February 5, 2009
Empathetic CEO Leads McD’s to New Heights
There are a lot of reasons
one could point to as "the reason" behind McDonald’s success
in recent years. There are restaurant remodels, changes to the menu, a
focus on value, etc.
While all of the above
are certainly contributors, a piece on Forbes.com by Dev Patnaik and
Peter Mortensen, co-authors of Wired to Care, posits that the real
credit goes to McDonald’s CEO Jim Skinner for "building a widespread
sense of empathy… for the company’s customers."
According to Messrs. Patnaik and Mortensen, Mr. Skinner’s ability to get McDonald’s
employees to see how the world and their company
looks through the eyes of consumers has enabled them to provide something
of true value to those who patronize the fast food chain.
Organizational empathy
has also helped make McD’s more efficient. According
to the authors, "Empathetic companies don’t get paralyzed by a sea
of contradictory information. They have the acuity to cut through the noise
and focus on what really matters. Most important, they find ways to lay
the foundations for new growth regardless of what their competitors are
up to."
Discussion Questions:
Do you agree with the premise that Jim Skinner’s greatest accomplishment
has been in making McD’s a
more empathetic company? How do you think that empathy is demonstrated
in the day-to-day business of McDonald’s?
Discussion Questions
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After Fast Food Nation came out, McD’s didn’t really have a choice but to appear more empathetic. They’ve made some great strides with the menu assortment, but they still serve products loaded with preservatives and manufactured taste enhancers. When they start embracing the more natural food approach with less impact to the farmers (and less nightmare stories from the meat manufacturers that they use), I’ll give them credit for real empathy.
This is simply not true. People go to McD’s because they get a value food offering, regardless of the location, and clean bathrooms. What McD’s did do was finally extend their reach into areas that they had ignored for years, like premium coffee, which dramatically changed their client base and increased their ability to appeal to both new customers, as well as increase the return rate of existing customers.
If building empathy equals making your employees aware that it’s the customers who make their payroll, then Mr. Skinner has definitely built empathy. I believe McDonald’s success under the leadership of Mr. Skinner is much more than that. He’s a home-grown McDonald’s success story who understands the business at every level in good part due to the fact that he worked his way up from the bottom. He knows who the McDonald’s customer is, and has orchestrated the delivery of a consistent and successful strategy across the brand. Every touch point the customer has with the brand is vital to success and he communicates that enthusiastically to all employees.
I’m not buying the premise that “empathy” is the driving force behind McDonald’s resurgence, without minimizing its merits. Skinner and his two immediate predecessors as CEO (both of whom died prematurely) recognized several strategic missteps made before them and took steps to correct them:
1. They improved the company’s execution. First and foremost, McDonald’s is noted for its consistency but had slipped badly in terms of food quality, cleanliness and speed of delivery. McDonald’s operates at a much higher level than in the past.
2. They improved the chain’s relevance to its consumers. Not by accident that McDonald’s buys (and presumably sells) more chicken than beef today, and is giving Starbucks a run for its money in the coffee business.
3. McDonald’s found a new marketing mantra (“I’m lovin’ it”) that achieved the simplicity and emotional resonance of its slogans from “the golden age” of its advertising.
I could go on…the point here is that Skinner may be an empathetic manager but has most importantly improved his company’s performance by executing some key strategic steps well.
Forty years ago, Abe Shuckman was the best professor at the Columbia Business School. He was the professor of marketing and taught a variety of marketing and sales courses. I took every one that he offered, but I still remember the very first one. In the first class, marketing 101, he introduced the word “empathy.” He said there is no more valuable word for a marketer. It works if you are in sales selling across a desk. It works if you are in advertising designing an ad to reach a customer. It works if you are a marketer determining how to market your product.
It left a great impression on me and I have kept it in mind for my entire career. If one uses empathy as their primary marketing tool, then one cannot forget their customer. In theory and research there have been (and will continue to be) many “hot” ideas on connecting your product to your customer. But, basically, whether simple or complex, the latest idea always boils down to “empathy.”
The success of McDonald’s today reflects Skinner’s leadership in taking the organization back to the customer across all levels of the organization. It can be difficult in a multibillion dollar organization to remember that it represents billions of small transactions, each one a customer experience. From the McD training programs, to the commitment to quality, family focus and clarity of direction within the organization–it works.
One of my favorites is the vendor program that invites employees from supplier companies to spend a day behind the counter. This program has reached across the supply chain, involving partners from many different areas bringing a common perspective that keeps the customer in view.
Hi, this is Pete, one of the authors of the Forbes piece all of you have been discussing. It’s been really fun reading your comments–there’s a lot of provocative thinking going on here.
