Unionisation, first challenge brewing for Narasimhan as Starbucks CEO

Pune-born Laxman Narasimhan is set to lead the world’s largest coffee chain, Starbucks, as its chief executive officer. He will join the Seattle-based company on October 1 as incoming CEO and shall formally take on the role on April 1, 2023.

He will work closely with Howard Schultz, the interim CEO before assuming the aforementioned role and joining the board of the company.

Narasimhan joins the coffee chain at a time when its employees at over 200 outlets have voted to form unions. Harish Bijoor, founder of Harish Bijoor Consults, said Narasimhan’s primary challenge shall be to handle this issue astutely and in a politically correct way.

This is not the first time Narasimhan will be facing such a daunting challenge. During his three-year stint at Reckitt Benckiser, where he took the reins as CEO a few months before the world shut down due to the Covid-19 pandemic, he dealt with numerous problems head-on. 

According to a Bloomberg report, he took over at a time when the company was recovering from a cyberattack, manufacturing problems, a failed product launch, and a health scandal where hundreds of people in South Korea died from lung diseases caused by exposure to a humidifier disinfectant sold by Reckitt Benckiser.

Narasimhan wrote a letter of apology to a South Korean independent commission for social disaster investigation after a meeting with its members in Britain. As CEO of Reckitt Benckiser, he put in place a turnaround strategy. According to a Bloomberg report, he took only two quarters to come up with a road map to communicate the strategy and roll it out.

In its release, Starbucks said: “Narasimhan brings nearly 30 years of experience leading and advising global consumer-facing brands… Most recently, he served as chief executive officer of Reckitt, an FTSE-12 listed multinational consumer health, hygiene, and nutrition company, where he led the company through a major strategic transformation and a return to sustainable growth.”

Prior to his stint at Reckitt Benckiser, he held various leadership roles at PepsiCo, which he joined in 2012. He left PepsiCo as its global chief commercial officer; he was responsible for the company’s long-term strategy and digital capabilities. He also served as CEO of the company’s Latin America, Europe and Sub-Saharan Africa operations, and previously as the CEO of PepsiCo Latin America, and the CFO of PepsiCo Americas Foods.

According to a source, 55-year old Narasimhan was in the running to take over PepsiCo after Indira Nooyi. He worked very closely with Nooyi during his stint at the US-based food and beverage major.

“He comes with long-term and short-term visions and understands the food and beverage business very well. He has insights into the emerging markets, as well,” said the source.

Mellody Hobson, independent Starbucks board of directors chair, said in the release that Narasimhan is an inspiring leader. “His deep, hands-on experience driving strategic transformations at global consumer-facing businesses makes him the ideal choice to accelerate Starbucks' growth and capture the opportunities ahead of us. His understanding of our culture and values, coupled with his expertise as a brand builder, innovation champion, and operational leader will be true differentiators as we position Starbucks for the next 50 years, generating value for all our stakeholders,” Hobson said.

The interim CEO of Starbucks, Howard Schultz, stated that when he learned about Narasimhan's desire to relocate, it was apparent that he is the right leader to take Starbucks into its next chapter.

“He is uniquely positioned to shape this work and lead the company forward with his partner-centered approach and demonstrated track record of building capabilities and driving growth in both mature and emerging markets,” Schultz said.

Narasimhan’s base salary at Starbucks is $1.3 million; he will have an annual cash bonus opportunity at a target of 200 per cent of the base salary, according to regulatory filings by Starbucks. He has also received a $1.6 million cash signing bonus.

Narasimhan holds a degree in mechanical engineering from the College of Engineering, University of Pune, India. He has an MA in German and International Studies from The Lauder Institute at the University of Pennsylvania and an MBA in Finance from The Wharton School at The University of Pennsylvania.