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Cell phones are celebrating their 40th anniversary today. While today there are some 5 billion in use worldwide, in 1987, when I got my first one, a Radio Shack “brick” like the one pictured, there were at best a million in use. My company wouldn’t get me one (I was responsible for corporate communications for McDonald’s), so I bought mine at Radio Shack for $1499, plus a few hundred dollars for accessories, such as a roof-top antenna for my company car.
I recall that my wife, Vicki, would not walk with me in downtown Chicago if I was using the cell phone, as she thought it looked pretentious. I do recall using it after a press conference at the Ford Museum in Detroit. All the media people were on land line phones calling in their stories in the press room, and I stepped out into a patio and used my cell. As I looked back into the press room, several reporters were staring out the window in wonder at this revolutionary communications tool.
A few years later, all the officers and directors in the communications department had company phones installed. I had been the first with a cell, just as I had become the first company executive outside the information services department to have a personal computer at my desk in 1985. That had required an exemption from the U.S. McDonald’s president. Up to that point, only secretaries were authorized to have personal computers.
In the early 90s, I became the3 first company executive, other than the treasurer, to have a Bloomberg terminal at my desk, allowing 24/7 monitoring of news and market activity. The then-enormous fee for the terminal had to be authorized by McDonald’s CEO. Using the Bloomberg tool, we were able to counter the effect on our stock price of news events perceived as impacting the company from around the world, justifying its cost many times over.
While I admit I’ve enjoyed the novelty of being an early adopter of new technologies, I’ve found that their strategic use often provide a beneficial business edge.
In 1993, the innovative former Chicago theatre executive credited with being the first to put butter on movie popcorn, passed away. David Wallerstein, who by then was the longest-serving board member at McDonald’s, had become a good friend. It was his idea to offer large fries at McDonald’s — I remember buying bag after tiny bag of 15-cent fries at McDonald’s as a kid. Dave never missed a McDonald’s marketing or communications meeting, and was always sharing his wise perspective and counsel on what might click with customers. The insights he brought to enliven the movie theatre business carried forward to enhance the world’s largest restaurant company. Here’s his obit from The New York
Times.
David Wallerstein; Theater Innovator In Midwest Was 87
By LEE A. DANIELS Published: January 06, 1993
David B. Wallerstein, an innovator in the movie theater business, died Monday at his home in Chicago. He was 87.
Mr. Wallerstein died of cancer, said Chuck Ebeling, a spokesman for the McDonald’s Corporation, which Mr. Wallerstein had served as a board member since 1968.
Mr. Wallerstein retired in 1965 from the presidency of the Balaban & Katz Corporation, a Chicago-based entertainment company that during his tenure was the largest movie theater chain in the Midwest. He joined the company in 1926 when he was 21, after graduating from the Harvard Business School, and quickly became one of the leading showmen in the country.
His innovations included adding live shows to the movie screenings. Such stars as Frank Sinatra, Bing Crosby, Mary Martin and Judy Garland sang before audiences in the company’s showpiece, the Chicago Theater, from the 1930′s to the 1950′s.
Other innovations were putting butter on popcorn, ice in drinks and caramel on apples at theater concession stands.
In 1946, he was involved in the purchase of Chicago’s first television station, WBKB, whose successor station is WBBM, the CBS-owned affiliate. He was also one of those responsible for putting the “Kukla, Fran and Ollie” children’s show on television in the 1950′s. A native of Richmond, he graduated from the University of Virginia in 1924. In his 80′s, he was still an active hiker, downhill skier and traveler. Last year he journeyed to the Antarctic and had planned to travel to the North Pole until health problems interfered.
Mr. Wallerstein’s wife, Caroline, died in 1982. A son, Michael R. Wallerstein, died in 1974.
He is survived by two sons, David L. Wallerstein of Washington and John M. Rau of Orange County, Calif., and one grandson.
Fred had just observed his 80th birthday, and had served for nearly a decade as Chairman Emeritus of McDonald’s Corporation, the world’s largest restaurant company and a Dow Jones 30 Industrial. He began his McCareer as one of entrepreneur Ray Kroc’s first employees, as a grill man.
Over the years he developed the operating system (Quality, Service and Cleanliness) that made McDonald’s famous. He kept a low profile outside the company, but was a lion to those inside the 34 thousand restaurant organization — employees, franchises and suppliers — which he called the three-legged stool upon which McDonald’s stood. Fred created the training system that introduced millions of employees to the world of responsible work. Hamburger Universities and their home campus, the Fred L. Turner Training Center (which I named) in Oak Brook, IL, are taken very seriously by the generations of managers who are graduates. I hold a Bachelor of Hamburgerology degree, 1985.
I wrote about Fred, as well as fellow business legends,Dick McDonald and Ray Kroc, in my essay for the Chicago Literary Club, “Breakfast With Mr. McDonald.” You can Google it, or go to http://www.chiit.org and search under Ebeling. Fred was a wonderfully irascible character.
NBC-TV’s Today show this morning did a feature on the question of whether French Fries are really French, or from Belgium. Michelle Kosinski reported from Europe, while Willie Geist and the Today team speculated in New York.
