Jim Skinner
Vice Chairman and CEO
McDonald’s Corporation
Global Business Forum Address
University of Miami
Coral Gables, Florida
January 16, 2009
Vice Chairman and CEO
McDonald’s Corporation
Global Business Forum Address
University of Miami
Coral Gables, Florida
January 16, 2009
Thank you Dean Kahn and good afternoon everyone. It’s an honor to be here with all of you at this forum – and at this great university.
I actually know more than my fair share about the University of Miami, our President and Chief Operating Officer Ralph Alvarez is an alum. And so is Jose Armario, who is Group President of our Canada and Latin America divisions, and who took part in one of the panel sessions here yesterday.
I’m particularly well-informed about the activities of the football team. In fact, I can usually tell what kind of week Ralph’s going to have by how the Hurricanes did on Saturday. This year, he had more “better” weeks than not, but barely.
Anyway, I’m excited to be in a place that had such a formative influence on the careers of my colleagues. And I congratulate the University for your impact on current and future leaders around the world.
I’m eager to contribute to the conversations you’ve been having over the past two days. I know there’s been a lot of great discussion and thinking about how to navigate our modern landscape, and how to succeed in the connected world in which we live.
The perspective I’d like to offer comes from nearly 40 years of experience at the only place I’ve ever wanted to work. In addition to serving 10 years in the United States Navy, I’ve had the privilege of first working for and now leading one of the most well-known global companies. It’s afforded me the opportunity to travel to our restaurants far and wide – and to see and learn more than I ever thought possible.
I’ve spent a lifetime looking at the world up close, and one of the things that strikes me is the incredible pace at which our world has advanced. When McDonald’s opened its doors 54 years ago, the most connected thing we had was the telephone, and it was a rotary phone. Today, the ways that we’re connected seem endless.
The astounding technology that’s everywhere around us links so much of what we do – from communications, to trade, to finance. The benefits, of course, are obvious. It’s made us all more efficient, effective, and eager to innovate. At the same time, it’s challenged us to rethink many of the ways we operate.
Our highly connected and open age has elevated a number of business principles and made them more critical than ever – principles that in the past may have been nice-to-haves, but are now must-dos. There are a few that are particularly important for achieving success in today’s global environment.
I believe they apply no matter what the size or scope of your business or what economic environment we happen to be in. The first is speed and the ability to innovate quickly and constantly.
Simply put, you have to move faster than ever in our current business climate. Ours is a world of immediacy and transparency . . . and so nothing stays unique for long. The products and services we develop and deliver can be copied in no time at all. And often, they are. So if you’re not always on to the next thing, you’ll eventually fall behind. The most successful companies are those that are consistently on the run and just out of reach, the ones whose campfire the competition always finds warm. They’re the ones who stay one step ahead of everyone else and are always focused on the future.
If you consider brands that act with this kind of urgency, one that comes to mind is Apple. They introduced the iPod in 2001, and essentially changed the way we listen to music.
So what did they do then? Apple re-invented the product nearly every year after that, first the mini, then the shuffle, next the nano, and most recently the iPhone. When someone asked Steve Jobs about constantly retooling such an iconic offering, he said simply, “Innovation is what distinguishes leaders from followers.”
The key to staying ahead of the pack is to always be in search of the next great idea – and to never stay satisfied once you find it. So speed is vital.
The second priority I want to highlight is the need to be customer-centric. We all know the modern-day consumer truly is king. It’s easier than ever for people to tune out messages, side step sales pitches, and customize everything they see, hear, and purchase. Now more than ever, consumer relevance is the name of the game.
It used to be that people went through life without changing their tastes, embracing anything new, or moving off the beaten path. Today, no one even considers taking just one road.
With technology opening up so many new ways to live, people are experimenting, exploring and trying new things to enrich their lives. The best brands are right there with them, deploying a rigorous insights process to anticipate their needs, and responding to those needs with lightening speed. When I look at our brand, it’s clear that so much of our recent success comes from an increased focus on customer relevance.
I don’t know how many of you recall – and I’m actually thrilled if you don’t – but back in 2002, McDonald’s found itself veering off-course. We experienced our first-ever quarterly loss. Our stock price sunk to an all-time low. And we lagged behind our rivals in most customer satisfaction surveys. We took our eyes off our fries. We became too focused on getting bigger rather than getting better.
Like many companies in the 1990s, we embraced the conventional wisdom that rapid growth was the prerequisite to success. So we sought growth in new restaurants, new brands, and new lines of business. In short, we got complacent about our customers. We figured “if we build it, they will come…” But they didn’t.
It quickly became clear that we needed to listen to what our customers wanted, rather than tell them what they needed. And so this defined our new growth strategy, which was, and still is, to be “better not just bigger.”
