Authors: Barry Gibbons
Tags: #Business & Economics, #General
Now, I must boldly go. I am writing this on a plane. My values are such that, at all times, I will be an equal-opportunity, non-discriminatory air traveller. I will fairly treat all fellow passengers with courtesy and sensitivity. But if this fat geezer doesn’t stop banging his lard-arse into me while he stuffs his oversize carry-on bag into the overhead compartment that
already contains mine
, I will pull his pants down. You may frame that and put it on your cafeteria wall.
7. You can’t fly solo
I
split my life between bases in an English village near London and a place in Miami (Cuba’s northernmost suburb). Let me bring you some news from England’s bustling capital.
Drinkers are intrigued by the fact that a beer that cost the publican the equivalent of less than fifty pence now costs more than three pounds across the bar. Shoppers in the supermarket are getting used to the fact that you can quite easily get seventy-five pounds’ worth of groceries in one of those check-out bags. Female executives in the city are alarmed by the arrival of a high-profile American (female) executive who is attended twice during her office day by her beautician. All strange stuff – but nothing has confused us more than McDonald’s buying stakes in other (small) food-service outfits.
None of the big players in the quick-service industry flies completely solo – that is, owns and manages everything it does. It is not possible. But alliances and partnerships within the industry make for an interesting study. So, you want to be a millionaire? Here’s your first question for £100. In Burger King, if you buy a cola, you buy Coca-Cola. What, in your opinion, should be the brand name on the paper cup you drink it out of? Should it be:
(a) Coca-Cola?
(b) Burger King?
(c) Plain, white, unbranded?
(d) The latest promotional offer?
It is, of course, mostly ‘b’, and occasionally ‘b’ mixed with ‘d’. However, I am quite clear: it should always be ‘a’. My reasons? I was behind Burger King’s switch from Pepsi to Coke in the early 1990s. They are both fine liquids, particularly if you have any jewellery that needs cleaning and, penny for penny, there was not much difference in the cost. Coke pitched as partners; Pepsi pitched as suppliers. Now, if BK is selling a cola that prides itself in being one of the world’s great drink brands, why the hell wouldn’t it say so on the cup? It also, rather pragmatically, occurs to me that the place the public sees these cups most is in the street gutter, where their presence is extremely negative. Another good reason to keep BK off it.
Partnerships are of all shapes and sizes. They may be about high-profile co-branding, like BK and Coke. They may be about a vendor/supply-chain relationship – for example, the provision of produce. It may be a banking or financing partnership. It may be with an advertising agency. It may be about diversification, like McDonald’s seems to be signalling with its growing number of interests in roast chicken, gourmet sandwiches, Mexican food, and specialty coffee – a case of putting some fresh eggs in a (big) basket of mature ones.
There are infinite types of partnership, but to succeed they must have one thing in common. They must work for both sides. They must be win–win. As the Chinese proverb says, a good agreement is where both sides leave the table smiling. It is this aspect that bothers me about this growing practice. It’s not the usual Western way of doing business. The Western way is about winning, and gaining at somebody else’s expense.
Legend has it that if you send a group of Western (male) executives to a business school and get them together in the bar after a long day, you can play a simple, entertaining game. Pick two guys, and make a mark on the floor between them. Tell each of them to try to convince the other, verbally, to come across the line. The results are astonishing. They will still be there next morning. Now, if you do the same thing in Japan, within five minutes the two guys will have an agreement. One will say to the other: ‘I’ll come over to your side if you’ll come over to mine’. There is no winner. Or loser.
If you spend hours at your office, huddled with your lawyers, trying to find ways to screw your partner, it is not a partnership. It is a practice that will rule out a sustainable, healthy win–win relationship. Contrast two examples. For years, Ray Kroc had a handshake deal with many of his major suppliers. Included in those years are those where McDonald’s broke away from the pack and made itself the quick-service brand of the millennium.
Now look at those fatheads in DaimlerChrysler. A while back they hit an earnings shortfall. In a moment of lunacy that only a German management team operating in the United States could come up with, they announced that all their suppliers would cut wholesale prices by 5%. No debate, no consideration of individual circumstances. Result? Chaos. Some suppliers refused to deliver and a red-faced climbdown followed. More important, partners who might have proved allies in a common cause were now enemies. A bank of goodwill was emptied at a stroke. A potential solution became another problem.
As in life, so it is in quick service. You cannot fly solo. Partnerships work, but they need working on. Just think: if Burger King did make its own brand of cola, what would it be like? It might be like its coffee. An ugly, ugly thought.
8. Even the big cheese must budget
W
hat happens in America usually takes two or three years to reach England. As a Brit, it was, therefore, with a feeling of horror that I saw my first US-style stretch limo over here. It was parked in front of a four-hundred-year-old village pub, and looked like a cold sore on the face of Elizabeth Hurley. The stretch limo is universally associated with Hollywood and/or rappers and/or the trappings of corporate power in the United States, and I need to start by revealing my views on limos. Yes, I confess I have been inside several of them, but my ongoing position is that I would not willingly go in one today, even if it offered me the only escape route from a pack of wild dogs snapping at my genitals.
More than a decade ago, as a newly appointed – and imported – CEO of Burger King, I inherited a wonderful assistant. She assumed that the new boss would be the same as the old boss and booked a limo to pick me up as I arrived at Orlando airport on an early head-hunting mission. Knowing no different, I got in the thing, which then proceeded
about a hundred yards
to the airport hotel where the meeting was scheduled. I could have got in the back, walked
through the car
, got out of the front door and had my meeting. I banned them for all corporate use.