I did want to just step in and confirm that empathy in a business context is precisely what was described above–knowledge that all of business flows from the customer and developing knowledge of their lives to connect more closely with them. That’s why, even though execution is a major part of Skinner’s resurgence, and coffee drinks, and chicken sandwiches of all kinds, I’m willing to say empathy was the key factor.
Otherwise, how would Skinner have known that the problem was the up-keep of his stores, that consumer tastes had changed, and that the standard of food quality had risen? You have to be listening and connected to discover what should be obvious. Large companies can be constructed so it’s incredibly hard to see who your work has an effect on. Great organizations find ways to make it abundantly clear who you really work for, and how to create value for them.
We’ve written a lot more about all of this in our book, Wired to Care, and we’ve got a great conversation going at http://blog.wiredtocare.com that you guys might find interesting. Thanks for all of your thoughts, and I’d love to hear more from all of you!
I’m not sure that empathy is exactly the right word, but there is something to this idea. For years, McDonald’s was very focused on customers, but in the 90s they lost that focus. If you read their annual report from the few years before Skinner, you can see it. You read a lot about international expansion, food operations/machinery, franchisees, and finance. You don’t read about a clean restaurant, or making something for mom to eat. Once Skinner arrived, the whole thing changed and became much more focused on customers again.
Now, McD’s is never going to “empathize” with the Alice Waters-idolizing, Fast Food Nation-reading, NPR-listening, Jon Stewart-watching set (OK, I just described about 90% of the people I know!). But so what? There are lots of Americans who want something cheap, fast, tasty, consistent, and family-oriented, with a variety of more and less healthy choices. McD’s does that–and even my Jon-Stewart-watching self likes a Quarter Pounder every now and then.
I’m not sure Laura Davis understands what it takes to serve food to millions of people every day in over 30,000 locations across the world. Sounds like she’s thinking “Whole Foods does Fast Food”…and that could be a good idea, but it’s not a ‘brand right’ idea for McDonald’s. McDonald’s is a CHOICE that many people are more than happy to make. ‘Whole Foods does Fast Food’ would be another…but there’s no doubt, fortunately or unfortunately depending on your p.o.v., as to which one would be more ubiquitous (globally), more profitable and more digestible price-wise.
On topic: there is no better CEO than one that comes up through the ranks. They (usually) completely ‘get’ the customer simply because they know the customer–they’ve talked to them! And there’s precedence at many different levels of retail as well. An example of that is Crate & Barrel; they only hire HQ staff from their stores–good idea. Abercrombie’s in-store graphic models are from their stores–hey, they look like customers….
Stephen Davis, who recently took over the reigns at Bob Evans immediately went out to stores and spent most of his first 6 months behind the register, talking to customers. Guess what…their numbers are solid.
Empathy is not the only reason for McD’s success, but it’s certainly one of the top 5 reasons.
We can argue about whether it is empathy or not, but it’s become pretty clear that McDonald’s offers value, quality, and consistently good service for its target customers.
Laura Davis has it totally right.
This is a great concept based on legitimate teachings. All businesses should have this frame of mind. But I am curious how they are able to take this empathetic philosophy and translate it into action at the customer level.
Would the server now say something like “I’m sorry to hear you just lost your job, sir. I guess that means you won’t be super sizing your fries today?”
“Thank you, McD’s for regularly feeling the hunger pains in my stomach and quickly satisfying them without causing additional pain in my wallet. Hey, Mac, you are one empathic dude.”
I’m not sure that empathy has contributed to McDonald’s success. Ubiquity of their restaurants, coupled with low prices and a more interesting assortment would seem to have had the most impact.
This a very timely and important article to discuss. I will not claim that empathy is the reason behind McD’s turnaround, but clearly the point of giving the customer what they want through a huge organization of individuals with varying priorities is almost a miracle. As the authors state in the article, “Skinner’s success reminds us that in a crisis, the best way to get ahead is the best way businesses have done it for centuries: Have a gut sense for what people need and give it to them.”
The “miracle” is in Skinner finding the path to get the 30,000 McD’s employees to focus their talent and time on improving the customer’s experience. Call it empathy, but Skinner has been able to be seen by franchisees and company staff as relevant, knowledgeable and inspirational. Therefore, they have listened to his message and have focused as a cohesive organization on delivering for the customer.
Other than Sausage McMuffins with Egg (which are my guilty pleasure), I am not a McDonald’s customer–but I love the story. Hopefully more CEOs will read the author’s book, “Wired to Care,” and move their organizations in a similar direction.