The real answer to the question, and the fascinating history of the tantalizing tuber can be found in my 2005 essay, “French Fried: From Monticello to the Moon,” which I researched and presented to the Chicago Literary Club in 2005. Having headed corporate communications for McDonald’s for 15 years, I had a head start on the subject.
You can read the essay online by going to http://www.chilit.org and entering “French Fried” in the search box.
P.S.If you can’t wait to know, the answer is…what we call French Fries probably came from Belgium!
When I would visit Dick McDonald, the co-pioneer of the McDonald’s restuarant concept, at his home in Bedford, New Hampshire, where he lived in retirement, he would often mention his admiration for Warren Rudman, his feisty New Hampshire Senator, author of the famed Gramm-Rudman-Hollings federal balanced budget bill. He and Rudman knew each other pretty well, and had somewhat similar personalities — they bnoth were caring people, but often outspoken and blunt. Rudman, 92, died today.
I recall in the early 90s going out to D.C. to meet Dick for the premiere of a new Smithsonian World PBS film called “A Moveable Feast,” produced by Linda Ellerbee. It was the story of the history of food service for people on the move, and Dick was interviewed in the film. Dick also invited Rudman to the opening at the Smithsonian Castle. The next day, Dick in turn was Rudman’s VIP guest in Congress, and I went along. We dined on Navy Bean soup inh the Senate Dining Room, as legislators and aides gathered around Dick for a look or a word, or an autograph, from the man whose name was vastly more a household word than his host, the famous Senator. Dick enjoyed riding the miniature underground rail line used by the legislators.
I just ran across a package of matches, now resting on a tray next to my tie rack, from the Senate Dining Room that I’d kept from that day, some 20 years ago. Warren and Dick were a pair of New England characters, all right.
For more on Dick McDonald, see my essay, “Breakfast With Mr. McDonald,” at http://www.chilit.org. Search under “Ebeling.”
Bob Lutz, ex of GM, has written an interesting book called “Car Guys Vs. Bean Counters,” that talks about why it makes sense to let people with a passion for a given business run it, rather than turn it all over to the accountants and finance guys. That’s the way McDonald’s, my alumni group, has been run for most of its nearing 60 years.
My own early experience as a budding “car guy: for Toyota, largely peopled by really frustrated ex-US car guys, in the years when Detroit had lost its way, helps make Lutz’s point. My essay on that period — Acceleration — can be found by searching for that title at http://www.chilit.org.
Here’s Amazon’s summary of Lutz’s new book:
“It’s time to stop the dominance of the number-crunchers, living in their perfect, predictable, financially-projected world (who fail, time and again), and give the reins to the ‘product guys’…those with vision and passion for the customers and their product or service.”
When Bob Lutz got into the auto business in the early 1960s, CEOs knew that if you captured the public’s imagination with innovative car design and top quality craftsmanship, the money would follow. The “car guys” held sway, and GM dominated with bold, creative leadership and iconic brands like Cadillac, Buick, Pontiac, Oldsmobile, GMC, and Chevrolet.
But then GM’s leadership began to put their faith in numbers and spreadsheets. Determined to eliminate the “waste” and “personality worship” of the bygone creative leaders, and maximize profitability, management got too smart for its own good. With the bean counters firmly in charge, carmakers, and much of American industry, lost their single-minded focus on product excellence and their competitive advantage. Decline soon followed.
In 2001, General Motors hired Lutz out of retirement with a mandate to save the company by making great cars again. As vice chairman, he launched a war against the penny-pinching number-crunchers who ran the company by the bottom line, and reinstated a focus on creativity, design, and cars and trucks that would satisfy GM customers.
After emerging from bankruptcy in 2009, GM is finally back on track thanks in part to its embrace of Lutz’s philosophy, with acclaimed new models like the Chevrolet Volt, Cadillac CTS, Chevrolet Equinox, and Buick LaCrosse.
Lutz’s common-sense lessons, combined with a generous helping of fascinating anecdotes, will inspire readers in any industry. As he writes:
“It applies in any business. Shoe makers should be run by shoe guys, and software firms by software guys, and supermarkets by supermarket guys. With the advice and support of their bean counters, absolutely, but with the final word going to those who live and breathe the customer experience. Passion and drive for excellence will win over the computer-like, dispassionate, analysis- driven philosophy every time.”
2011 Top 10 Largest Chains (by latest-year sales)
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1. McDonald’s - $34.17B 2. Subway - $11.43B 3. Starbucks Coffee - $8.49B 4. Burger King - $8.13B 5. Wendy‘s - $8.11B |
6. Taco Bell - $7.00B 7. Dunkin’ Donuts - $5.93B 8. Pizza Hut - $5.50B 9. KFC - $4.60B 10. Applebee’s - $4.43B |
When Rodney King was dragged from his vehicle and mercilessly beat by south LA police in 1992, he triggered riots that tore apart that area of the city. King will be remembered for his plaintive admonition in the wake of the riots, “Can we all get along?”
