Listen to the podcast here:
What’s Your “SuperSizeMe?”
I’m slightly changing something I’ve taught for years, that you manage numbers, not people. You manage systems, not people. I want to make a slight adjustment to what I’ve been teaching. I’m still going to stick with that because you do manage systems. You don’t manage people, but I want to add a little nugget there. You’ve heard me for years where I’ve talked about McDonald’s went 31 years with thirteen different CEOs at the helm and they had same-store sales for three decades. No CEO could screw it up because their systems for growth were so fine-tuned that it wasn’t about the people pulling the levers. It was about what levers they were pulling.
I gave the example that it took them about eight years, but they finally got it down to the point that when they did a month’s revenue in a store, nationwide, depending on city, it fell into taking 2% to 2.2% of the last month’s gross sales and putting into the next month’s local advertising budget and 2% to 2.2% for the national advertising budget. Let’s say in the City of New York, McDonald’s did $100,000 a month. They would take $2,000 and put it into local advertising and they would take $2,000 and put it in national advertising. Combine that times their 30,000 stores and you see a healthy national advertising budget dust around on every Super Bowl commercial and you get the idea. What they found in their eight years of trying was 1.6% and 1.6% wasn’t enough. 2.4% and 2.4% for local and national advertising didn’t do any better than 2% to 2.2%. They found their system for advertising for same-store sales for 31 years.
During the last five years that they were still growing the same–store sales growth, everything was amazing. During the last five years of that 31-year run, a lot of McDonald’s competitors were slightly changing their menu. Kentucky Fried Chicken even changed their corporate name to KFC. It wasn’t to make bigger letters on a sign. In their prospectus, they wrote that they wanted to drop the word fried because the United States was becoming health conscious. Subway hired a guy named Jared who used to be a rather large person and because he ate Subway a lot, he’s now a very thin person. Subway went so far as to start promoting commercials talking about how organic and healthy their cheese was. Taco Bell even talked about how healthy their cheese was.
You manage systems, not people. Click To Tweet
The McDonald’s executive saw all this around them. They made no adjustments whatsoever and then all of a sudden, the movie Super Size Me came out and McDonald’s got absolutely rocked. Super Size Me was a story about a man who ate nothing but McDonald’s three times a day for a month. He gained so much weight that he became almost obese. Everything about his health went askew. His blood pressure went through the roof. He was destroying his body and he did this to prove to the world how bad McDonald’s food was health-wise.
Here’s the thing. Once you’re in a downward spiral in business like that, there is no system that is going to fix that. You have to have people fix that. The people at the top of McDonald’s didn’t see or smell the current growing need for health around them when the signs were everywhere. The people at the top could not have been the people to implement a new system to make the corrections and stabilize McDonald’s. What did they do? They made a leadership change, not just in CEO, but a bunch of the top core leadership. Over a course of a couple of years, they did an OTSW, which you’ll need the previous episode to understand what that is, episode 433. They did an OTSW, not a SWOT analysis and then they made their corrections. It took them four full years before growing again with same-store sales and their adjustments were not in advertising alone. It was in advertising, but it was in stripping out the core product line and reinventing McDonald’s.
Every business out there has a Super Size movie. Every business out there has a nemesis attacking them. It’s called entropy. Entropy by definition says anything man-made or God-made is built to go from order to disorder. Our bodies are breaking down. If you leave a car in a desert for 80 years and go back, it’s not a car; it’s a chunk of metal. Everything is built to go from order to disorder. The question I have for you is do you know what your Super Size movie is? Do you know what’s against you? Here’s the key, if you don’t know what the threats of an OTSW are against you, if you can’t label them clearly and you don’t know your threats, that might signal to you that your level of incompetence has been reached.
I would strongly recommend that you bring in outside counsel or mentors and have them evaluate you, your company and your situation and see if they can tell you what the OTSW is. What are the threats against you? Because if you can’t see them, they’re there. You have to understand. You’re going to have to bring somebody in to show them to you. Opportunities and threats are far stronger than your greatest strength. Your greatest strength, no matter how strong you are, cannot wield a lever or leverage against a bigger opportunity or a bigger threat. It’s just what it is. It’s called business. I hope this helps. Take care.