How do you get major companies like IBM, Starbucks, Nike, and GE to radically rethink their purpose? Keith Yamashita starts by asking companies to “lead into the unknown.”
Keith Yamashita and his team at SY Partners have spent nearly a quarter century helping individuals and companies transform, but 24 years in, business is better than ever. When you’ve got decades of experience helping companies like Starbucks, IBM, and Target become better versions of themselves, word gets around.
Yamashita and his team will only accept work with large enterprises if the CEO and executive team are fully committed to challenging their core assumptions. Plenty of companies pay lip service to transformation, but Yamashita’s genius has been in identifying the leaders who are truly ready for the journey change requires. Perhaps his most illustrative client is Howard Schultz’ Starbucks, which has been working with Yamashita ever since the founder returned as CEO nine years ago. During the decade of their partnership, Starbucks completely rewrote its purpose statement, focused its business on its employees and its role in the community instead of the bottom line, and saw its stock grow by nearly 15X.
True change is centered around human creativity, Yamashita argues, and requires leadership to be open to new approaches to what are seemingly intractable problems. Starbucks, for example, was a victim of its own intellectual traps: A decade ago, the company was struggling, and most of its leadership (and Wall Street) was convinced the company had too many stores and needed to cut back. Working with Schultz, Yamashita found a completely different answer (read on for the details!).
Below is a transcript of my conversation with Yamashita, along with a video. Both have been edited for length and clarity.
John Battelle: Let’s start with your firm SY Partners. You and a partner founded the firm 24 years ago…
Keith Yamashita: Yeah, it’s crazy.
What does SYPartners do?
It’s been an evolution. The way I best describe it now is, “We help people as they go through a process of transformation.” Whether that’s an individual trying to transform the way he or she leads a company and how they serve the market, or the difference they make in the world, or increasingly societal impact kind of work. If I had to sum it up I’d say, “We’re a transformation company, when one thing is trying to transform or morph into a better version of itself.”
There seems to be a lot of that going on right now. Is business booming?
Business is booming. Mostly because the world is in such amazing flux and change, whether it’s new competition that is shredding markets and changing industries, or it’s people really saying that they need to make a bigger impact or positive impact in the world. Both those dynamics are causing lots of change in the world.
Give me a sense of who your clients are. I know you can’t talk about all of them…
Some clients like to talk about their transformations and some don’t. We work with Howard Schultz and the team at Starbucks, and we’ve been a long-term partner there as they’ve been on this perpetual road of challenging what it means to be a public company and how much positive impact you can drive as a public company.
We have worked a very long time with IBM, a 105-year-old technology company as they’ve gone from e-business to creating a world which is really a smarter planet to this new area of cognitive. We work with AARP as they’re trying to disrupt aging. We work with Laurene Powell Jobs and Russlynn Ali at the Super Schools endeavor as they try to reinvent the American high school.
Are there clients that you won’t work with?
Yeah. There are a number of clients. We’re a firm that’s very driven by intention. When you have leaders that have a deep intention to actually drive more societal value, a better company, differentiated culture, those are the things that we’re attracted to, and those are the things that are attracted to us.
Conversely, when we believe a leader is mouthing the words but doesn’t really mean what she or he is saying, we gracefully suggest that they work with someone else. It’s never a flat out, “No.” You can take the boy out of Japan but you can’t take the Japan out of the boy.
Let’s talk about Howard Schultz. Starbucks has been in the news a lot in the last few years for decisions that were made by Howard about how he manages the workforce. How did that assignment begin?
Howard was reinstalled as CEO of Starbucks, I guess it’s almost nine years ago. We did not know Howard Schultz then, but we had worked with one of his board members.
We got a wonderful call — “Howard Schultz is coming into the company. He’s taking over the company at a time when all the leading indicators are down and he’s going to have kind of lead into the unknown. He’s going to have to create something of Starbucks that even differs from his amazing (first) time at the helm. Will you come talk to him?”
We said, “Sure, when he gets settled that will be great.” His board member said, “No, I’m talking like about tomorrow, could you come in and talk to him?”
