Starbucks Commits to Raising Awareness of Racial Bias

Brian Kenny: If you happen to be driving on I-96 just outside of Detroit, there's a billboard that will surely get your attention. It reads, “Driving while Black, racial profiling just ahead, welcome.”

“Driving while Black” is an all too familiar term in the US and it highlights one of the many indignities that Black people endure on a daily basis as a result of implicit or explicit bias. In fact, almost any activity that seems mundane to whites, becomes stressful and anxiety-ridden when you do it while Black. Shopping, studying, parenting, and of course, dining. It's a documented phenomenon, the journal of Black studies surveyed 200 restaurant servers in North Carolina and found that 38.5 percent admit to discriminating against Black customers while 59 percent say they've witnessed discrimination by others. Meanwhile, Black diners report that they are often mistaken for valets, coat checks, and washroom attendance. And it's not just a Southern thing. Today's case takes us to a Starbucks in Philadelphia where two Black men seated at a table, waiting for a friend, would become the latest examples of the perils of dining while Black. Today on Cold Call, we'll discuss the case study entitled, Starbucks: Reaffirming Commitment to the Third Place Ideal, with coauthors, Francesca Gino and Katie Coffman. I'm your host, Brian Kenny, and you're listening to Cold Call. Brought to you by Harvard Business School.

Francesca Gino: Thank you for having us, Brian.

Katie Coffman: Great to be here.

Brian Kenny: And we are socially distanced, in fact, we are more than socially distanced, we're far away from each other because we are continuing here to be in the midst of the pandemic. And we are in the midst as well of another major crisis unfolding in the United States. And that has to do with George Floyd's death and the Black Lives Matter movement. So this case to me feels all the more timely and prescient. And ironically, we started talking about doing this case on the podcast well, before that happened. So I think a lot of our questions and conversation today will reflect on the current situation and what we can learn from this case. Katie, I'm going to start off with you; could you just set the scenario, tell us what happened on April 12th, 2018.

Katie Coffman: I think it's a scene we've probably all seen in a Starbucks at one point in our life or another, which is two individuals sitting at a table waiting for another person to arrive. But in this scenario, those two individuals were African American men. And the situation was, these were two aspiring entrepreneurs waiting for a business associate that they were going to have a meeting with. They sat down to wait, they hadn't purchased anything. One of them asked to use the restroom and an employee responded that because they hadn't purchased anything, the restrooms were for customers only. After that they sat back down and the employee approached them again and told them, can I help you with something? Sort of asking, what are you doing here? And they said, "We're waiting for a meeting." And that employee asked them to make a purchase or leave. Within minutes of that encounter with no escalation of voices or any conflict beyond that, the police had been called. And the police arrived, there was a confrontation pretty shortly thereafter and just two police officers turned into six police officers. The men were told they had one more chance to leave, even though other customers, the business associate showed up and said, "We think these people are being treated unfairly, this doesn't seem like they've done anything wrong." The police still stayed and told the men they were actually no longer free to leave. And they were brought to a local station in handcuffs and placed in a cell for several hours before ultimately being released that evening with no charges filed.

Brian Kenny: So that sounds just so familiar, doesn't it? In the current context, and we know that it could have even ended much more tragically than it did, but it's amazing the parallels to what we saw happen with George Floyd and then in so many other instances. Francesca, you've taught it in the classroom. I'm wondering if you could just tell our listeners, how do you dive into this conversation? What's your cold call in this particular case?

Francesca Gino: The first question I always love to ask in class is a question that gets us to analyze how Starbucks responded to the Philadelphia incident. And so I would ask students right off the bat, what were the features of Starbucks response? What were some of the strengths and some of the weaknesses in the response that they used? I did try a couple of time to go down a different route. And maybe this is an approach that is a little bit more courageous because it can bring out right at the start of class, a lot of emotions. But basically I set the stage by telling students why we're discussing the case, that we're really interested in trying to evaluate how this big organization has reacted to an incident of discrimination directly in its store. And an incident, let's not forget, that was caught on camera by customers and it basically became viral within hours. And so I basically say, look, this is obviously not a case in isolation. I ask people to reflect on their experiences for a moment and then ask them whether they would be willing to share the experience, or at least to tell us the words that they would use to describe how they felt. And I described it as a more courageous route, but I think it's a discussion that might be important because it gives students really an opportunity to engage with the challenges of unconscious bias and how so easily this, maybe even without a bad intention, can turn into discriminatory behavior.

