Despite the economic doom and gloom at least one company continues to prosper. Last week McDonalds posted quarterly results that beat market expectations. This is the latest in a series of good results from the ubiquitous burger chain, and is based on the company’s ‘Plan to Win’ strategy led by CEO Jim Skinner.
McDonalds have achieved their success not only in the face of recent economic uncertainty but also while the company continues to be at the forefront of campaigns focused on food health issues (including Morgan Spurlock’s film, Supersize Me), environmental concerns and anti-globalisation protests.
Many companies would have crumbled in the face of such hostility but it seems to have spurred the company onto greater and greater success. I believe there are three factors underpinning their impressive performance:
- Focus. The whole organisation, from the CEO down, is obsessed with the McDonalds system (which integrates franchise owners, suppliers and employees) and ensuring that the business continues to function efficiently and effectively. They know what they want to achieve and what it requires of them to achieve it. As the McDonalds insiders would say they “keep their eyes on the fries!”
- Distinctiveness. It is not enough simply to be focused – McDonalds are also distinctive. They have huge brand awareness (it was the first brand that Louis, my two-year old son, noticed) and a clear customer offer. They target their offer and their communication on customer groups who will react positively and are prepared to largely ignore those who aren’t interested in the McDonalds proposition.
- Agility. As the tastes and requirements of their core market have evolved McDonalds’ managers have been willing and able to refine the proposition. Eighty percent of their business may still come from their core ranges – Big Macs, Quarter Pounders and fries – but McDonalds now offer salads, higher-quality coffee and new types of sandwiches – all of which are delivered within their value-focused system.
- Set aside “free-time.” Famously, 3M give their researchers up to 20% of their time to work on projects of their own choosing. This has been the source of many of their greatest innovations, including Scotch Tape and Post-It notes.
The critical aspect of their success is that all three factors – focus, distinctiveness and agility – are in evidence, which is why the formula at the top is multiplicative rather than additive.
- The performance of a company that is focused and distinctive but is not agile will inevitably decline over time. Kodak, for example, has struggled to make the transition to the digital photo market.
- Alternatively, a focused and agile company that is insufficiently distinctive will be unable to generate clear advantages or deliver superior profits. Somerfield, for instance, has had no answer to the convenience food offer of Tesco or the Co-Op and was eventually bought by the latter last week.
- Lastly, an agile company that has a distinctive proposition, but which is not suitably focused, may be undone by poor operational performance. Howard Schultz, who returned to lead Starbucks last year, argued that the company had lost its way, noting, “I have said for 20 years that our success is not an entitlement and now it’s proving to be a reality. Let’s be smarter about how we are spending our time, money and resources. Let’s get back to the core.”
The bottom line
Do you deliver McSuccess? Whether you lead a small team or a large corporation you need focus, distinctiveness and agility if you are to achieve great results.
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