Leadership Case Studies : Ray Kroc – A Salesman’s Leader By John Baldoni
In all the talk of business leaders, one name rarely surfaces among the Welches, the Goizuetas, the Waltons, and the Gateses. And that’s the name of one who has been gone for a decade and half, but whose example is just as clear and vivid as ever.
I refer to Ray Kroc, the founder of the McDonald’s Corporation: a leader driven by vision, but one willing to nurture talent and ideas not his own, a rare combination for an entrepreneur.
Look beneath the “Golden Arches” and you will find a leader of near-irrepressible enthusiasm who discovered late in life what his true mission would be. At age fifty-two, Ray Kroc invested himself, and over the next few years nearly everything he owned, to fulfill his dream. For the first eight years, Ray Kroc didn’t take one dime from McDonald’s. He lived entirely on the modest salary he took from his milk-shake mixer business.
The neglect of Kroc may perhaps be due to the fact that McDonald’s is an ubiquitous presence (some would say too much so) on the American landscape. But that presence, some 25,000 restaurants strong around the world, never would have occurred without the drive, enthusiasm, will, and sheer optimism of a man who dreamed of a chain of restaurants coast-to-coast that would all serve the same food prepared the same way in the same restaurants in the same fast and friendly way.
Once McDonald’s become established, the world forgot Kroc’s humble origins and instead focused on his life as a multimillionaire; e.g., owner of the San Diego Padres and contributor to Nixon’s second re-election effort. Forgotten too was his leadership style, which to this day, is very applicable to anyone who dreams of starting a business, or managing it.
Here are some of the principles Ray Kroc lived and led by.
* Vision … Once he had witnessed the McDonald brother’s hamburger drive-in in San Bernardino, Kroc knew he had found what he was looking for: the opportunity to establish a nationwide chain of standardized, fast-food eateries. Today it seems obvious, but given the time, 1954, it seemed closer to fantasy.
Friends of Kroc warned him that he was crazy to consider building a business on 15-cent hamburgers. It must be said that Kroc initially envisioned McDonald’s as a opportunity to sell more Multi-mixers, but the more he investigated and the more he invested, he realized that McDonald’s had the potential to rewrite the fast-food rule book and in the process establish the quick service restaurant business.
* Conviction … “There’s almost nothing you can’t accomplish if you set your mind to it” he told a group of MBA students in 1976. And he lived those words. Kroc held fast to his dream of McDonald’s restaurants. And furthermore to the idea that the restaurant concept would only succeed if everyone in the system—operators, suppliers, corporate—held to the same strict standards in food offerings, food preparation, food delivery, and service principles.
* Flexibility … As rigidly as Kroc held to strict standards in food preparation and service, he was open and eager for new ideas, chiefly from operators. New products like Big Mac and Egg McMuffin emerged from operators; Kroc’s attempts at new products—the Hula Burger and a strawberry dessert, to name two—were abject failures. Yet Kroc was smart enough to run with a good idea no matter who originated it. That’s leadership.
* Cooperation … Kroc built the McDonald’s System on the simple, but fundamental philosophy, that everyone would profit or no one would. For this reason, he established a system that put operator profits first. Only by ensuring operator profitability would the system succeed. (In contrast to other franchisers of the time, Kroc charged no markup for supplies and equipment. He sold everything at cost.) He applied the same philosophy to his suppliers. This faith in letting others prosper first cost McDonald’s dearly in the early years, but it paid off handsomely in the end.
* Enthusiasm … Ray Kroc loved the hamburger business. He could wax lyrically about the water content of french fries, or the curves of a hamburger bun. More so, he enjoyed talking up his restaurant business; it was his passion and his avocation. This kind of enthusiasm seems innate to many salespeople, and they need it in spades. Ardor for what they do steels them against the rejection that salespeople face on a daily basis. Kroc possessed so much enthusiasm; he was contagious. Since his enthusiasm was so infectious, he was able to attract so many of the right people to him.
