Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
"The Founder' movie shows the story of Ray Kroc, a struggling salesman turned Founder of McDonald's. In 1950s, Ray Kroc met Mac and Dick McDonald, who were running a burger operation in Southern California. Ray was impressed by the brothers' speedy system of making the food and saw franchise potential. Ray expands the McDonald's restaurants through franchisees, pulls the company from the brothers and creates a multi-billion dollar empire. This movie teaches many important business lessons, a few of them are as follows:
- Be Curious: Curiosity is an important characteristic to get fresh ideas.Ray Kroc was not able to sell his milkshake machines at many restaurants, but when he got an order of 6 machines from a far away restaurant, he got curious to understand why so many milkshake machines were ordered by a single restaurant. Here, he could have simply delivered the order, could have avoided travelling a long distance to figure out the reason, but he was curious and decided to visit the restaurant.
- Explore New Ways: Just because something is not done in the past, doesn't mean it can't be done in the future. Innovators refuse to accept status quo and inefficiency. They explore new ways by taking inspiration and ideas from various fields. To improve the efficiency of their business, McDonald brothers Mac and Dick took the assembly line concept perfected by Henry Ford for cars and applied it to hamburger business.They optimized it for their business through chalk drawings on a tennis court and orchestration of their team members' steps. They made sure that speed should not impact quality standards on everything from cleanliness to the number of pickles per patty.
- Solve Customer Problems: When a business provides what customers need, it doesn't have to convince customers and look for them. Supply of the right product creates demand.Drive-in restaurants were already popular places in America but the wait was usually long, and often food was wrongly assembled when arrived. This was not the case at McDonald's. As compared to many other restaurants that Ray Kroc visited, McDonald's was able to serve the high-quality food at lightning-fast speed and low cost without sacrificing quality. Though McDonald's had huge lines, customers were happy with quality and service.
- Think Big: Thinking big requires stretching the boundaries of possibilities. It enables acceptance of new challenges and creation of capabilities to overcome those challenges. McDonald brothers innovated and mastered the efficient restaurant business model and decided to have one best in a class restaurant instead of multiple mediocre restaurants. Ray Kroc thought big and with his persistence, he innovated and mastered the art of business expansion through franchisee model.
- Sell Your Vision: Visionaries manage to get people on board by appealing to their emotions and aspirations. McDonald brothers were passionate about the product - hamburgers, whereas Ray Kroc was passionate about business potential. He convinced them for expansion through franchisees by making them visualize that "McDonald's can be the new American church… And it ain't just open on Sundays."
- Select Right Partners: Partners should be selected for adding value instead of just giving their name and money.More than experience and resources, a strong desire to come up in life matters. To scale up McDonald's, Ray Krock wanted to have multiple franchise owners who follow his guidelines of standardization, automation and discipline. Firstly, he selected a few rich franchise owners, but he found that they were not following his inputs. Later, he carefully selected hard-working middle-class individuals for their work ethic and ambition. This idea proved to be hugely successful as these new franchise owners were focused and willing to follow Ray Krock's guidelines.
- Look for Next-level Innovation: Instead of falling in love with one innovation, to remain competitive, it is important for businesses to spend time and effort in creating the next innovation. McDonald brothers brought efficiency by innovating assembly line operations for their restaurant. They focused on just a few high selling items such as burgers, fries and drinks, and figured out an efficient way of order delivery. For scaling up the business, Ray Kroc introduced standardization, automation and discipline. Later, for reducing the cost, Ray Kroc pushed a vastly cheaper powdered milk for the shakes as opposed to buying and freezing the ice cream.
- Tolerate Frustration: Giving up on tough situations is an easy option, but with the ability to tolerate frustration, one can create his path for success. McDonald brothers refused or delayed on many ideas of Ray Kroc such as using powdered milk, tie up with Coca Cola, renegotiation on contract terms, basem*nt in store etc. Instead of giving up, Ray Kroc tolerated the frustration, for the time being, he had lesser power, found new ways and rules to make himself more powerful than McDonald brothers and then controlled the business terms and conditions.
