High ideals like these don't conflict with the bottom line in Schultz's world. "There's no long-term shareholder value," he says, "if it isn't linked to building long-term value for your people." Wall Street seems to agree: The stock has more than doubled in the past three years. "Howard Schultz's leadership style makes employees feel like partners, not hourly workers," explains Ashley Woodruff, an analyst at Bear Stearns who follows Starbucks. "That's one of the reasons why the people behind the counter in the stores are so friendly and passionate. They're not just selling coffee. They have a relationship with customers."

Growth curve. A key question for Schultz is how those relationships with customers can be sustained as Starbucks expands (the company is currently opening five stores a day around the world). In other words, how can Starbucks stay small as it grows big? "The art of leadership is making sure we don't allow the scale and size of the company to change the methodology of how we conduct ourselves," says Schultz. "We have to be careful not to let our values be compromised by an ambition to grow."

Schultz talks the talk--and walks the walk--on this issue. At the town hall meeting, he was asked if Starbucks had any special plans for advertising the opening of its 10,000th store. Schultz answered no, and then he turned to his questioner, a manager who was marking his 10th year with the company, and said: "You and I should get together to celebrate your anniversary with us. That's an unbelievable milestone!"

He's not the stereotypical cheerleader, but Schultz, who visits 30 to 40 Starbucks stores a week, believes that a corporate leader must share unbridled enthusiasm with his employees. "I need to touch as many people as possible--I want to spend time with people," he says. "That's the single most important thing I'm doing."

It's hard for most entrepreneurs turned CEO or chairman to let go, and there is a fine line between touching people and smothering--or micromanaging--them. Which is why Schultz tries hard to respect this delicate boundary. When Lombard was officially launching Starbucks music business last year, for example, he consulted Schultz on inventory, shipping, and signage issues.

But Schultz is hardly a pushover. "Everything we do matters," he says, "and we have to be consistent with the heritage of Starbucks." Or, as Lombard says: "Howard asks questions and will challenge you to perform. He'll push you to go gather the data. He'll tell you what he would do to try and solve a problem, but he's not always going to hand you the answer."

Rare beans. Passion--not ownership or empire--drives Schultz's involvement in some of Starbucks's day-to-day operations. Recently, for example, Dub Hay, the company's senior vice president for coffee and global procurement, showed Schultz the bag for a rare and exclusive Ethiopian bean. The copy on the bag said the coffee had an "intense blueberry flavor." Schultz vehemently opposed the language, saying consumers might think blueberry flavor had been added. But after much discussion, Hay and his team persuaded the boss to keep the phrase. "Three words on a bag," recounts Hay. "Howard just cares so incredibly much what we put out."