasimhan volition go Starbucks’s 5th main enforcement successful its 35-year history, and the archetypal 1 to travel from extracurricular the company.

One of Mr. Schultz’s successors, retailer Jim Donald, exited the institution aft 3 years, with Mr. Schultz returning to hole operations that helium said had go excessively bureaucratic.

Mr. Schultz stepped down arsenic CEO again successful 2017, handing implicit the reins to Starbucks main operating serviceman and committee member Kevin Johnson. After Mr. Johnson said helium would retire, Mr. Schultz returned to Starbucks earlier this twelvemonth erstwhile the board asked him to travel back, Mr. Schultz has said.

Starbucks is expected to marque changes to store operations and connection much worker perks arsenic portion of its strategical plan.

Photo: Bridget Bennet for The Wall Street Journal

Since returning, Mr. Schultz has said that the company’s income are strong, but relations with employees person suffered and cafe operations person grown cumbersome. He has mounted a reinvention plan to effort to amended Starbucks and has hired executives from extracurricular the institution that Mr. Schultz said tin bring caller skills that Starbucks doesn’t presently have.

Mr. Schultz said during an interrogation earlier this year: “We’re warring for the aboriginal of the company, and it requires a committedness to reinvention.”

Starbucks’s shares person declined 3% since Mr. Schultz took the interim CEO role, portion the S&P 500 has fallen astir 11% and the Dow Jones Industrial Average has dropped astir 8% during that clip period.

Transitioning enactment from a founding enforcement to a newcomer to the institution is ever challenging, said Brad Karp, president of instrumentality steadfast Paul, Weiss, Rifkind, Wharton & Garrison LLP, who advises concern leaders. The erstwhile main needs to afloat enactment his successor, including done his words and assemblage language, helium said.

Outsider CEOs person to triumph implicit much constituencies, concern advisers said, and mislaid spot tin beryllium hard to recover. CEOs hired from extracurricular a institution depart wrong 3 years astatine overmuch greater rates than those promoted from within, according to an investigation of S&P 500 companies by recruitment advisers Russell Reynolds Associates.

Starbucks trails lone McDonald’s arsenic the largest edifice concatenation by marketplace capitalization. WSJ’s Heather Haddon explains wherefore mobile exertion has go a concern precedence for Starbucks and garnered it a loyal lawsuit base. Photo: Stanislav Kogiku/Zuma Press

Executives who person worked with Mr. Narasimhan described him arsenic humble, but besides assertive. “I deliberation helium tin basal toed to toed with conscionable astir immoderate executive,” said Target Corp. Chief Executive Brian Cornell, who worked with Mr. Narasimhan at PepsiCo Inc.

Some concern leaders said that the lengthy modulation play for Mr. Narasimhan gave them intermission and that Mr. Schultz’s relation should beryllium intelligibly defined erstwhile the handoff occurs.

“I would privation Howard to instrumentality the relation of being the psyche of the company,” said Bill George, an enforcement chap astatine Harvard Business School and erstwhile CEO of Medtronic PLC, who knows some men. “There tin beryllium galore CEOs, but lone 1 founder.”

Born successful India, Mr. Narasimhan said astatine the Starbucks forum that arsenic a young man, helium sold galore of his belongings to beryllium capable to question to the U.S. to be the Wharton School of the University of Pennsylvania, and aboriginal lived connected 1 repast a time for a agelong portion studying successful Germany.

He advised companies astir the satellite arsenic a McKinsey & Co. manager, and ran PepsiCo’s Latin America, Europe and sub-Saharan Africa operations earlier becoming CEO astatine Lysol shaper Reckitt.

Mr. Narasimhan had aggregate conversations with Ms. Hobson and the committee crossed the hunt process, and ended up spending a play with Mr. Schultz successful Seattle visiting Starbucks stores, helium said astatine the company’s worker forum. Both men spent clip unneurotic successful New York City arsenic well, and Mr. Narasimhan said helium visited immoderate stores connected his own.

Mr. Narasimhan said astatine the worker forum that helium would beryllium listening to employees and learning astir the company’s past and operations earlier making his ain assessments. He said helium whitethorn person to unlearn immoderate of his erstwhile approaches to companies successful coming to a spot arsenic unsocial arsenic Starbucks.

Mr. Narasimhan said helium has gotten a peek astatine the reinvention plan, and believes that improving the lawsuit experience is astir apt the company’s biggest opportunity.

Mr. Schultz said that helium has recovered the person the institution needs successful Mr. Narasimhan, and that helium would absorption connected preserving the company’s past and values erstwhile his relation arsenic interim CEO ends. He said: “My committedness and committedness to each of you is doing everything I tin to guarantee Laxman’s success.”

—Emily Glazer contributed to this article.

Write to Heather Haddon astatine [email protected]

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