The 2006 Leadership Excellence Summit
"The Six Steps of Leadership"
Jim Donald
President and Chief Executive Officer
Starbucks Coffee Company
"First and foremost, I'm a retailer," Donald began. "I try to do my company proud." Donald stresses the importance of constantly developing leadership "personally, professionally, and in everything that you do."
When Donald join Pathmark Stores, Inc. in 1996, the company was barely making payroll. Up to that point, management had not communicated the dire circumstances under which the company was operating to the employees. "There was no communication," Donald said.
Soon after joining the company, Donald paid a visit to one of the stores in Newark, NJ. A short-staffed night manager asked him who he was. Donald replied that he was in management, and asked what he might be able to do to help out. The manager then pointed out how short-handed he was, and told Donald that he needed some extra help getting things in order. When Donald said he couldn't really help him, the night manager replied, "typical management - they come in offer to help, then end up doing nothing and leaving."
Donald took this to heart, and made several return trips to visit that night manager. Donald's first step of leadership is going where you've never gone before. Donald encourages management to visit "the front lines." A simple presentation by a high-ranking member of an organization can help line-level workers feel valued. By going store-to-store and having discussions with the company's most visible representatives, leaders can learn a great deal about the culture and the climate of the company.
Donald then set out to tackle a major issue within the organization - most of the employees had no idea that Pathmark was barely making payroll. Step two of leadership is communicating daily to the entire organization. To kick this off, Donald distributed a video explaining the company's financial situation. Ninety-five percent of the responses to the video were nearly identical; "Jim, you've ruined our company," Donald quoted. The company's finances hadn't changed over night, but management had not been communicating. This void of information had lead employees to believe that the company was doing better than they were. Donald prides himself on personally communicating with as many members of his organization as possible, hand-signing more than 33,000 pieces of correspondence in a year.
Donald's third step of leadership is maintaining an experience that keeps you memorable. Leaders need to make a dramatic and lasting impression on their organizations if they want to be remembered. Donald told the story of a company summit during which he related Pathmark to a dead fish. During his presentation, he actually presented the group with a dead Salmon, a trick he used on more than one occasion. A stand-out moment such as this can keep a leader memorable. "What's your fish story?" Donald asked rhetorically.
Donald also told the story of a local store associate named Megan. When he visited Megan's store, he noticed that they were advertising a special, for what was normally a winter drink, in the middle of summer. Identifying himself as a fellow employee, but no more, he convinced Megan to explain why they were running such a strange special. She confided in him that she had accidentally purchased a much larger quantity of the main ingredient in that particular drink than she should have. There was no way to correct the mistake, and instead of simply eating the cost of the supplies, she instead turned her mistake into an opportunity to perform above and beyond.
Donald segued from this story into his fourth step of leadership: Through risk we thrive. Donald encourages his employees to take reasonable risks. After Megan had explained her situation and Donald had identified himself, he said to her, "Megan, screw something else up." To Donald, risk-taking and courage go hand-in-hand. Promoting a climate of "freedom to fail" and allowing the organization to make and learn from mistakes is an excellent way to build trust.
Donald also believes that executive leadership should never be bigger than the front line. This is his fifth step of leadership. Donald attributes his appreciation for this to Sam Walton, his former boss and mentor. "Sam was a master of showing up where nobody ever though he would be," Donald said. Walton would appear at local stores and distribution centers during second and third shift, just to speak to the ‘front line.' This approach ties in very closely with step one and helps foster a sense of community in the organization.
Donald's sixth and final step of leadership is celebrating success. Through each of the other six steps, an organization can form an excellent framework for success. By celebrating it as a company, the organization validates and justifies its efforts and its accomplishments. Every level of the organization experiences "the grind," and Donald believes that breaking from this to recognize the organization's accomplishments is absolutely critical to continued success.
Jim Donald started his career as a grocery bagger in a Florida supermarket. After joining Albertson's in 1976, Donald rose swiftly through the ranks, eventually becoming head of operations in Phoenix, AZ. He was then hand-picked by Wal-Mart's Sam Walton, who was seeking to expand the company's presence in the supermarket sector. As an executive, Donald oversaw the development of the Wal-Mart Super Center, supervising many aspects of the division's expansion.
From 1994-1996, Donald was president and manager of Safeway's Eastern Division. During his time there, Donald orchestrated a turn-around following four years of declining sales. Donald was chairman, president and CEO of Pathmark Stores, Inc., one of the highest-volume supermarket chains in North America. Pathmark was facing impending bankruptcy when Donald took the reigns in 1996. Again, Donald was able to infuse life into a struggling organization.
Today, Donald is the president and CEO of Starbucks, occupying the position left vacant by the retirement of Orin Smith in 2005. Donald has guided the company through consistent financial success since joining the company in 2002.
Jim Donald attributes his success to effective communication and leadership skills.