The risks of corporate succession and Starbucks

Corporate succession refers to the transfer of ownership of a company from one person to another. In the case of Starbucks, the founder and CEO Howard Schultz retired in 2008 and handed over control of the company to his successor, former CFO Kevin Johnson. While many people believe that corporate succession is a good thing, it can actually have negative effects on the company’s performance.

Starbucks’ Performance

Starbucks experienced a decline in sales after its founder left the company. Sales dropped by 10% in the first year following the transition of leadership. However, the company recovered and began to experience steady growth again.

Why Corporate Succession Is Bad

When a company transitions from one leader to another, the change in management style can cause confusion among employees and customers. Employees may not understand what their role is in the company anymore and may feel lost. Customers may become confused about who they should talk to if they have a problem.

How Starbucks Recovers

After the transition of leadership, Starbucks implemented a series of changes to improve customer service and employee morale. These included hiring more customer service representatives, increasing training opportunities, and offering free coffee to customers.