- Apply Fresh Perspective: Some of the greatest business models are created by looking at the challenges and situations from a fresh perspective.When Ray Kroc was going through financial challenges, he met Harry Sonneborn, a financial expert who gave him a new perspective that Ray Kroc was not in the food-service business, he was in the real-estate business. Harry showed him another way of making money off the deal with McDonald brothers on selling hamburgers and franchisees. This new way involved creating a real estate company that would buy up (or lease) the land on which all McDonald's would be located.
- Carefully Negotiate Contracts: Well negotiated legal contracts create defenses and add to competitive advantages. Initially, Ray Kroc agreed to a complex contract that stipulated that all business decisions must go through the McDonald brothers. Later, instead of putting in writing the deal of providing 1% of McDonald's earnings to McDonald brothers, Ray Kroc offered them a handshake deal on this term. The movie shows that McDonald brothers were legally forbidden from using their own last name on the signage of their restaurant and they were unable to prove their handshake agreement and were thus denied any royalties from the McDonald's corporation.
(Views expressed are author's personal and don't necessarily represent any company's opinions.)
As someone deeply entrenched in the realm of business strategy and entrepreneurship, I bring a wealth of firsthand expertise to dissect and analyze the insightful article on Entrepreneur India. The narrative delves into the riveting tale of Ray Kroc's journey from a struggling salesman to the Founder of McDonald's, highlighting key business lessons that are not only timeless but also profoundly impactful.
First and foremost, the article underscores the importance of curiosity as a driving force behind innovation and success. Ray Kroc's inquisitive nature, exemplified by his pursuit of understanding a bulk order for milkshake machines, showcases how curiosity can lead to groundbreaking insights and opportunities.
The concept of exploring new ways is another crucial aspect discussed. McDonald brothers Mac and Dick's adaptation of the assembly line concept from the automobile industry to the hamburger business exemplifies the power of innovation. This transformative approach, depicted through chalk drawings on a tennis court, illustrates the application of ideas from diverse fields to enhance business efficiency.
Solving customer problems emerges as a pivotal theme, emphasizing the significance of providing solutions that fulfill customer needs. McDonald's ability to deliver high-quality food at unprecedented speed, addressing the shortcomings of traditional drive-in restaurants, showcases the business principle that a focus on customer satisfaction drives demand.
Thinking big and envisioning a scalable business model is a cornerstone of entrepreneurial success. The article highlights how Ray Kroc's vision for McDonald's expansion through the franchise model contributed to the creation of a multi-billion dollar empire.
Selling your vision and selecting the right partners are crucial components of business growth. Ray Kroc's persuasive ability to communicate his vision, coupled with his strategic selection of franchise owners based on work ethic and ambition, exemplifies the importance of aligning partners with the overarching business goals.
Next-level innovation is presented as an ongoing imperative for business sustainability. McDonald brothers' focus on efficiency through assembly line operations and Ray Kroc's introduction of standardization, automation, and discipline exemplify the continuous pursuit of innovation to stay competitive.
The article also touches on the significance of tolerance for frustration in overcoming challenges. Ray Kroc's perseverance in the face of resistance from the McDonald brothers demonstrates how resilience and determination can pave the way for success.
A fresh perspective is advocated as a catalyst for creating successful business models. Ray Kroc's encounter with financial expert Harry Sonneborn, who shifted his perspective from food-service to real estate, underscores the transformative power of looking at challenges from a new angle.
The importance of carefully negotiating contracts is highlighted, emphasizing the need for well-structured agreements to create defenses and competitive advantages. The cautionary tale of the McDonald brothers, who failed to secure written agreements, serves as a lesson in the importance of legally sound contracts.
In conclusion, the article encapsulates invaluable business insights derived from the journey of McDonald's, offering a comprehensive guide for entrepreneurs and business enthusiasts alike. These principles, rooted in the experiences of Ray Kroc and the McDonald brothers, transcend time and remain pertinent in the dynamic landscape of entrepreneurship.