Schultz is so truthful about wanting it to be a very different kind of company. He believes that you can drive a lot of societal value from a perch of being a for-profit company. It’s been almost a decade-long journey of him rewriting and remaking the purpose of that company, re-instilling how they innovate, making positive choices about the workforce and how the workforce works. He so values the employees of his company, he calls that his purpose.
When you get a phone call like that, is it usually the leader of the company saying “I have a very clear vision of where I want to go”? Or is it more, “Help me figure out, I have a general direction”?
Situations present in all ranges, but the ones that we’re most fascinated by are “unknown problem, unknown solution.” Where you get a call from a leadership team that says, “We’re facing challenges, we don’t fully know how we want to address them yet and we don’t really know what the solution is because we don’t see anyone out there who solved the problem this way.”
We tend to get called for those kinds of engagements, where you have to invent the future.
Specifically in Starbucks’ case, what were the kind of problem sets that were being addressed?
It’s interesting. When you have every leading indicator down — this was a decade ago — so very different than the Starbucks you see today, which is a vibrant healthy company. But if you look at same-store sales, morale of the work force, resonance of the brand, every leading indicator was heading down. It wasn’t so much that they didn’t know they had challenges. They had many.
It’s that they didn’t know what to pinpoint in those challenges to take action. What evolved, the leading hypothesis at the time was that Starbucks had become over-saturated as a brand. Here in New York City you go every few blocks and there’s a Starbucks on the corner. I think the leading hypothesis at the time is, “The company is too saturated, there’s just too many of them.”
We worked with the leadership team to challenge that notion and say, “If Starbucks was really actually a part of the community, actually doing good in the world, actually a great place to work, actually a place where people can start their careers, actually a place of decency and humanity, there would be no such thing as too many, because business of course can benefit from this thinking everywhere.”
This is how sense-making happens. As leaders we always try to find I think the minimum viable explanation of what’s going on. People latch onto these memes without doing the thoughtful introspective work about what they want to do in the world.
What I admire about Starbucks is they perpetually renew their belief in their culture, their belief in their purpose as a company. One of the things that we worked with Howard and his team on was literally rewriting every stanza of their mission as a company, something they had not done for decades.
Can you give me a concise overview of what their purpose is?
They’re really about nurturing the human spirit. It really is about getting that right with coffee and everyone who is involved…There’s the maker of the coffee, which means treating farmers ethically, allowing them to have an amazing living from farming.
It’s about taking that and really doubling down. All the policy decisions that Starbucks has made over many, many decades are investments into this belief in their people. From that you create amazing stores, from amazing stores, you’re able to serve the community, and only if you do all of these things do we actually perform for the shareholder. It’s important to get each one of those equations right.
In a world where most people are focused only on shareholder value, and don’t look at the rest of the causal chain, what I admire about Starbucks is that they start from the very essence of the product they make all the way through the people. Their performance is a result of doing all of that right.
It’s not about managing the Street or managing the number, it’s about leading all of these things and the number’s the natural result.
Let me ask you about a different client. You mentioned Laurene Powell Jobs.
Laurene Powell Jobs and Russlynn Ali, from the Emerson Collective, have a lifelong passion for education. Laurene’s view of America is, “To create a stronger America, we have to remake and reinvent and reimagine our schools.”
She’s exceptionally gifted at, as you would expect, in painting a new picture of the future but not from an egocentric point at all. She’s one of the most humble leaders I’ve worked with. She says, “There is an answer out there for a different kind of high school. High school is the last time you can close the gap between what a student has and what the student needs before he or she goes in the world.”
Jobs has this concept of “XQ.” IQ used to be a big measure, and then EQ (emotional quotient) became a big measure. XQ is that kind of X factor, if you will, that students need to be successful today. The XQ Institute has sponsored something called the Super Schools Initiative – an open call to all of America to reinvent the American high school.
What’s been beautiful about it is almost 50,000 people raised their hand to help. Of course, teachers and educators, but also engineers, tech people, startup people, artists, photographers, journalists, and they formed local teams to invent local high schools.
