I often sit back and reflect on why our industry is in such an economic mess and, even more, how we’re going to recover from it. I recently read “What McDonald’s Can Teach Us About Recovery,” by Mats Lederhausen. It’s posted on HarvardBusiness.org and it offers some applicable and thought-provoking insight for us as boat dealers.
Lederhausen is a former senior executive with McDonald’s and now is the founding partner of BE-CAUSE, a company focused on building businesses with a purpose bigger than their product. Reflecting on his years with McDonald’s, he recalls they tried many things, some even said too many. But, out of it all, two insights eventually emerged.
The first was that the original premise of the McDonald’s business model was still sound. Lederhausen explained that Larry Light, the chief marketing officer, said: “The time we need a new business model is when we believe that our customers no longer ‘Deserve a Break Today.'” Clearly, in today’s time-starved landscape, this was not the case.
In a similar manner, our business model in the marine industry — to bring the enjoyment of the boating lifestyle to America’s families — remains as sound today as it was 50 years ago. We need more focus on that as our core business.
But the second insight for McDonald’s was even more striking. “We had confused size with success,” says Lederhausen. “Over time, we started to believe that one more restaurant meant ‘job well done.’ And sooner rather than later, all our metrics, all of our incentives and all of our capital were chasing growth — the bad form of growth: growth from quantity, not quality.”
Ouch! Looking back now, could it be that in the marine industry, we got caught up in a race for quantity (manufacturers chasing ever bigger production and dealers pushed to unsustainable inventories) instead of seeking growth from quality? In a word: yes!
So, what did McDonald’s do? “We realized that growth must be ‘deserved’ in order to be sustainable,” explained Lederhausen. “As long as you are getting better, it is good to get bigger. But if you are buying size, particularly at the cost of quality, then you are on a slippery and ultimately unsustainable slope,” he emphasized.
In 2003, McDonald’s launched a new strategy, “Growth from being better.” The entire company was realigned around this one idea. Human and financial resources were now directed at truly improving, not just increasing, their activities. The rest is history and Lederhausen shares four good lessons from the remarkable turnaround of McDonald’s:
1. How you grow matters as much as that you grow. The financial services industry would have benefited from a focus on “growth by quality, not by quantity.” Clearly, the “growth at any cost” credo of some led to exactly that: any cost.
2. Changing your business model may not be needed, but belief in it is. At McDonald’s, we knew that people still “deserved a break today” and we were willing to let go of all other initiatives (many of them very exciting) in order to demonstrate unwavering commitment to the core business.
3. None of us is as good as all of us. It’s the system, stupid! Understanding that you are leading a system, not a company or a person, is a critical insight if you want to successfully change something large. And it must start with the humility that you are in the service of something larger than your own institution. As we say at BE-CAUSE, a purpose bigger than your product.
4. Plan your work, and work your plan. At McDonald’s we created a “plan to win.” Some would argue that it wasn’t perfect. Perhaps it wasn’t, but we decided that it was. And we haven’t looked back. Even through tragic circumstances — losing two CEOs in less than one year due to tragic deaths — the plan stayed intact and is still central today to the focus and alignment of the organization.
Here’s today’s How I Discovered Boating video: www.youtube.com/watch?v=CFdGNlLb8oA?