Brian Kenny: So we're going to talk a lot about unconscious bias in the course of this conversation, some of our listeners might be thinking, this is a business focused podcast, what does this have to do with business? So I guess I would ask both of you the next question. Why did you decide to write the case? How does it relate back to the kinds of things that you look at as a scholar?

Francesca Gino: Maybe I'll get started by telling you why I think this is a case that it's quite important for a business school and for an audience, whether it's executives or MBA students. Through the case, we basically get to evaluate how a very large organization that operates globally and really takes pride in being open, inclusive in its culture and being a space that is between home and work, reacted to an incident where an employee used discriminatory behavior. And to me, especially in a world where, because of social media, what we do inside organizations becomes knowledge that a lot of people around the globe can get access to. And so they get to see everything that is happening in the moment. It's really important to think through how would we react as leaders or how is it that we're creating the conditions intentionally or not to see people in our own organizations react in this way?

Katie Coffman: There's obviously the moral and ethical imperative to try and root out racism in all forms in our organizations. But on top of that, I think there's increasing awareness of the missed business opportunity. If your organization, especially in the customer service type industry, is not a place that's consistently welcoming, friendly, fair, you're not going to be as successful as a business. So I think understanding the ways where we could actually reach a broader audience with our products, with our services across a variety of industries, is really important and can be a missed opportunity for a lot of organizations.

Brian Kenny: So we know there are significant costs to the brand of firms that find themselves in these kinds of situations. Right? But there are other costs I would imagine that are associated with it, too. Katie, I wonder if you could talk a little bit about some of the, both, I guess the level of pervasiveness of bias, whether it's unconscious or not. And I do want to talk a little bit about what that means, but what are the ripple effects of these kinds of things in terms of the cost of doing business?

Katie Coffman: You could think both about the cost among your own employees and the culture within your organization, the extent to which your employees really feel aligned with the mission and values of your organization, how effectively they're able to work with each other and bring their whole selves to work. So you have to think about, I think the employee side of things, and on the flip side for a company, particularly like Starbucks, you have to think about the customer side of things, which is what's our relationship with the community? What's our relationship with our patrons? Are we a place that people feel comfortable going to, feel proud of going to and include as part of their daily routine? I know in our conversations with Starbucks, a number of members of their leadership team talked about how easy it is to lose a potential customer through one bad experience. And certainly a bad experience like this, has the capacity to reach a large number of people, not just the specific individual who was targeted. In constructing the employee culture you want, but also in making sure that you're an appealing place for people to shop, to do business, to spend their money. Making sure that your organization is as free from the negative consequences of bias as possible. It is really a business imperative.

Brian Kenny: Obviously, businesses have been thinking a lot about this, right? This is not a new phenomenon. I think we've talked about finding ways to make people aware of their bias so that they are more thoughtful about how they're engaging with customers and with coworkers and such. Francesca, I would ask you, how persistent is this problem? Have we made any headway or is it just as bad as it's always been?