* Toleration of Dissent … Many entrepreneurs live by the rule, “my way or the highway.” Not Kroc. His boldest move in this area was his hiring of Harry Sonneborn as his finance manager in 1956. As different as night and day, Kroc and Sonneborn formed a remarkable team. Where Sonneborn was taciturn and detail-driven, Kroc was outgoing and visionary. But without Sonneborn, McDonald’s would never have survived.
It was Sonneborn’s idea to establish the Franchise Realty Corporation, a real estate venture that enabled McDonald’s Corporation to profit from the growth of the chain. Sonneborn and Kroc clashed constantly, but Kroc tolerated the dissent because he knew Sonneborn was good for the System. (Sadly, the two eventually parted, but it was well after Sonneborn was a multi-millionaire and had prospered from his ideas.)
* Mentoring … Salesman that he was, Ray Kroc had an eagle eye for talent. He plucked Fred Turner, the organizational mind behind the McDonald’s operating system, from the ranks of potential operators. Kroc nurtured Turner as he did others; and in the process, built his business by selecting the right people at the right time. (It must be said that Kroc was sometimes arbitrary. In a fit of pique he might demand that man who didn’t shine his shoes, or wore his hat incorrectly, be fired. Typically, the order would never be carried by Ray’s executive team who knew better. And in time, Kroc would forget the incident.)
* Giving … As generous as he was with advice, Kroc was generous with a dollar. After becoming a centi-millionaire several times over, he established a foundation to support his charitable efforts. Even before he was wealthy, McDonald’s staged promotional events linked to local Chicago charities. To be certain, the original aim was publicity; but over time, Kroc and his team initiated a culture of giving that is alive and well today throughout the McDonald’s System.(The Ronald McDonald House, which provides housing for relatives of children undergoing lengthy hospital stays, is one such example.)
Of course, the point of giving is not to “get something back,” but rather to “give something back”; For leaders, giving helps create a culture where everyone in the organization becomes more outwardly focused in ways large and small that help benefit others. Kroc understood this principle and the organizations he built are a testament to it.
* Optimism … If ever there were the archetype of salesman who’s always looking for a rainbow in a hailstorm, it’s Ray Kroc. “I have always believed that each man makes his own happiness and is responsible for his own problems,” so wrote Kroc in his autobiography, Grinding It Out. It was a philosophy that served him well. Faced with adversity throughout his life, he overcame much of it and succeeded beyond his wildest dreams.
Curiously, Kroc’s original passion was music; he was a piano player in nightclubs. But since it was not the kind of lifestyle that appealed to his wife — nor to Kroc’s own entrepreneurial aspirations — Kroc gave it up for a career in sales. Still, he possessed the irrepressible optimism that come from someone who can break into a song to please a crowd.
All of these traits contributed to Kroc’s leadership style, but perhaps the greatest was his ability to sell an idea. The reason he was so persuasive was not because he was a good storyteller (he was); a good socializer (he was); had a way with words (he did). No, the chief reason for his leadership was Kroc was able to sketch out his vision and have the listen participate in it with him.
Whether Ray was talking about french fries, or the McDonald’s System, he believed in absolute truth of what he was saying. His sense of conviction, larded with plenty of optimism, dwarfed doubt and helped the listener participate in the dream with him. Most important, this vision also was predicated on the idea that the listener would benefit by sharing in the dream with Kroc that would enrich and ennoble all who shared it.
Couple Kroc’s conviction with his overwhelming optimism and you have a leader of whom salesmen can be proud… and from whom managers everywhere can learn.
(c) John Baldoni – all rights reserved
Kroc, Ray with Anderson, Robert (1977) Grinding It Out: The Making of McDonald’s. New York: St. Martin’s Books.
Love, John F (1986, 1995) McDonald’s: Behind the Arches. New York: Bantam Books.
John Baldoni is an internationally recognized leadership expert, executive coach, speaker and author of seven books on leadership. His newest book, Lead by Example: 50 Ways Great Leaders Inspire Results (Amacom) describes how leaders encourage others to follow their lead. John writes the “Leadership at Work” blog for Harvard Business Publishing and as well as his own leadership blog. John’s website, www.JohnBaldoni.com, contains coaching podcasts and videos, leadership articles, and information about his books and workshops.
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