McDonald’s, Scalability, and Leadership

McDonald’s, Scalability, and Leadership – John C. Maxwell

Imagine for a moment that you stop typing, move your eyes from your computer screen, glance at the wall and realize that the time is 11:57 am on a cold winter Monday morning. What’s on your mind? What is your very next thought?

I’M HUNGRY! Right?!

With our busy lifestyles, what quick meal options come to mind? McDonald’s, Wendys, Burger King, Taco Time, Subway, and the list goes on. Where do you usually find yourself at lunch time?

Two years ago I would find myself in Little Caesars buying a hot-n-ready $5 buck pizza. You ask if this was for my team? No! The whole thing was for me; and I ate every last slice. If it wasn’t pizza, it was some kind of hamburger, taco, sandwich with fries and a soda. So, it was natural that I weighed 240 pounds back then.

What does my weight and past eating habits have to do with McDonald’s, Scalability, and Leadership? ABSOLUTELY NOTHING! But, here is the fascinating truth. McDonald’s was at the roots of an economy that was changing rapidly. John C. Maxwell shares the story of the McDonald’s brothers as part of his discussion regarding “The Law of the Lid.” What law is that? Well, here is a condensed summary.

On a scale of 1 to 10, how do you rate your leadership ability? On the same scale, how do you rate your effectiveness? “Your LEADERSHIP ABILITY always determines your EFFECTIVENESS and the potential impact of your organization.” You’ll find this on page 1 of chapter 1 in John’s revised and updated book; The 21 Irrefutable Laws Of Leadership. So, if my leadership ability is a 4, then my effectiveness cannot be greater than a 3. If my effectiveness is a 4, then my leadership ability is at least a 5. Make sense?

John illustrates the story of Dick and Maurice very well when emphasizing that the two brothers recognized an opportunity to reinvent their restaurant and to convert it into a drive-in selling hamburgers, fries, drinks, etc. Indeed, they saw great success in their venture and “their genius was in customer service and kitchen organization (p3).” Yet, they didn’t race after the franchising concept because “they lacked the leadership necessary to make a larger enterprise effective (p3).”

Do you find yourself in a similar situation? You are expert in your field, clients love the work that you do, but you don’t know how to scale your business to build a larger enterprise? We all have something we can relate to. Two weeks ago, I never would have pictured myself blogging every day (DISCLAIMER: I have missed a few days here and there posting content to my blog, but when I stop to think about it, I am blogging constantly every day as I coordinate tax returns, tax consulting projects, and answer questions from clients about tax technical concepts multiple time a day!).

Well, ask yourself, “How high or how low do I wear my LID of LEADERSHIP ABILITY and/or EFFECTIVENESS?” If I am at a measly 3 for leadership ability, how do I raise that to a higher number? Now between 1937 and 1954, I’m sure that the McDonald’s brothers enjoyed their success with their regional restaurant model. Then they met Ray Kroc and he wore his LEADERSHIP ABILITY LID a few notches higher than the brothers. You see, Ray could visualize a grand enterprise of restaurants where everyone followed a set system of processes that presented every customer with a similar meal and a similar experience; this is scalability! Ray literally worked his BEHIND off. Did you know that during his first eight years with the McDonald’s brothers, Ray did not collect one penny of salary? Would you put yourself through sweat and tears for eight years without a salary?

What if I told you that you could cash in for $2.7 million, but would have to wait 8 years before collecting? This means you would have to work day in and day out for 8 years before you could collect a penny of the $2.7 million; would you be all in? You would be hard pressed today to find any man or woman that would work for NO SALARY for a promise of a payout in 8 years.

Well, that’s exactly what happened! “In 1961, for the sum of $2.7 million, Kroc bought the exclusive rights to McDonald’s from the brothers, and he proceeded to turn it into an American institution and global entity. The “lid” in the life and leadership of Ray Kroc was obviously much higher than that of his predecessors (p4).”

Fast forward over 50 years later and McDonald’s is a global icon for hamburgers, fries, and soda. No matter whether you buy a burger in small town Evanston, Wyoming or downtown San Francisco, California on Market Street, you experience the same taste and smell that is duplicated across the world. That’s the amazing story of McDonald’s, Scalability, and Leadership under Ray Kroc.

Just so you know, I am currently reading about 10 books at the same time. When I come across information in one book that is addressed in another book, I am forced to think that it is not a coincidence, but that I should probably take the message seriously. In his spin off book The Business Of The 21st Century, Robert T. Kiyosaki talks about assets. Well, asset number 5 is about a duplicable, fully scalable business model.

If you haven’t read the book or heard about the book (FYI, Robert is the author of Rich Dad, Poor Dad; ring a bell?) then I will let you know right now that Robert is talking about direct sales. He points out that you do not need to be a skillful salesman to be successful in a direct sales business if you embrace one important fundamental:

Design your tiny little business model so it can be multiplied and replicated many times over without your direct participation.

Remember, the McDonald’s brothers were expert in customer service and kitchen organization. They struggled to design their business model in a way that anyone could duplicate it many times over. Yet, when Ray Kroc came into the picture, “he didn’t seek out an elite corps of especially talented restaurateurs with high-level expertise to run his multiple operations. Instead, he designed the expertise right into the operation (p67).”

Robert continues to teach that “you don’t need highly skilled salespeople to duplicate what you do. You need people who are willing to learn basic business and communication skills and grow themselves personally into self-determining entrepreneurs and team-builders (p69).”