Francesca Gino: So I would coach this in a couple of observations. First of all, one of the ways in which I believe we've made progress and organizations and leaders have made progress is by focusing more often or more attentively to creating work places that are inclusive. In fact, I would say it's hard to think of leaders who don't think that diversity and inclusion are important to their organizations. Where I don't see a lot of progress yet is truly understanding what it takes to be an inclusive leader or to create an inclusive environment. And it's sometimes troubling to leaders and to employees alike to realize that some of these biases happen at the unconscious level. And to realize that our human nature is imperfect. What I think is equally surprising is to think about what can effectively drive change. So there have been a lot of organizations doing unconscious bias training, often not with the results that they expected. And I think that comes down to not truly understanding what solutions are helpful to reducing unconscious bias. The organizations that are making headway or that are being more thoughtful are really organizations that do not think about diversity inclusion as a HR problem. But somebody or leaders who thinks that fundamentally we need to make, I would say inclusion and diversity part of the DNA of the organization. And that requires much more thoughtfulness and requires being willing of being part of a messy journey where you might not get everything right.

Brian Kenny: But Starbucks had that, Howard Schultz had a vision for Starbucks and they focused a lot on this. Didn't they, Katie? Wasn't this something that was important to Starbucks and apparently it didn't take?

Katie Coffman: I think that's one of the really important learnings from this case, because if we look at the history of Starbucks and their mission and values, one of the fundamental principles they had is that Starbucks is going to exist as what they would call a “third place” for their communities. And the idea of a third place is, you have your home, you have their work, Starbucks is going to be a third place where you could really just be. Right. It's welcoming, it's safe, it's inclusive. You can come, you can have a cup of coffee, you can do your work and it's going to feel like one of those safe, special places to you. And that's been a part of their value systems really from the start. And yet even with that type of mindset and a set of policies aimed at achieving that, you can still have this kind of behavior and this kind of outcome. And I think you could make the same analogy when thinking about individuals. Even individuals with really good intentions, who would not view themselves as a racist person can still, because of these unconscious biases end up with actions, with behaviors, with poorly chosen words, doing things to create problems, particularly for underrepresented groups. And so I think part of the recognition here is this really can happen to any organization, to any person. And you have to have a much deeper understanding of the root causes of these types of behaviors and what we can actually do to make those unconscious biases less problematic in our lives and in our workplaces.

Brian Kenny: So to your point a Francesca, this can't just be an HR initiative, right? This has to be an initiative that cuts across the fabric of the entire organization.

Francesca Gino: Exactly. And one of the things I do appreciate in the response to the Philadelphia incident is that Sternberg started a journey. So everybody, especially the press has been very focused on the fact that they ended up closing down their stores on a particular day to do some training. That was about understanding racial injustice and also understanding unconscious bias. But it was really the beginning of a much larger journey. And so it's interesting that maybe that closing the stores was symbolic to get us started, but it was one only one step of a journey that is still continuous. And again, I think that the leaders were going to be really thoughtful about this need… to be ready to take steps that might not be the right ones, but at least to try their best to address issues that might be happening across all parts of the organization. And it's both about the behavior of the leaders and the employees who work in the organizations, but also trying to understand whether there are policies or systems that are becoming, system that systematically reinforce discriminatory behavior potentially. Like in the case of Starbucks, the policies that they introduced at some point about who's a customer and who's not a customer, might in fact, have contributed to, by judgment on the part of the store manager.

Katie Coffman: I completely agree with what Francesca said and I think so much attention has been paid to that May 29th store closure. In my opinion, one of the smartest things they did were these policy changes, right? So really shortly after this incident, they recognized that their policies were maybe the biggest contributing factor to this incident. And in particular, putting the owners and store managers to make distinctions between customers and non-customers in terms of what was going to be permitted in terms of bathroom use. And they gave them much more explicit guidance on what type of behaviors are appropriate and not appropriate in the store and gave them an explicit guide for actually addressing disruptive behavior. That type of de-escalation emphasis and giving that to their employees, their store managers, their partners, so that they were much better position from a policy perspective to actually handle these types of incidents in a much better way.

Brian Kenny: So let's dive into what Starbucks did, because I think that's the basis of a lot of the most salient points in the case. They shut everything down, did they mandate for employees to go to this training? Was it optional or did you have to do it?

Francesca Gino: They did not make it mandatory. So they allowed people to choose and they didn't actually record whether or not you participated. But from the qualitative data that they collected, it seems as if most people were actually there taking the course and the training.