It’s been a kind of competition to find the model high schools of the future. Our involvement has been to bring this ability to lead into the unknown. Help all these teams get the knowledge they need, master the methods they need to be able to think very differently about the American high school, to challenge the model itself.
I would imagine it’s quite challenging because there’s so much local politics around that.
Yeah. The method really is about first starting with youth and really what youth want. There’s a whole segment where we provided kits and methodologies to really get underneath student voice. For the youth that are out there that are not in school because they’ve dropped out, school doesn’t serve their real needs. Go talk to them, understand their lives.
When you start from the sense of student voice, it’s the way you break through politics and all these things locally because you hold up the youth that you have and you say, “What future do they want? What future do we want with them?”
We prescribed a methodology and then what ended up being nearly 2,000 teams across the United States, then took that methodology and made it their own. What’s been exciting about the effort, they just named the top 10 schools that came out of this competition and these schools now will serve as a model for other schools.
These are already schools that exist or…?
There are a few that already exist that need to be further transformed, but most of them are brand new schools where they’ve challenged every aspect of what makes a high school a high school. Everything from how you use time to how you develop the curriculum to where you do your studies, the use of technology, the use of place. Some of them have the really radical use of using the city as the open classroom.
You mentioned the AARP as a client. Here’s an organization that has been around a long time has a very established place in society, but apparently it’s rethinking itself.
Jo Ann Jenkins, CEO of AARP, is a client. Think about you mental model of aging. If you would say, “What is aging?” You’d say, “Well, it’s a period of decline, it’s about getting older, it’s about doing less, it’s about retirement.”
That is so far disconnected to the reality of how aging happens today. I just turned 50 on September 16th and I think for me it’s about an era of reimagination, it’s about new possibilities, it’s about doing new things with a deeper wisdom.
What Jo Ann and her team are doing is really challenging the entire mental model we have of aging. They have an initiative called Disrupt Aging, it’s really about, “What are the practices you need to adopt as a human being to constantly adapt to your life?”
If you think about, for instance, your career. John, you’re a perfect example of this. A career now is not just one steady through line. It’s six or seven decades of adventure. Each 10 years, you have a very different adventure.
Our work with AARP has been about helping them envision that future and mobilize the 40 million members of AARP to embrace and think about these ideas and to take this disruptive thought that aging can be an age of Renaissance and make that the foundation of how people think about it.
50-plus people, if you add us up all over the world, are the third largest economic superpower in the world. It’s time that we bring innovation and thought and brands and business and new policies to that vast group.
When she approached you to help her, was it, “OK, the brand’s here, I want it to mean this over here, how do I get there?” Do you have a process?
We do definitely have a process. Almost all of the things we work on are new ways of conceiving of things. Our method really, first, is to go in and deeply understand what’s going on side by side. We’re not an outside force or a consultant that comes in and gives you an answer or prescribes anything. We discover it with you.
In AARP’s case, it was looking at all the different aspects of aging. What’s going on in the economy? What’s going on with jobs? What’s going on with what people want? What’s going on with macro forces on earnings over a lifetime? What’s going on with savings? What’s going on with social attitude about aging?
From that, in this highly volatile world, what started to emerge was this belief that aging actually is conceived of in the wrong way. 50 percent of the kids that are alive today that are 10-year-olds, 50 percent of them will live to be 104.
Totally different world when you think about retirement age. We used to conceive of retirement when you were 60. What do you do with that 40-year Renaissance, this elongated period? That was a process of discovery. It’s a whole phase of that kind of learning. It’s really got this to be the mission, purpose, and behaviors of every single aspect of every employee, and in their case, 40 million members here in the United States.
I just turned 50 also. I still don’t really know what the AARP is, other than a club I don’t want to join…
Maybe that’s because you haven’t welcomed yet this new view of disrupt aging. If you think about AARP as the place where you get resources, and access to experts, and tools to keep adjusting and reimagining your life, you think about AARP quite a bit differently.
