Transition to New Technology and Honoring Company Roots

Lately, much business news has been about the impact of the corona virus crisis. However, some business news does cover other areas. These other areas were often an issue well before the virus crisis, but they may affect how a company deals with the crisis and/or with reopening.

An example is the tension between McDonald’s franchisees and its corporate headquarters. Over the last few weeks, there has been more than one Wall Street Journal article discussing this, as well as coverage in other media outlets. Although this issue predates the virus crisis, it does affect the company’s plans for reopening dining rooms as the mandated shutdown starts to wind down.

Even before the corona crisis, McDonald’s Corporation had been implementing a strategy to revitalize its business. The strategy called for investing in restaurant modernization and franchises were expected to pay for restaurant modifications and technology upgrades. Franchisees were concerned, however, that these expensive investments wouldn’t necessarily pay off with revenue and profit increases.

Granted, the proposed upgrades do involve adopting new technology, and we are in an era when it is said that every company must become a technology company. Thus, adopting newer technology would be expected to be beneficial. However, companies need to evaluate new technologies and adopt not just any new technology, but those that are right for the organization.

This is a time when an organization like McDonald’s might benefit from honoring its roots. This entails remembering that Ray Kroc, the entrepreneur who successfully built McDonald’s into a large organization, had a prior background as a salesman who spent years selling milk shake equipment. His customers were the individuals who were running restaurants, often as restaurant owners. Thus, his background was such that he had spent years understanding the needs of restaurant owners and successfully selling them milk shake equipment.  As Kroc built McDonald’s, his prior work background could be valuable for selling to and working with franchisees.

These corporate roots should not be forgotten when McDonald’s determines how its franchisees will be affected by its strategies for restaurant modernization and technology upgrades, including those associated with dining room reopening. Viewing restaurant owning franchisees as a market segment whose needs must be understood can help ease tension between corporate and its franchisees. This can lead to better decisions about restaurant modification and technology. It can do so even as matters are complicated by the shutdown crisis.  And, it can help insure that technology upgrades are done in a way that is right for the company.

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