Interview Transcript

Give us a sense of the team that you came into, how big was that team? How big was the marketing budget? Who did you have around you?

McDonald’s marketing budget is enormous. That’s never a problem. I felt with confidence that one of the first things I could do was cut the marketing budget. When your marketing budget is publicly announced to be over two billion dollars, I was very confident under the circumstances that I inherited, that at least ten percent was a waste of money. I didn’t know how it was wasted, but I was confident that it was being misspent. That’s 200 million dollars. We cut the budget by that and nobody noticed. Budgeting was not my problem. I had enough money to do what needed to be done. The problem is, having the money and doing the right things. Not having enough money. We need more money to spend on advertising. No, we don’t, if we’re advertising the wrong thing, we should spend less money. The leadership team was a handful of people. The CEO got fired. A new CEO was brought in out of retirement, Jim Cantalupo. He signed a contract for three years and then agreed he would go back into retirement. The COO was a guy who came from Australia, Charlie Bell, he became number two, the COO. The CFO was a member that joined the team. The head of operations in that and there was a new HR person. That was the team. The two key people were Charlie and Jim Cantalupo. I had consulted to Charlie Bell when he was head of Australia, on a new service idea he had, called Mc Café. Mc Café, the first store was in Sydney Australia.

He was the leader believing that coffee was a big opportunity and McDonalds shouldn’t leave that to Starbucks for itself. He developed Mc Café and brought me in from halfway across the planet for some reason. I consulted on how to position Mc Café. Eventually, as you know, Mc Café went global and Charlie went global along with it. That’s how he was brought to the attention in Chicago. When he became COO, he asked me to consult and join to consult on the turnaround because that had been my specialty. I did. I made a few presentations. There was a lot of cultural resistance at McDonalds to what I was promoting. As things I thought they should do. One day, Charlie got me aside, we went out to dinner. He said, “Maybe a consulting relationship doesn’t work because you tell us what to do but you’re not accountable for success. You consultants are all the same, you tell us what to do, if it works you take credit. If it fails, you blame us for poor execution. My challenge to you is, would you like to come in and be the global chief marketing officer? Then you’ll consult to yourself. I assume you’ll agree and then you’ll implement what you want us to do. You will be accountable. This is a unique opportunity because for the first time, you can say, I not only consulted on this project, I was publicly accountable for results.”

I found that to be enticing. I said, I really don’t want to be an employee forever, I love the idea of my independence. Jim Cantalupo who I mentioned earlier had dinner with me and said, “I didn’t want to come out of retirement. You don’t want to come out of consulting. Why don’t we each sign a three-year contract. We’ll start together and we’ll leave together. I want you to promise you won’t quit before three years.” I agreed. As you may have read, the unfortunate thing is in the second year, Jim Cantalupo died of a heart attack. At a global meeting of 16,000 people where we were about to celebrate the turnaround of McDonalds. He would have made the opening speech that morning. At five in the morning, he died. It wasn’t a great moment. Then I left a year later, but I would have left anyway. Some people suspect that I left because Jim was no longer there. I appreciated Jim because when I did make my first presentation to the board, the board unanimously rejected what my strategy, what I was proposing. Unanimous rejection.

I got rejected when I was a consultant. I got rejected as an employee. It didn’t seem to make a difference. I went back to my office assuming I was going to pack up and go home. Cantalupo came into my office and said, “You didn’t succeed with the board.” I said, I know. He said, “A member of the board is going to come down and talk to you and see if they can change your mind.” I said, fine, I’ll listen. The messenger from the board came down. We met for a few hours. I said, I believe the turnaround, this is how I would approach it. He then went to Jim Cantalupo and said, “I’ve talked to Larry and Larry won’t change his mind.” Jim then came down to talk to me and said, “How do you feel?” I said, the board feels this is the way we’ve done it; therefore, this is what made us great. This is what we should do. I said, a turnaround means what we’ve been doing is not working. Doing more of what we’ve been doing will not work. We need change. We need to do something different. The change I’m proposing, I strongly believe is the only answer, but it means a change from focusing on Wall Street, focusing on the customer. It means a change from focusing on building new stores as fast as we can, to building stores that the market needs and can satisfy profitably. It means focusing on the franchisee who are the real owners of the brand, not focusing on the corporation.

Unless our franchisees are profitable, we will not be profitable. Focusing on the customer and developing new products that the customer wants and needs. Not focusing on new products that we just need so we have something to say in our advertising. If we don’t do those things, I don’t want to be apart of the turnaround. The turnaround in my mind which that sentence will stay in my mind for the rest of my life. Jim Cantalupo turned to me and said, “I hear you. You’re here to take care of the brand. I’m here to take care of the board. I will take care of the board. You take care of the brand.” Then I remember calling my wife and saying, this will work.

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