Brian Kenny: And what was the training like? What were they trying to teach?

Katie Coffman: It's incredibly impressive from an operational perspective, both how quickly and how comprehensively they were able to put together this program. So I think the idea was to spend a couple of hours with store managers, store partners, increasing awareness, and doing education around racial bias. And to produce that content, they actually worked with a variety of both internal and external resources, really consulted with experts in this area to try and make that training as impactful as possible. You have 8,000 stores, there's no way you're going to be able to recruit and train and deploy a bias training facilitator for each of those stores, so they created this centralized version of the content that could then be deployed with iPads, accompanied with a guidebook to help store managers actually navigate and lead the discussion within their own stores. They also gave private notebooks to all the employees who would participate so they could answer questions privately, make reflections, and actually take those home with them with hopes that these learnings would last a little bit longer.

Brian Kenny: And were the managers leading their own teams in this exercise? I mean, was it like a cascading type effect?

Francesca Gino: Exactly. So the store manager is in charge of leading the training, paced according to how the people in the store are actually reacting to the content.

Katie Coffman: I'll just add to that too. I think an important part of their approach, and we mentioned this in the case is that all of this is also paid time. Right. And I think that says something about the mindset too. This isn't extracurricular activity that, hey, wouldn't it be great if we got a little bit better on this, maybe you should spend some time with this. This is employees being paid to engage in these important conversations. And I think that sends a really key message to everyone in the organization.

Brian Kenny: So did it work and how did employees respond to it?

Francesca Gino: So measuring success is actually a question that we ask in class when we teach this case, because we're interested and intend to understand how do you know after making such big investments that you're making progress? That in fact you are looking at your employees, you're looking at your leaders and you see that they're treating each other equally, that there is no sign of discrimination. And this is a really hard question to ask, not only to the students in class, but also when we asked it to the leaders themselves. A couple of data points that they brought up that were interesting: first is what seems to be the climate in the stores around actually having these conversations. And the fact that again, the people in the store often mirror the type of communities that they serve made people feel more included because they had more opportunity to talk about their experiences. Or if you look specifically at the store in Philadelphia, that actually had the incident. If you look at it from a profitability standpoint, the year after the incident was quite a good year for them. And so there are elements, maybe not perfect data or the type of objective performance measures that many leaders may like or that Katie and I would love to see when we look at our research and try to understand the effect of a policy change, but there are at least indicators that can help us understand whether this has been successful or not. And if I were to put my scholar's hat on or my instructor's hat on, I would also try to understand if the journey they've been on fundamentally touches on some of the elements that we know are important when we're trying to fight unconscious bias and discriminations. So for example, the presence of information that is counter stereotypical, or trying to increase content or connecting with empathy, with people who look different from you. And so if I keep this element in mind then I would say, I think that they're on a good standing, given the type of conversations that they've started.

Brian Kenny: Katie, let me ask you this question. I'm wondering in the wake of what happened with George Floyd and what feels like a movement at this point, something feels different about what's happening in our country right now. Does this change the inflection of the conversation that you would see yourself having with students around this?

Katie Coffman: One of the things I've taken away from the last couple of weeks, or maybe now months of this social movement, is that the bar for what it means to be a good person in this context is going up. And I think going up in a really good way. It's no longer enough to be someone who's not actively engaging in discrimination. It's now important to actually, I think the term we're seeing a lot is to be anti-racist, right. That you're taking active actions to make the systems, the institutions, the culture around you, one that is less racist and more equitable. When you think about judging Starbucks's response, I think in a lot of ways over the last year now, the bar is going up for whether Starbucks's response is good enough. And I think that's actually a really positive reflection on where we're moving from a societal perspective, which is, we're not just getting rid of problems, but are they actually doing enough to create change? And so I'm really excited to teach this case more in the coming year and hear from our students and from executives of how they see the recent conversations, changing their views of this incident and the response. I think it couldn't be more timely.