You’ve worked with so many different, particularly large organizations as they’ve transformed. What do you see are obstacles that keep coming up in the behaviors of large corporations and their leaders that you can identify and say, “You’re doing it again, get out of your own way”?
I’m a big fan of trying to dissect mental models. There has been a 40, 50-year era where cost-cutting, and best practice, and process orientation have been the dominant mental models of training in business. “Who does it well? What’s that best practice? Can we implement that in our company? Can we use it to squeeze out costs so we can deliver to the shareowner?”
There has been also a real dominance of shareowner value as the primary metric for the success of a business. I’d answer your question by saying, “I think actually, the mental model is changing,” that really this is about serving all constituents well. It’s very much more Howard Schultz, it’s, “What are all the things you need to do in order to get the performance?”
I would say that because so many companies have squeezed all the costs out, now it’s about, “What makes us unique, what makes us differentiated, what makes us covetable, what makes us something that people want to work at and associate with and buy our products and services?”
A lot of that today, because information is all pervasive and everyone has access to the same data, requires originality and creativity and this ability to lead into the unknown. To me, what happens is everyone gets stuck in the first mental model, where they keep searching for an answer in the known. They keep searching for an answer by copying someone else.
They keep searching for an answer by cutting costs, rather than what I think leaders really need to do is to dig much deeper into, “I need to be creative. I need to start this from a humanity perspective. I need to be authentic in how I communicate and mobilize not just my own employees but the broader ecosystem. I got to bring creativity to everything I do.”
How do you encourage an employee base or leaders to be creative while, at the same time, hitting the goals that they have to hit to continue the health of the business?
It’s a great question. I think the answer resides in the relationship to those two things, employees and hitting your targets. It’s through the ingenuity and creativity of your employees is how performance happens. It’s not, “Tell them to perform and maybe they can be creative.”
To me, it first starts with how people self-conceive. This whole arc of betterment through small increments has actually denied people their creativity. The first thing is like, “No, my chief job as an employee of this company is to be a creative being…”
That’s as simple as look at something and find a better way to do it, be a steward of the thing that you have inherited to make it turn out.
This feels squishy to me…
Let me give you a very concrete example. IBM Japan, a very stalwart part of IBM, it used to be a part of the organization that had a top-line annual revenue of $12 billion. It’s itself a fairly significant entity.
Over a period of eight years, that declined from $12 billion to $8 billion annual revenue. Ginni Rometty in her leading of the company installed a new leader, Martin Jetter. Martin’s hypothesis of what happened is, “All the answers are here. They’re in our people. We need to unleash our people.”
He embarked on helping, a whole journey of helping those 22,000 members of IBM Japan bring their full creativity to work. He started by saying, “Let’s go look at our clients’ customer. Let’s go to the bank but look at what the client goes through. Let’s go to a grocery store. Let’s go to a retailer.”
How could we apply data analytics here? How could we apply a sense of user design here? What could we do to eliminate waste? How could we use cognitive analytics to do this better? Put aside the technology jargon, what he was trying to do is rekindle people’s belief to look at the world in a new way.
Over his time at the helm, he restored $3.8 billion of top-line growth within IBM Japan. He won’t say it’s only because of this creativity element, but it all starts with that.
Last question for you. Consultants, of which broadly one could argue, that’s what your business does, sometimes get a bad rap because they come in with these great ideas and get everyone all excited, and then they leave. How do you maintain continuity with a client?
To me, the whole point of us engaging is actually at some point to leave, but to leave when the organization has built this great culture, has defined that direction, this emergent direction and has worked on the behaviors, so it sustains, it is enriched, it propels itself on its own.
Technically, we are consultants, but I think first and foremost, we’re about transformation of human beings. That is about how you self-conceive, how you show up, what your behaviors are, how you interact, what you take pride in, what you focus on, as well as what your strategy is.
We tend to work on the human part of all of that in order to get transformations to be propelled and to create much more adaptive cultures. Our whole goal actually is to work side by side with leaders so that they put their culture in a place where we’re actually not needed.
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