A couple of years later, we booked ‘Stormin’ Norman’ Schwarzkopf to speak at our annual convention. At the hotel, we were all on standby to receive the great man, with a bunch of secret service guys hanging about, their eyes never still. The walkie-talkies suddenly crackled and up pulled a huge limo. The door opened, and out stepped my tiny wife. The hotel had sent this doozie to pick her up at the airport. She, not knowing any different, had got in. As everybody stared silently at her getting out, some of them wondering if they should shoot her, Norman pulled up behind – in an old red pick-up truck.
There and then I formed SEAL (Senior Executives Against Limos) and I have remained president, treasurer, and the only paid-up member ever since. It begs the question, of course, as to what is the correct degree of ostentation you should enjoy as a ‘big cheese’. There are negatives to a fully egalitarian approach – I remember one of my corporate managers pleading with me to be a bit more flash when I visited franchisees. His message was that they expect ostentation from a corporate leader, that they want their employees and their competitive peers to see that they belong to a system of substance, and that they are led by a Big Time Charlie. The point is also made, of course, that if you are in the junior ranks of a company, labouring away for 24/7 in an office the size of Fatty Arbuckle’s coffin, if you don’t believe there is a big office and a load of perks at the end of your rainbow, there is not much to keep you turning up and motivated. Each to his (or her) own.
There is, however, a clear trend towards reducing the excesses of corporate style invoked by business leaders, if for no other reason than it can tick off the Stock Exchange and/or investors and/or pressurised employees by giving off the wrong kind of signals. I have stopped judging all this by car length or office square-footage. There is an appropriate level of cost necessary to support the effectiveness and efficiency of each job in a corporation. Corporate cost is like the fresh water barrel on a fifteenth-century galleon crossing the Atlantic. The water has to get everybody there alive. It’s finite, and there’s not much of it. If one person uses more, another must use less. If it runs out, everybody dies. It calls for judgement.
This approach can justify the private jet – but only if it is used like Sam Walton used it. His life was visiting Wal-Marts, day in day out, all over America. He was frugal in the extreme with normal overhead costs, but everybody agreed he added real value visiting stores. A private plane probably doubled or trebled his annual store visit tally and was money well spent.
On the other hand, this approach can’t justify a limo if it’s only about image and pampering. One of my old bosses was driven, in a stretch limo, on his own, from home to work and back every day. It was such an important part of his image that he had a structural wall knocked out in the under-office car park to cater for his big sardine tin.
Both stories tell you all you need to know about right and wrong in this game. Spend what you need to spend to support your job description. No less, no more. That’s a ruling that should apply to every job. If you are sending a junior manager to Japan, give them a first-class air ticket. If they are important enough to represent you, the cost of getting them there fresh is justified. Conversely, if you are a big cheese and you are hopping a short distance, shock everybody and drive yourself or fly economy. Your lifestyle is determined by your salary and how you spend it, not corporate perks.
I fear the only way I will stop this unwanted limo invasion in England is to start a scare. So, if you read of an outbreak of mad-limo disease in the UK sometime soon, and read of the government slaughtering them all, you can smile quietly to yourself. And you can still apply to join SEAL.
9. The giants’ changing faces
I
am in Turin, at a convention of European shopping-mall developers. They have just realised that the provision of food and drink at such facilities is er … er … well, helpful to all concerned. While we are in the old city, we grab a look at the famous Shroud (or, at least, a life-sized replica). Everybody has his or her own theories as to its origin and whether it is fake or real. So have I – it looks like a prank played by one of the Bee Gees in the 1970s after a heavy post-concert party. One of them covered himself in treacle and fell asleep.
With my limited Italian, I try to read
La Stampa
, the local newspaper. Suddenly I find myself trembling, with a dreadful constriction in my throat. Unless my translation is way off, just over the Alps and across the border in Switzerland, the first McDonald’s hotel has opened. One picture tells me everything I can’t translate – the headboards on the beds in the double rooms are shaped like golden arches. The only restaurant in the hotel is a McDonald’s. This is Switzerland, remember: a tiny country with France and Italy as neighbours – nations responsible for two of the planet’s great culinary cultures. It gets worse. I think I translate the last sentences of the article correctly:
McDonald’s is targeting business travellers.
Now then, should this earth ever require a stereotypical business traveller to send to an inter-planetary business travelling convention, it would be me. I have spent much of my adult life in planes and hotels. I have visited more than thirty countries on business. They are, therefore, and by definition, targeting me. So, let me tell you what they are up against. Should I be lucky enough to have a business visit to Switzerland, and my searches on the web tell me that there are 6,512 hotel options, a McDonald’s hotel would not even be my 6,512th choice. No, sir. If all the other 6,511 were full, I would book a room in Northern Italy, get up early, and walk (if there was no elephant to hand) across the Alps to my meeting.
Are they mad? The answer, I suspect, is
no
. There are some odd bits and pieces going on in McDonald’s, which, if you look at them as a whole, suggest something quite revolutionary might be going on. It might also be a quick-service industry first. By any measurement, McDonald’s is one of the world’s great brands. The science of branding has changed irrevocably in the past decade, and my observation is that we are seeing the first of the quick-serve giants recognizing this.
For the last century or so, branding has been about products. Coca-Cola is the classical exponent of this approach – and Mars, Ford and Heinz are but three of many other examples. Branding is about differentiation – distinction – in cluttered and competitive markets. What has changed is how you get that distinction effectively and efficiently. Much less emphasis is being placed on
what
you do (the specification and price of your product or service). What’s winning and retaining business today is
how
you go about delivering that to the market. What you do still matters, of course, but it is the price of entering the game. To win it, you must add style to substance. What you stand for as a business, and the company’s ‘personality’, are becoming critical differentiators. Branding by reputation, not product, is the name of the new game.