Count me among the ones who drove past McDonald’s to a competitor. Unhealthy, fattening food. Sterile restaurants. And aggressive counter people pushing us to “Super-Size” everything. No thank you.
However, in this morning’s New York Times SundayBusiness section a very interesting article appeared. McDonald’s has now delivered 55 consecutive months of increases in global same-store sales. In a horrid stock year, McDonald’s is one of only two in the Dow Jones to eke out a gain — with a 6% increase.
How did McDonald’s turn itself around? I believe there are lessons here for every CEO. It can be summed up in a change in culture from the numbers to the people, from short term results to customer experiences, and from a focus on market share to a focus on product.
It seems so easy in hindsight. The changes seem so logical. But we also ought to remember what went wrong in the first place — a short term focus on financial results and market share. This lead to “Would you like to super-size that, Sir?” and over expansion of restaurants. Ditto for Starbucks.
Instead as the Times article stated, “McDonald’s reinvented itself by putting quality ahead of expansion.” Bob Goldin, EVP at Technomic, a food industry consulting firm, says McDonald’s “executes the basics flawlessly.”
If we look at the changes made, it seems so simple and logical, but in the relentless pressure for results, we often lose focus on what really matters. In McDonald’s case, the changes included:
- 60% of revenue comes through the drive-in window, so focus on speeding the process.
- Customers prefer bottles, so put milk in bottles rather than cartons.
- Chicken is considered to be healthy, so offer more chicken sandwiches.
- It refocused on drinks — now longer just an add-on to meals
We also need to look at management style. Jim Skinner, 64, is the son of an Iowa bricklayer and lacks a college degree. (Boy, there is lesson there for hiring managers!) He is also quick to credit the company plan (Called “Plan to Win”) and to give credit to his colleagues. He credits “alignment of the organization.” “Right people in the right place.” Empower your managers and give them a long leash to produce results.
Another central theme is patience. Change takes time. This turnaround in McDonald’s took six years.
Stay tuned for further management lessons.
Let’s talk. I’d love to discuss my ideas with you. (516) 495-9350 or Jeff.Ogden at FindNewCustomers.com
Good luck and good selling.
He’s also the author of three highly acclaimed white papers:
- How to Find New Customers (sponsored by Marketo)
- Definitive Guide to Making Quota, (sponsored by Marketo) and
- Moving from Transactional to Conversational Email Marketing (sponsored by Genius.com)