Guest Post: Former Starbucks CEO’s tips for tough times

Photo courtesy of Starbucks
by Jim Donald, former CEO of Starbucks and Pathmark
“Good morning, general store managers, assistant store managers, VPs and all 26,000 employees…Jim here…
It’s Wednesday morning and the merchandising message today is–and you are not going to believe it– but I am telling you that it is OK to steal.”
It was 5:30 a.m., and I was on the phone, in my kitchen, sending out my daily voicemail. As I paused for effect, I was thinking that the supermarket industry has one of the strictest employee honesty codes in the world. Because of the large number of employees, the vast number of items and the low profit margins, it’s an absolute necessity to have zero tolerance for employee theft. I hadn’t informed my senior team that I would be sending out this message…hmm…better think about how to handle that one…
“You heard correctly…despite what you might think about controlling losses and theft, I am saying to all of our associates, it’s now time to start stealing…stealing market share, that is.“
Call it hokey, but this is how I needed to deliver my message to my 26,000 associates. I wanted to convey that the power of the company comes associate by associate, item by item… and it’s up to them to translate that power into sales. So I finished my broadcast this way:
“That’s my message for today…it’s OK to steal…steal market share, that is. Thanks, and I’ll talk to you tomorrow.”
That’s how I communicated though a crisis almost a decade ago when I was CEO of Pathmark Supermarkets. The economic crisis back then wasn’t as bad as today’s. But Pathmark was barely hanging on, just like a lot of companies now. Once the giant grocery chain in the New York metro area, it was one the longest living LBOs from the 1980s and still strapped with $1.6 billion in loans and junk bonds. Employee morale was at an all-time low. It was no longer a price leader. And our suppliers worried that we wouldn’t be able pay the bills.
I learned a lot at Pathmark—and during my time at Albertsons, Safeway, Wal-Mart (WMT) and Starbucks (SBUX), where I was the CEO until January of last year. Since I have some experience in crisis and now I have some distance, too, let me share just a few ideas with you:
Communicate, communicate, communicate. Especially at a time of crisis, make sure your message reaches all levels, from the very lowest to the uppermost. When Pathmark was in dire straits, I began to send out my daily message to all employees. Make sure too that you give them an opportunity to reply.
Reach deep for answers. Sam Walton once said to me, “Jim, if you ever want to know what is troubling your business, ask your front-line employees. They know, and they will tell you.” It’s true, your people on the front line are your real marketing experts. Take advantage of the fact that they’re closest to your customer everyday.
Beware the success trap. Success breeds risk aversion. And what happens when we become risk averse? We stop innovating. And we lose our best people because they become restless and even bored. Various studies by McKinsey and others lists three things that employees want from a company today: an open and honest work environment, the opportunity to be stretched and valued, and the ability to make decisions. Especially today, when so many companies are frozen by risk aversion, giving your people freedom to fail could be your competitive advantage.
By the way, we eventually took the company public and eliminated about two-thirds of the debt. And we did steal a point or two of market share along the way. Pathmark is owned by A&P now and has 144 stores in the northeast. Things worked out OK.
Jim Donald was CEO of Starbucks from 2005 until January 2008. Before that, he was chairman and CEO of Pathmark, president of Safeway’s (SWY) eastern division, and head of Wal-Mart’s supercenter division. He’s on the board of Rite-Aid (RAD) and is an executive in residence at the University of Washington, Bothell. Also, Donald is one of the candidates whom activist investor Bill Ackman wants to place on the board of Target (TGT). Read Jennifer Reingold’s “Taking Aim at Target” in Fortune for more on that.
Jim Donald worked with me at pathmark , and he was a real hands on guy. We all miss him there. I think he got a raw deal at Starbucks. The first year stocks were very good under him. He got sucked into a bad economy. Lets face facts everything collapsed. With money being tight nobody wants a 4dollar coffee, in this economy. Shultz is back and what has he done?? Jim had more energy than any ceo I,ve ever had.
Jim Donald was great to work with at Safeway in the early, mid 1990’s. The communication was thorough to the employees, up to the Washington Post newspaper editorials. He is still missed!
well thanks Jim for all your help in taking my companies shares Starbucks down to the low that you did.I would like to say it was a pleasure having you lead us. I would like to but I cant.I would hope Howard and Orin regret taking you for dinner in New York to this day
Above comments are funny!
However, very good article.
Other hot tips from Jim…
Expand too much so your stores steal market share from one another.
Form partnerships with absolutely EVERYONE so your brand gets tarnished by your partners’ low quality standards.
And whatever you do, do not ever sell palatable breakfast foods to accompany your coffee products.
So what’s he saying is everything he needed to know he learned in kindergarten. What an eye opener! Now I see why the big coffee place is closing stores at a record pace.
Co-founder and creative director of Tory Burch LLC
- Portraits of Powerful Women
- Career advice in a minute–or 10
- Power Point: Oprah says, “Own yourself”
- Behind Oprah’s next big move
- NBCU’s “Trash TV”: the full view
- Power Point: How to pick a magazine cover
- NBCU gives new meaning to “Trash TV”
- Power Point: To friend or unfriend?
- Geek Squad rivals: Bring ‘em on!
- Power Point: Go for lead dog
- How about Capt Sully? The pilot on t... More
- Celebrate your advertising campaign! ... More
- Well said Hope.Yes bullying does go o... More
- Im Sure the polish and Ukranian mana... More
- Hello, this is the real Eddie here an... More
- Looking at Jim's retraction. To me it... More
- Bulling is the main management style ... More
- I would like to add some facts to the... More
- i have to say this, after listening t... More
- Management in Vistakon Limerick are a... More






Jim Donald is a great leader who inspired thousands of employees at Starbucks. His contributions lead the company to phenominal growth. It is now clear that the decline in the stock price was due to the economic and not Jim Donald’s leadership. Jim would have been the best man to navigate the company through tough economical times. The short sighted decision to remove him caused a rift through the ranks that made the company’s problems even worse. Since his removal from the CEO’s chair, the stock has declined another 50%. I had the pleasure of meeting Jim and working for him. I hope to work with him again some day.