DO YOU KNOW WHAT BUSINESS YOU ARE IN? – #58

In 1974, Ray Kroc, the founder of McDonald’s, was asked to speak to the MBA class at the University of Texas in Austin…

“What business am I in?” Ray asked, once the group all had their beers in hand.

“Everyone laughed,” my friend said. “Most of the MBA students thought Ray was just fooling around.”

No one answered, so Ray asked again, “What business do you think I’m in?”

The students laughed again, and finally one brave soul yelled out, “Ray, who in the world doesn’t know that you’re in the hamburger business?”

Ray chuckled. “That’s what I thought you would say.” He paused and then quickly added, “Ladies and gentlemen, I’m not in the hamburger business. My business is real estate.”

As my friend tells the story, Ray spent a good amount of time explaining his viewpoint. In his business plan, Ray knew that the primary business focus was to sell franchises, but what he never lost sight of was the location of each franchise. He knew that the land and its location were the most significant factors in the success of each franchise. Basically, the person who bought the franchise was also buying the real estate under the franchise for Ray Kroc’s organization.

Today, McDonald’s is the largest single owner of real estate in the world, owning even more than the Catholic Church. McDonald’s owns some of the most valuable intersections and street corners in America and around the globe. The lesson to learn is to know “what business you are in” and especially the need for establishment of a culture, trust and most importantly leadership at all levels of management. To provide another example: I was reading about Kevin Runbeck’s – Election Services Co. – who for 40 years provided every ballot for all elections in each precinct, county, city, State and Federal arena. His company was growing at a 15% per year pace based on 48 million ballots being printed in 116M styles and mailing 10.4 million of the total  directly to voters. In 2014 it took 1400 errors out of 3.8 million ballots being mailed – to wake Kevin up to the fact that his company had grown to complacent in their ability to ensure the 100% accuracy needed in the election process.  They could have given up – as Customers and voters lost their trust – instead they reinvented the company.

The Management team and all the employees had to change their roles to insure that a ZERO error rate in reading the ballots was required (that meant readers and newly printed ballots had to meet and exceed maximum quality standards).  Kevin realized that their business was “Defending American Democracy” through absolute insurance that when our product is used at the ballot box, the U.S. Citizen knows that they can trust the process. That’s the business of Runbeck Election Services Inc. with their Customers and Voters knowing that they can place their trust in the Company.  They are very good at putting ink on paper and developing all related election equipment and software, but “Defending American Democracy” is their Business.  It took 45 years for the founder to realize that fact.  The changes were many, and it was not an easy task.  Once done, everybody associated with the business was singing from the same page.

WHAT IS REALLY YOUR BUSINESS?  GIVE IT SOME THOUGHT –TODAY’S RAPIDLY CHANGING WORLD DEMANDS THAT FROM MANAGERS, EMPLOYEES, SUPPLIERS AND INVESTORS.  IF YOU DON’T ANSWER THIS KEY QUESTION CORRECTLY, YOUR CHANCES FOR SUCCESS WILL BE DIMINISHED. SHOULD YOU WANT TO HAVE MORE INFO ON SPECIFIC STEPS IMPLEMENTED BY KEVIN BURNBECK THAT LED TO SUCCESSFUL TURN-AROUND OF HIS COMPANY. PLEASE LET US KNOW!

WE THANK RAY CROCK AND KEVIN RUNBECK FOR THEIR TIMELY CONTRIBUTIONS TO THIS BLOG. WE ALSO THANK THE RICH DAD – POOR DAD CURRENT NEWSLETTER THAT FEATURED EXCERPTS FROM RAY CROCK’S STANFORD SPEECH.