Francesca Gino: I also think that there is an aspect of the case that usually doesn't get as much attention or didn't get as much attention in previous sessions that I've taught when I use this case. We focus a lot on how you would react as a leader if you were actually to see something happening like this in your own organizations. So the attention is on the store managers calling the police on these two Black customers. But the story is a little bit more complex and richer. How about the police officers who were there and arrested the two individuals without too many questions about what had happened? And so I think given the current social crisis that we're living through, I think the students, whether MBAs or executives, would point to the role of the officers much more quickly and likely they would also point to the customers who were sitting there watching this unfold and practically doing anything.

Katie Coffman: And there, I would applaud Starbucks too, because in thinking about their response and maybe it didn't stand out at the time, but I can tell you reading back through it now, a lot of the guidance they provided is, who can you call before you call the police? If there's a behavior that's going on that you think needs to be addressed, where can you turn first? Should you actually be turning attention to a mental health professional? Is there a shelter that you need to be connecting with? And all of these other resources. And I think it's just so very connected to the conversations we're having now, the movement to defund the police, that wasn't really part of the mainstream conversation at the time of the incident. And yet I think Starbucks had a lot of foresight to say, if we can avoid the stage where we're even calling the police in the first place, maybe that has the potential to have a real positive impact.

Brian Kenny: One last question for each of you, and this has been really interesting hearing you talk about the case. I think lots of great insights here. But for our listeners, almost all of whom I think are people who are interested in business or practicing business in some way, some are leaders, some are managers, some are somewhere in between. What can they do individually? Because I think a lot of us look at this and it's like boiling the ocean, it seems like such an enormous problem. And what kind of impact could I have? But I would expect that there are some things that people can do practically within their role, no matter what they are. So Katie, I'll ask you to maybe comment on that, what piece of advice you'd like to give and then Francesca, same from you.

Katie Coffman: I think awareness of unconscious bias is an important first step and recognizing the prevalence of it in ourselves and across others that we're going to encounter. And I think that type of awareness is an important first step, but hardly sufficient. And so when do these unconscious biases become most problematic? Well, it's really about these implicit associations, these intuitive decisions we make, these quick decisions we make. So both in our policy design and in our individual actions, can we interrupt that mapping from unconscious bias, implicit association to action. Because it's going to be very hard, I think we've seen in research, you can't just suddenly become someone who has no unconscious bias. But I think the case is much stronger that you can become someone who takes actions and acts with a deliberate hand to make it the case that whatever unconscious bias you have is going to be less likely to impact the decisions you make.

Brian Kenny: Great. Francesca?

Francesca Gino: I was struck in writing this case and talking to the leaders about the reaction that the CEO had, Kevin Johnson, when he was thinking back to the moment he realized this had happened, and it did seem it was discriminatory behavior. And he kept asking himself two questions. One was, what is the right thing to do? How did we prepare our people for this? And I think that that is a very profound question because unconscious bias is in fact pervasive. And as leader, we do play a role in trying to understand it better but also give people the opportunity to have conversations, to try to understand how to pause in the moment and make sure that they're coming up with the right judgment and the right behavior in that particular moment.

Brian Kenny: Great advice. And hopefully there will be other cases forthcoming where companies are showing great examples of how to do this and to succeed at it. Katie and Francesca, thank you so much for joining us on Cold Call.

Francesca Gino: Thank you so much, Brian, for having us.

Katie Coffman: Thank you so much.

Brian Kenny: If you enjoy Cold Call, you might like other podcasts on the HBR Presents network. Whether you're looking for advice on navigating your career, you want the latest thinking in business and management, or you just want to hear what's on the mind of Harvard Business School professors, the HBR Presents network has a podcast for you. Find them on Apple Podcasts or wherever you listen. I'm your host, Brain Kenny, and you've been listening to Cold Call, an official podcast of Harvard Business School on the HBR Presents network.

Brian Kenny is Chief Marketing and Communications Officer at Harvard Business School.

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