7 of Starbucks' most tech-savvy management moves

Published
  • December 02 2016, 2:36pm EST
As Starbucks prepares to transition its top executives into new roles, it helps to look back on its history in mobile payments and examine how its management structure helped this plan. Here are a few of the key decisions the company made.

As Starbucks prepares to transition its top executives into new roles, it helps to look back on its history in mobile payments and examine how its management structure helped this plan. Here are a few of the key decisions the company made.

Mobile first

Starbucks CEO Howard Schultz hasn't let his job get in the way of his company's mobile wallet. In 2014, he redefined the CEO role, handing many of his responsibilities to the company's chief operating officer, a newly created position. Going forward, Schultz would be able to focus more on mobile payments and other digital initiatives. "There are things that we can take advantage of and that we can leverage that are outside of the ecosystems of Starbucks," Schultz said at the time.

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Keeping the team fresh

Schultz relies on his fellow executives to keep the company running smoothly, but is willing to accept change. When COO Troy Alstead went on an extended "coffee break" in 2015, Schultz put Kevin Johnson in that role. Johnson — who had been on the Starbucks board for over five years and is the former CEO of Juniper Networks and the former president of Microsoft's platform division — will take over for Schultz as CEO in April 2017 (Alstead never returned to the company).

A focus on tech

Schultz is stepping down from the CEO role (but is remaining chairman of the Starbucks board) to develop the company's Starbucks Reserve Roasteries around the world. Though this would seem to distance Schultz from the company's tech efforts, the choice of Johnson for CEO underscores the coffee chain's focus on technological innovation.

Company man

Despite his willingness to change his own role to further the company's technological innovations, Schultz hasn't let himself get distracted by outside projects. He limited his tenure on Square's board to just one year, and he declined suggestions to run for president of the United States. "Despite the encouragement of others, I have no intention of entering the presidential fray," Schultz said in an op-ed for The New York Times published in 2015. "I'm not done serving at Starbucks."

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Maintaining an ecosystem

Starbucks handles 25% of its U.S. in-store sales through its mobile app, but that success wasn't built on smartphones alone. The company's execs consistently state that its record-breaking mobile sales volume was only possible due to the success of its plastic gift cards, which are among the most popular holiday gifts in the country. Rather than let mobile cannibalize gift card sales, Starbucks execs have been careful to let both products complement each other.

Bucking conventional wisdom

Another factor in Starbucks' mobile success is the management's bravery in going against the practices most common in mobile payments. In particular, the company chose to prioritize development of a BlackBerry app in 2010 over the development of an Android app because it wanted to better serve the BlackBerry-toting office workers who buy Starbucks coffee during their commutes. This strategy changed as BlackBerry fell out of favor, but it was an early sign that Starbucks management was more focused on results than on trying to shoehorn other companies' efforts into its own environment.

More to come

Schultz and Johnson aren't simply going to let the new CEO's resume speak for itself. Understanding the concerns investors have in the departure of a well-liked CEO, the pair plan to provide a detailed plan for the company's future during its Dec. 7 investor day. "Starbucks is making a bold move that indicates technology is one of the most important aspects of its strategy, if not the most important," said Rick Oglesby, president of AZ Payments Group.