What We Learn from McD

Early in my career I had the opportunity to work at the McDonald’s headquarters in Oak Brook, Illinois, just outside of Chicago. I was of course familiar with the operations of a McDonald’s franchise, a tidy small scale operation of high efficiency. I was very much taken aback by the amount of infrastructure I found at the McDonald’s HQ.

The reason each franchise runs so efficiently is not an accident. There is an immense effort that goes on behind the scenes which allows each franchise to be a model of efficiency. This effort is not just about infrastructure and consumables – it’s about every detail of procedure, behaviors and technology in the franchise that makes the McDonald’s experience identical globally. There are even mock-ups of restaurants on site to test out new approaches to increase efficiencies. Managers of a franchise live and die in adherence to The Blue Book of operations.

A similar dedication to detail is needed for Investible Units to be successful. It’s clear why most research units fail – the sheer magnitude of the corporate effort needed to make them successful is often lacking. Think of it in these terms: corporate oversight costs could be as much as one third of the overall investment in R&D.

The good news is this effort, although significant, greatly simplifies and improves many of today’s decisions: budgeting, where to invest, when to stop investing, interim progress tracking, and the graduation of prototypes, to name a few. In general, this simplification allows for greater oversight and focus on the few key variables that drive productivity (e.g., the quality of research unit management).

Just to be clear, we’re not flipping hamburgers here. Although franchise management models inspired the approach for World Class R&D, these have been significantly modified to take into account the creative nature of R&D pursuits. Better quality evidence and unbiased decision-making by themselves can lead to large increases in R&D Productivity. Imagine if we had ten times more evidence for every decision and we were able to better manage bias in those decisions.

Recall the premise of this website: it’s all about the behaviors. When we talk about an R&D franchise we are talking about behaviors. We sense the beginnings of a shorthand language across different technical disciplines as they build a collective implicit knowledge. We no longer hear complaints about someone else's ‘ugly baby’. We sense much greater confidence in the way individuals interact with one another and with their supervisors. Individuals willingly challenge unstated assumptions, evidencing a much higher level of confidence in their interpersonal relationships.

What will it take to ensure our franchise brand is recognizable in each and every one of our research units? In other words, what do we do as a corporation to ensure that the behaviors are the most appropriate for the mix of goals, management styles, staff composition and maturity of the research units? You won’t find the same behaviors in every one, so what are the commonalities that lead to our recognizable brand?

In downtown Charlottesville, VA there are four upscale restaurants of various cuisines found along the central mall. They have all the trappings of elegance, including the ambiance and prices. They are all owned by the same individual and are close together in the high rent section of Charlottesville. None of them have kitchens. Behind the scenes is a very efficient central kitchen located nearby to all four restaurants. You place your order and it is electronically conveyed to the central kitchen. The order is hand-made and then placed in an insulated delivery container and rushed over to the restaurant placing the order. The waiter unpacks the food, arranges it on the expensive place settings, and delivers it to the customer’s table. The customer has no visibility into the background operations of these restaurants. – Employee of one of the restaurants (2007). Personal Communication

You can run a custom build operation as a franchise where each franchise from the outside seems unique. But in the background there is a commonality that ensures a high quality product is delivered to the customer.

The role of corporate management is to do what it takes to attract top quality acquisitions and proposals for pre-game. What this means is we attract proposal submissions from quality talent. This is best achieved through demonstrated results.

A well run franchise attracts customers; they know to expect quality. This is what makes it worthwhile for me to run my business as one of your franchises rather than as an independent. What do new recruits sense when they walk into an existing franchisee? How will they make the connection between what they sense and how it can affect their likelihood of success? The franchise model attracts quality recruits (customers) in that they sense your business model can make them more successful.

Editor's Picks for October, 2010