The Golden Arches

As we have discussed in class, McDonald’s Corporation has gone through its fair share of management changes during the last decade. In 2002, with the stock price down 60% from its peak in 1999, then CEO Alan Greenberg resigned after only four years in office. Next emerged Jim Cantalupo, who announced the company’s “Plan to Win”, and began to emphasize adding customers to restaurants instead of vice versa. After Cantalupo suffered an unexpected expected heart attack in 2004, McDonalds was forced to promote Charlie Bell to the position, who in turn passed away from cancer a year later. Since then, current CEO Jim Skinner has provided the firm with much-needed stability and increasing profitability, but he too is schedule to retire in July (Moore).

Enter Don Thompson. A 48 year-old and McDonald’s COO since 2010, he has maintained a sound reputation throughout his tenure in the organization, which is bolstered by his training as an engineer and his ‘affable’ personality. However, he faces an arguably tougher task than Cantalupo did ten years ago. Instead of having to revive the company, as Cantalupo did, Thompson is charged with meeting the lofty expectations shareholders now have. McDonald’s stock has been trading in the mid to high $90s and topped out at $102 back in December. Thus, many investing experts worry that the fast food chain will be unable to grow at the rate it has been. To complicate Thompson’s job further, McDonald’s best chance to increase the value of its shares lies in international markets, a field where he has limited experience (Jargon).

In my opinion, the upcoming CEO and his companies predicament corresponds well to Jim Collin’s Good to Great, in which he discusses ‘How the mighty fall’. Collins discusses five stages that great corporations progress through, only to come out destroyed on the other side. So what does Don Thompson need to do, or not do, to keep McDonald’s trending upward, or to avoid trending downward?

Understand what got him here

Continue to build on the efforts of past leaders, which have obviously worked. This means upholding the “Plan-to-Win”, which emphasizes well-trained workers selling the right, affordable products at clean, contemporary restaurants while also creating marketing activities that resonate with key customer groups (Moore).

Avoid hubris

Any overestimation of McDonald’s abilities or of his own will immediately cause management to begin to make poor decisions (Collins).

Know his limits

While expanding to more countries is key, Thompson must not do so to the point where cost rise significantly higher than revenues.

Accept the possibility of limited regression

McDonald’s has been doing so well for so long that it will be almost impossible to maintain that rising level of success for an extended period of time. Thompson must not ignore profits and stock prices if they drop slightly, but also must stay the course if they do.

Continue to improve

Thompson, and his team, have to still innovate and search for new ways to improve business. For McDonald’s to grow as it has been, they cannot be satisfied with what has been done in the past.

There is no doubt Don Thompson will face several challenges as the next CEO of McDonald’s, but all of them can be overcome. If he can expand but not over-extend, innovate but not deviate, and credit others before himself, Thompson will be successful.