Posts Tagged ‘McDonald’s’

Preview: Is Financial Performance a Core Culture?

Thursday, October 13th, 2011 by Ellen Bryson

The following is an excerpt from an article by CEO Advantage advisor Ellen Bryson.  The full article is scheduled to appear in the upcoming 4th edition of The CEO Advantage Journal. 

While there is no “right” purpose, I suspect there is a wrong one: financial performance.  When growth becomes your purpose, trouble is not far away.  McDonald’s discovered this in the late 1990s when they shifted their focus from “QSCV” (quality, service, cleanliness, and value) to building more restaurants.  By early 2000, McDonald’s had more than 28,000 restaurants with annual revenues in excess of $15 billion.  Two years later, they experienced their first quarterly loss since 1954. 

Starbucks had a similar experience.  In Onward: How Starbucks Fought for Its Life without Losing Its Soul, Howard Schultz shares how Starbucks lost its focus.  In effect, growth became their purpose.  Schultz says that financial growth is not a strategy; it’s a tactic.  He admits that when Starbucks began pursuing undisciplined growth as a strategy, their culture crumbled and they lost their way.  Ironically, the financial performance they were pursuing eluded them when it became their chief focus. 

 …In their book The Discipline of Market Leaders, Michael Treacy and Fred Wiersema talk about three distinct operational models: customer intimacy, innovation, and operational excellence.  In my experience as an advisor to CEOs and executive teams, I have seen each of these manifested as the driving force of culture.  I have never seen a thriving company with a culture centered on its own financial performance ahead of serving the customer.  Is financial performance important?  Of course!  But it is the result, not the cause, of serving customers well.

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