One of the few positive things to take away from those horrible riots was the value of proactive community relations, as had been practiced by the minority entrepreneurs who owned the five McDonald’s restaurants in the riot and fire zone, which escaped unscathed, because those franchisees followed Ray Kroc‘s adage to give back to the communities they served, and put regular deposits of goodwill into the “trust bank” of social investing that McDonald’s has long followed.
I was director of corporate communications for McDonald’s in the 80s and 90s, and we told and retold the LA riots survival story to company employees and franchisees around the world. The philosophy survives today, just as those five restaurants did in 1992. Here’s the story:
In the area of South Central LA, a five square miles radius of devastation, the outcome was like a bomb. It resembled Nagasaki. Buildings had been looted and set alight. It was martial law. The streets were dangerous. Many people were killed in the frenzy, either as a statement of opposition between the established powers and the disenfranchised or as a gateway for much deeper held sentiments regarding race, class, poverty, and divisions between the entitled and disentitled.
In the wasted landscape of South Central LA, everything had been destroyed. Everything except for five buildings. In the post-apocalyptic aftermath, surrounded by smoldering ruins and debris, there were five buildings which had been untouched. Not a broken window. Not a slash of spray paint. All flooded in their usual operable fluoro lights.
These five buildings all had one thing in common. They were all McDonalds.
‘When the smoke cleared after the mobs burned through South Central Los Angeles in April, hundreds of businesses, many of them black owned, had been destroyed. Yet not a single McDonald’s restaurant had been torched.’
Edwin M. Reingold, June 29, 1992, TIME
Months later, Sociologists at Stanford University came aross this data. They were also intrigued. They sent teams into the field some time later. They went in to interview many involved in the riots. They went in to discover what the story was here – not why the devastation had taken place, but why they hadn’t taken place at McDonalds.
Now it must be said, these were not the crème de la crème of society. They organized meetings and interviews with those who had pulled people out of cars and beaten them to death. When asked why McDonalds was spared, the answers were unanimous across all the interview centres. The general conversation went something like this.
“They are one of us.”
“What do you mean?”
“They ‘re looking after us.”
‘How could McDonalds ‘be looking after you’?
“Because we like to play basketball. There’s nothing else to do except get high and shit. McDonald gives us balls.”
It turned out that McDonalds had in fact supplied a number of basketballs to youth groups and basketball centres in these low socio-economic areas. Not thousand of balls. A few hundred.
“And the old men. My old man. They don’t have jobs or nothin. They don’t have nowher eto live. McDonalds gives them free coffee.”
It was true. In that area, McDonalds suppied several hundred free cups of coffee each morning. In terms of its profitability, a piss in the ocean,
Learnings
In a purely commercial sense, McDonalds gained years over Pizza Hut, Wendy’s, Denny’s, Taco Bell, Burger King, and every other fast food restaurant in the area that was razed to the ground. Each had to undertake major rebuilds and ascertain their strategic direction to decide whether South Central LA would be part of the strategic plan.
Even today, Tesco the supermarket leader of the UK is launching a ‘grocery gap’ stores in the same aea. Most of the old stores have disappeared. Wal-Mart fears to tread due to union barriers. Residents suffer lack of renewed investment.
Emotionally, financially and psychologically, McDonalds’ competitive advantage after the LA iots was vast. Lest we forget. Marketing is not about producing advertisements. It’s the battle for the heart and mind of the consumer.
Fortune Magazine has just announced their 2012 Most-Admired Companies list, and McDonald’s ranked in the top 20 (#11), between Southwest Airlines and J&J, and above Disney, GE, American Express and Microsoft. McDonald’s ranked #1 in use of corporate assets, and #2 in management quality, financial soundness and global competitiveness. Of course, they ranked #1 in the food service industry.
Back in the mid-90s, I worked with the editors of Fortune to get McDonald’s considered for these annual rankings of corporate reputation and success..
Back in the early 90s, when Warren Buffet owned a $1.5 billion position in McDonald’s stock, he called my office and asked for a little help. It seemed that he and his friend Bill Gates and their families were planning a vacation trip to China, and had chartered a Chinese train to carry them across the country. Buffet was a McDonald’s fan, and asked if we could guide him to our restaurants along his route. We helped make it easy for he and his party to drop in at a McDonald’s whenever their hunger for hamburgers and fries arose. He talked about that trip for years.
By 2008, Buffet had invested $200 million in Chinese transportation, in a major Chinese car company, BYD, which was developing technology and production capability to build electric cars. By the way, BYD means Build Your Dreams. Really. BYD is slow getting off the mark, but they may yet become a factor in the electric car revolution.
Now, in 2012, Buffet appears on Chinese State Television, wishing the country well in their Year of the Dragon Chinese New Years celebration. And then he appears, in the same broadcast, playing his ukulele (http://blogs.wsj.com/deals/2012/01/23/see-warren-buffett-sing-and-play-the-ukulele/) in front of a model railroad, singing “I’ve been working on the railroad.” With the background that we know Buffet likes trains, including trains in China, and that Berkshire Hathaway not long back invested $20 billion in the Burlington Northern railroad over here, I wonder if he’s sending a signal that he may now be interested in getting financially involved somehow in the rails in China?
Stay tuned.
