Conversation with McDonald’s Mike Roberts
Learn how to generate customer-driven ideas.
Mike Roberts is currently President of McDonald’s USA – West Division. He has been with the company in various other positions for a total of twenty-three years. Mr. Roberts recently addressed the Graziadio School’s Management Partners dinner meeting. Professor Chic Fojtik caught up with him a few weeks later as he was participating in a company-sponsored Hispanic Leadership Conference and was able to pursue some of the issues raised in his earlier talk.
GBR – I’d like to begin with a broad topic. Several contemporary business authors, including Gary Hamel, have expressed the need for businesses to redefine the rules of engagement. Can we reasonably expect a mega-corporation that has been successful to the tune of billions of dollars to initiate changes in its basic operating formula and its culture? Isn’t it inevitable that it will wait for a crisis to make substantive change?
MR – Let me put it this way. I recently received a photograph from a biologist friend of mine. It was the face of a tiger about to leap on its prey. I gave a copy of that photograph to each of the regional managers because that tiger’s expression represented the sense of what we face all of the time. I don’t think you have to wait for a crisis. You do need to be aware of what is happening. Our business, as you know, is very competitive. And it is not easy to succeed in it.
A couple of years ago it was clear to many of us within the company that we were not moving at the speed with which we had moved before. The company was becoming more centralized. We decided it was time to reverse that trend and come closer to the consumer, closer to our operators, and closer to the crews. We are trying to think smaller, to recapture the urgency of Ray Kroc and the early founders, to feel that “This is OUR company – and we can’t wait for others to create it.”
It is hard. But this is what wakes me up every morning, this internal engine that says “We have got to be better today than we were yesterday. And we are going to be better next week than we are this week.”
GBR – I write and teach about customer satisfaction, so I was very interested the other evening in your comments on the importance of understanding your customer. How do you go about doing this?
MR – We ask them what they want. For one thing, we do focus groups to help us learn – and relearn – what it is the customer wants. Especially in a region like the western United States, there are many different markets and many different consumers. Maybe the West with its very diverse populations has a special capacity to constantly redefine itself. California is different from Colorado. Phoenix is different from Seattle, and Seattle is different from Honolulu. To serve your customer, you have to know what the customer in that particular market wants.
When we get an idea about something the customer might want that is somewhat different from what we have been serving or doing, we will test it out very quickly in a small market. Then we will collect data on that test. Based on those results, I can then go to the owner-operators and say, “This is what we learned. We would like to expand it and move. What do you think?” Speed wins, so we have to act quickly. Once we have introduced it, we monitor results. And we constantly talk with our operators to see what they are hearing from their customers.
Complacency is a threat — ignoring the warnings can be disastrous. It is also a management sin to think that we know what is going on in the field if we haven’t truly “been there.”
GBR – You mentioned operators. McDonalds is a heavily-franchised organization. What is important to know about managing in this type of environment?
MR – In the Western Division more than 85 percent of our restaurants are owner-operator franchises. We partner with our operators. These are people who invest not only their money but their sweat equity. They are at the restaurants running them. We get together with them, region by region – mini-market by mini-market – and assess the current state of their business and together decide what we need to do to be more in tune with customer desires.
And we have learned that in this type of organization it is even more important to communicate inside the organization than outside of it. You can market your products or your services directly to the end-consumer, but if your people – your employees, your operators, your internal constituencies – are not on board, you are in trouble. They have to understand exactly where you are going and feel like they are a part of it. We have found that it is important to bring them to a store where we have tested a concept and allow them to have a “hands on” experience with it.
Owner-operators are a tremendous resource. They still have that entrepreneurial spirit that the early founders of the organization had. The vast majority of the significant ideas in our organization have come from our owner-operators: the Big Mac, the Fillet-O-Fish, the drive-thru window, the idea of starting a breakfast menu – including the Egg McMuffin. The corporation can provide resources, people, money, opportunities to try out these ideas and spread them throughout the organization, but most of the best ideas come from those who are closest to the customer.
GBR – I understand that the event here today is a company Hispanic Leadership Conference. Do you run other such events?
MR – Yes, we believe there is value in inclusion, but we also believe in recognizing the unique behaviors and talents of different groups. So we have programs that celebrate the values of women, African Americans, Asians, Hispanics and others.
GBR – After your talk last month, we were talking about the challenges of training entry-level workers. What have you learned about this?
MR – First, I’m very proud of the fact that almost 50 percent of our store managers started out as crew members. I think it is a prime management task to get the word out about the company being an an “opportunity engine.” We look for ways to make a summer internship so rewarding that the intern will come to believe there is no better place to work. And the crew members see examples all around them of people who have come up through the ranks. Our concept of partnering that I mentioned earlier includes not only management and owner-operators, it includes crew members, suppliers, and customers.
We do formal training, of course, but from top management on down it is also stressed that each person in management is to be the kind of role model that the crew can look up to. We take it very seriously. But we also like to have fun and celebrate our crew people. If a store has done something especially well, some of us in management will go to that store and celebrate it. The manager will get a bonus, but the crew will also get gift certificates. We will sing to them right there in the restaurant, and then the customers will start to sing along too. We just have lot of fun celebrating them. As competitive as our business is, you have to have some fun with it.
GBR – I’d like to return to the theme of change. I was particularly taken by your comment during your Management Partners speech that “We must act like an insurgent and AVOID arrogance.” Recent business magazines have featured the faces of many CEO’s who took the plunge of Icarus, How can such a juggernaut as yours avoid this on a daily bases?
MR – It goes right to the top. Being a part of Jack’s (Greenberg, current McDonald’s CEO) team, I am truly inspired by the way he models listening. He makes people comfortable enough to bring him unpopular data, and he believes it when he hears it! In turn, he can do this because he hires honest forthright people. It’s another part of the wisdom of decentralization, of staying close to the action.
GBR – On a more personal note, your career with McDonald’s has covered numerous functional areas, from purchasing, through operations, even environmental services. Do you think that this experience has made you more attuned to the need for balance among multiple stakeholders of a business? Would you recommend this path to others? Any advice to the early career-path person?
MR – I was at Motorola before coming here. I also worked for a McDonald’s distributor of food and paper products. I had a territory, a budget, and a goal. It was up to me to make it happen. As a direct result of this experience, we now function in a mode where operators develop their plans and tell ME what they need to carry them out. Why should I deem to tell them; THEY are closer to the action.
I wouldn’t be who I am without the broadening experiences I’ve had with the company. It wasn’t really a path or vision of some mentor, or the result of any organized system. I just wanted to make the company better. I wanted to include the suppliers and others who were behind the scenes in the process of decision-making. I love knowing where their heads are at. They, in turn, know that I was there and can understand where they are coming from. If you haven’t been involved with international activities, haven’t been outside the silo, gained personal experience, then your ability to maximize is limited.
Young people must be willing to take risks with their careers. They need confidence, curiosity to ask why, and a willingness not to always judge.
GBR – Final thoughts… How do you personally maintain any balance in a 24/7/365 service environment?
MR – I have no short answer. I’m blessed with a family that supports me. My faith is strong. There is the support of long-time friends. I have a passion for my hobbies (golf, skiing, reading). I guess I try to explicitly include these as a part of EVERY day in some way, if only a phone call. When long hours are a fact of life, you gotta love what you do.