We developed a strategic roadmap – known as the McDonald’s Plan to Win – which put the focus of our business back on the customer.
We focused on our core brand -- Brand McDonald’s…our restaurants -- with a plan to divest ownership of all non-core brands and businesses.
We worked to make our restaurants more modern and inviting for our guests.
We developed a more relevant menu with a greater variety of choices.
And we focused on elevating the quality of our food, the friendliness of our service, and the effectiveness of our marketing.
In 2003 we launched “i’m lovin’ it” – the first global marketing initiative in our history. Up until that point, we had utilized nearly 40 different ad campaigns at various times in different regions throughout the world. With “i’m lovin’ it,” we went from talking in many disparate tones to speaking with one clear voice. Not only did this improve our efficiency and costs, it also put the focus of our communications on our customers – and helped us to connect with them more deeply.
Here are three of our more recent TV commercials that exemplify this greater emotional connection.
VIDEOS: Lessons Learned . . . Victory…..Boom Box
So a greater focus on speed and customer relevance is paramount in our current business environment.
A third key priority is communicating a clear vision. There used to be a time when managing your message and building public confidence and trust was a pretty straightforward affair. You reached out to the people you thought mattered and offered up your story in a way you thought it should be told. Those days are gone.
In this age of around-the-clock news and around-the-world blogging, your business – and your story – is out there for everyone to see, and to talk about.
Today’s opinion leaders are not the select few – but anyone with a laptop and a burning passion. Now more than ever, the whole world is watching – and so your mission and your plans have to be more coherent than ever. We’re all aware of our challenging economic times. Once-powerful companies and entire industries are now struggling and asking for help.
What has struck me about this has been the reaction by so many in Congress and the public. There’s been anger and dismay at these businesses – not so much that they had fallen, but that they offered no strategy for getting back up. They had no plan.
In our fast-paced and fast-changing world, making a misstep or taking the wrong path is not always the most pressing concern. It’s what are you doing to fix it that matters.
I look at Xerox as a prime example of this. As many of you know, they have an impressive turnaround story. A decade ago, their business had faltered – due to everything from internal miscues to stronger competition. They responded quickly with a revitalization plan. It focused on cutting costs, exiting non-core businesses, and investing heavily in innovations that would bring new products to market. Xerox returned to profit in 2002 and has been posting strong results ever since.
When their CEO Anne Mulcahy thinks back to the tough times, she says that what everyone wanted most was a vision for the way out. “Even while Rome was burning,” she said, “people wanted to know what the city of the future would look like.”
Whether you’re encountering struggles or success, the key is to always have a clear and concise plan for moving forward. This is what the connected world craves. And it’s what makes all those who are tuned into your business, show trust in your ability and faith in your future. After all, we live in a world that’s fixated on what’s next. So what matters the most is not just what you’ve done today – but what you’ll do tomorrow.
I mentioned the word “trust” a moment ago – and how important it is for people to trust your business. They also have to trust how you behave. The next area I consider a priority for succeeding in today’s environment is being a good global citizen.
For so many of our brands, the world has become a small stage. In our connected age, we’re touching more lives, impacting more environments and leaving a bigger footprint than ever before. Consumers see all this – and they expect us to act accordingly, and be accountable.
As our reach and influence grow, so does our responsibility to be greater stewards of our larger world. In my view, it takes work on two fronts: The first is taking the essence of your global brand and bringing it to life locally, so that you’re viewed as relevant and respectful in all the diverse communities you serve.
There’s a story we like to tell at McDonald’s about a group of young Japanese students who visited the U.S. for the first time. When they returned home they were asked about their trip and they said it was great. “There was even McDonald’s,” they said, “just like home.” We’re a global brand – and yet we’ve become part of the fabric of so many cultures.
We’ve done it not by just acting local – but by being local. We recruit local executives and partner with local franchisees and suppliers.
We embrace the local customs wherever we operate, whether it’s closing our stores five times a day for prayers in Saudi Arabia, or adhering closely to food restrictions in India. And we work hard to reflect the tastes of local society – from serving products that our local customers want ¬¬-- to designing restaurants that fit in wherever they’re built.
This formula of “global brand and local relevance,” has helped build our business and create good will toward our brand. And yet along the way, we realized it takes more than just that. It is important to become a more positive force and show leadership and responsibility on a global scale. At McDonald’s, we’re taking this on in a number of ways.
We’re giving back to the communities we serve – most notably through our worldwide charity efforts. There’s our Ronald McDonald Houses – which provide a place for families to live when they need to be near a sick child in the hospital. Today, there are 284 Ronald Houses around the world, and they’ve served more than 10 million families in the last three and a half decades.
There’s also our Ronald McDonald House Charities – which has chapters throughout the U.S. and 51 other countries. Through this organization, we’ve provided more than $460 million in grants for programs that benefit children around the world . . .
