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McDonald’s, Scalability, and Leadership

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

Imagine you stop typing, take your eyes off your computer screen, glance at the wall, and realize the time is 11:57 AM, and it’s a cold, winter Monday morning. what’s on your mind? What’s your next thought?

I’m hungry! correct? !

With our hectic lifestyles, what quick food option comes to mind? McDonald’s, Wendys, Burger King, Taco Time, Subway and more. Where do you usually go for lunch?

Two years ago, I would find myself buying a $5 ready-to-eat pizza at Little Caesars. Are you asking if this is right for my team? Do not! The whole thing was for me; I ate every last slice. If it’s not pizza, it’s some kind of hamburger, taco, sandwich with chips and soda. So, it was only natural that I weighed 240 pounds at that point.

What does my weight and past eating habits have to do with McDonalds, scalability, and leadership? Absolutely not! But here’s the fascinating truth. McDonald’s is at the root of a rapidly changing economy. John C. Maxwell shares the story of the McDonald brothers when discussing “The Lid’s Law.” What law is that? Well, here’s a condensed summary.

On a scale of 1 to 10, how would you rate your leadership skills? On the same scale, how would you rate your efficiency? “Your leadership ability will always determine your effectiveness and your organization’s potential impact.” You can find it on page 1 of Chapter 1 of John’s revised and updated book; 21 Irrefutable Laws of Leadership . So, if my leadership is 4, then my effectiveness cannot be greater than 3. If my efficiency is a 4, then my leadership is at least a 5. Make sense?

John tells Dick and Morris’ story well, emphasizing that the two brothers recognized an opportunity to reinvent their restaurant and turn it into a drive-thru that sold hamburgers, fries, drinks and more. In fact, their venture was a huge success and “their genius was in customer service and kitchen organization (p3).” However, they didn’t chase the concept of franchising because “they lacked the Essential Leadership (p3)”.

Have you found yourself in a similar situation? Are you an expert in your field and clients love what you do, but you don’t know how to expand your business to build a bigger enterprise? We all have something to relate to. Two weeks ago, I would never have imagined myself blogging every day (disclaimer: I missed a few days posting to my blog here and there, but when I stopped to think about it, I kept writing every day blog because I coordinate tax returns, tax consulting projects, and answer client questions about tax technology concepts multiple times a day!).

Well, ask yourself, “How high or low is my leadership and/or effectiveness ceiling?” If my leadership ability is a measly 3, how do I get it to a higher score? Now, between 1937 and 1954, I’m sure the McDonald brothers were successful with their regional restaurant model. Then they meet Ray Kroc, who is a few notches above the brothers in leadership. You see, Ray can imagine a grand restaurant business where everyone follows a system of processes to provide each customer with a similar meal and a similar experience; that’s scalability! Ray really works behind the scenes. Did you know that Ray didn’t get paid a penny for his first eight years with the McDonald brothers? Would you let yourself sweat eight years without a paycheck?

What would you do if I told you that you could cash out $2.7 million but have to wait 8 years to get paid? That means you’d have to work day in and day out for 8 years to extract a penny out of $2.7 million; would you give it your all? Today you’d be hard pressed to find any man or woman willing to work without pay for a commitment to pay within 8 years.

Well, that’s exactly what happened! “In 1961, Kroc bought the exclusive rights to operate McDonald’s from the brothers for $2.7 million and set out to transform it into an American institution and global entity. Ray Kroc’s life and leadership” Lid “is clearly much higher than his predecessor (p4).”

Fast-forward more than 50 years later, and McDonald’s has become a global icon for hamburgers, fries and soda. Whether you buy your burger in the small town of Evanston, Wyoming or on Market Street in downtown San Francisco, California, you’ll experience the same taste and smell that’s replicated around the world. That’s the amazing story of McDonald’s, scalability, and leadership under Ray Kroc.

As you know, I’m currently reading about 10 books at the same time. When I see information in one book mentioned in another, I have to think it’s no coincidence, but I probably should take this information seriously. In his spin-off book, “Business in the 21st Century,” Robert T. Kiyosaki talks about assets. Well, Asset 5 is about a replicable, fully scalable business model.

If you haven’t read the book or heard of it (FYI, Robert is the author of Rich Dad Poor Dad; ring the bell?) then I’ll let you know right now that Robert is talking about dropshipping. He notes that you don’t need to be a skilled salesman to be successful in dropshipping if you embrace one important fundamental principle:

Design your small business model so it can be replicated multiple times without your direct involvement.

Remember, the McDonald brothers are experts in customer service and kitchen organization. They strive to design their business model in a way that anyone can replicate it many times over. However, when Ray Kroc came along, “he wasn’t looking for an elite team of exceptionally talented restaurateurs with a high level of expertise to run his multiple businesses. Instead, he Design expertise directly into operations (p67).”

Robert goes on to teach, “You don’t need highly skilled salespeople to replicate what you do. What you need are people who are willing to learn basic business and communication skills and grow themselves personally as self-employed entrepreneurs and team builders (p. 69 pages).”

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