We all know McDonald's but few know why the franchise that serves 68 million customers daily in 119 countries across 36,535 outlets has recently doubled its revenue growth rate -- to 5.4% in the first quarter of 2016 -- propelling its earnings up 35% and its stock to an all-time high.
I recently interviewed Dean DeBiase, Adjunct Lecturer of Innovation & Entrepreneurship at Northwestern University's Kellogg School of Management who offered the inside scoop on how McDonald's cooked up this turnaround.
DeBiase taught in a part-time MBA program on corporate innovation that included an immersion program in which students developed new products for McDonald's.
In this way, he had a chance to observe how McDonald's CEO since January 2015, Steve Easterbrook, is turning things around there.
Easterbrook is a great leader for McDonald's. "Steve has the outlook of a younger generation. He left and came back which gave him a global perspective and insights into how to succeed in smaller markets. He is a rugged individualist who inspires people, holds them accountable, and gets things done," explained DeBiase.
Easterbrook also excels at driving changes that benefit all of the company's stakeholders. "Steve is a smart operator who is using insights from social media to understand what consumers want and helping franchisees and employees to see why they will be better off if they get on board with the need to adapt to consumers' changing tastes," he said.
A case in point is the introduction of all-day breakfast which contributed to McDonald's big growth spurt in the first quarter. There was clear evidence for years that consumers were asking for the change.
But Easterbrook was able to help franchisees see that the resulting revenue growth would warrant the investment they'd have to make to change their supply chain, information technology, and employee training.
One reason Easterbrook was able to make the case was that McDonald's could try out the all-day breakfast in its test kitchens so it would be able to provide detailed answers to the questions franchisees had about how the change would affect their operations.
Easterbrook used the forum of the regular franchisee meetings to help get them on board with the change he wanted to make. "Steve used the meetings to encourage the franchisees to think openly about how their lives would change over the next decade," according to DeBiase.
I have no financial position in McDonald's stock but after interviewing DeBiase, Easterbrook seems likely to continue to introduce new products that will propel the company's growth perhaps ahead of investor's expectations.
Easterbrook's example also offers four lessons for small companies seeking to boost growth.
1. Listen to customers for inspiration on sources of growth
2. Test out your best growth ideas to iron out the kinks before introducing them
3. Craft your case for change to appeal to the interests of your company's stakeholders -- such as partners, customers, and employees
4. Inspire people to embrace the growth idea and hold them accountable for making it happen