Another way we’re showing greater global responsibility is our overall work in the area of children’s well-being. This is truly a worldwide issue – and one that people everywhere look to McDonald’s for leadership. After all, we’ve always been a special place for kids. And appropriately, we have a unique responsibility to seek solutions to the issues that impact them – from nutrition, to exercise, to obesity.
We’ve put a lot of energy behind this – and we now have in place our most comprehensive platform ever for promoting the well-being of children. We’re offering more menu choice items for kids than ever before.
And recently, we developed our first-ever Global Guidelines for Marketing to Children. These guidelines align our system around communicating to children in the most responsible and ethical way – from promoting more products like milk and fruit, to creating more physical activity programs at the local level.
A great advantage of our size and scope is that every step we take – no matter how large or small – has the opportunity to benefit children and families around the world. So we’re committed to continue doing our part to affect positive change on this vitally important front.
And then there are our ever increasing efforts around sustainability. Like any global company, we utilize our share of resources. And we understand that this doesn’t come free. Being a good global citizen means helping to sustain the earth and the bounty it provides. For us, as a global food company, it’s a multi-faceted effort that stretches from our supply chain to our stores.
We’re working to reduce the energy output in our restaurants. As well as decrease our packaging presence – with new designs and a greater use of recycled materials. And we’re working with our suppliers and environmental groups to create a more responsible supply chain system. We’re fostering sustainable agriculture and fisheries around the world – all with the help of partners like Conservation International. We’ve even collaborated with Greenpeace to develop and maintain a moratorium on using Amazon Rainforest land for soybean production.
There’s much more we’re doing and plan to do. But the key takeaway here is that when you become a global brand, you enter into the global community. And it’s only through everyone acting with true care and concern that this community will thrive.
I’ve come to my final “must-do” for growing your business in today’s connected world. And it’s an appropriate priority to end with – because it’s the foundation of everything else I’ve talked about. It’s talent management and leadership development
Having the right people in the right place is the key to achieving any goal you set. As CEO, it’s one of my highest priorities – and strongest passions. You simply have to have the best of the best in all the key positions of your company if you want to attain and maintain success. Our modern times demand it.
In our increasingly complex world, learning curves are getting steeper, reaction times are getting shorter and everything is simply moving faster. So if you’re not structured in the right way – with the most talented, passionate, and strategic people where they need to be – then you’re at a distinct disadvantage. And achieving that structure today requires more attention than ever. Yet another casualty of our modern age is a workforce that stays put.
The employees of this generation are constantly on the move, in search of everything from better opportunities to greater challenges.
The average worker now changes jobs more than 10 times before the age of 40. It’s little wonder that when the consulting firm Accenture recently surveyed a group of global CEOs, their number one issue was talent retention – number one.
Today, it’s not enough to excel at finding the best employees and putting them in the right positions. You also have to be able to keep them.
In the end, it’s a two-tiered challenge we all face. Making sure you have the best people to care for your company. And making sure your company cares for your best people.
It should all be part of a rigorous talent management program that fosters strengths and addresses opportunities. And make no mistake, diversity must play a key role in these efforts. I believe that corporations can achieve new levels of greatness by promoting the advancement of diversity.
Muhtar Kent spoke at lunch about the importance of diversity at the Coca-Cola Company. At McDonald’s, I am committed to creating an environment where our entire system is even more diligent about identifying and developing diversity of thought . . . as well as diversity of the population we serve.
From the Crew Room to the Board Room, it takes a diverse group of well-trained, engaged people to drive success. The right people truly are your greatest asset. And yet like any other asset, you have to tend to it, and do what it takes to continuously make it stronger.
So there you have it, a few of my reflections on succeeding in our modern age, or harnessing the power of the connected world. All of it learned from what I like to think is an ageless brand.
At McDonald’s – as I’m sure at your companies as well – we continue to show great excitement and optimism about our connected world. It truly is an inspiring place.
The fact that MySpace now has enough members to be the fifth largest country in the world, or that the number of text messages sent in a single day exceeds the total population of the planet, all provides a chance to engage consumers in incredible new ways, and take our innovation to places that we once only imagined. The opportunity before us is limitless.
And yet I’m reminded of something the great inventor Thomas Edison once said, “Opportunity is often missed because it comes dressed in overalls and looks like work.”
Technology hasn’t made achieving success any easier; it’s just re-shifted the work you have to do. Today, I’ve shared what I think the focus of that work should be, getting faster at what you do and more customer-centric in how you think, taking steps to more rigorously manage your vision, and develop your people and always striving to be a good global citizen. Excelling in these areas is a continuous journey.
But I firmly believe that every step you take down this path will help you grow your global business and reach your soaring potential in this truly limitless age.
Thank you.
