Not at all surprising

In this post from last December, I wrote about the move to make kids meals healthier.

My wife predicted that the political class and the restaurants would get political props for providing healthier choices. She also predicted that people would buy fewer kids meals and just order ala carte to get the food they wanted.

This story appears to support those predictions.  As a follow-up, we have ordered many fewer Happy Meals since then, opting instead for ala carte to get more fries and to avoid the accumulation of cheap toys. And, as I mentioned then, my kid eats plenty of fruits and vegetables.

This is a lesson politicos know well. They can make it look like they are achieving great things, when they really just helped the restaurants sell other food and/or caused more packages of apples to be thrown in the trash. I wish more folks would wise up to the game.

The greatest and most skilled tricks of magicians and politicos is to divert your attention from what is really happening.

Where do great ideas come from?

In the commercial below, Domino’s Pizza CEO, Patrick Doyle demonstrates a value destructive bias held by many big company execs when he starts the commercial off saying:

In a big company, good ideas don’t usually come from the local store level…

In this case they didn’t let that bias get in the way, because the commercial features a good idea that came from a Domino’s store owner in Findlay, Ohio, Brian Edler: Parmesan Pizza Bites.

Doyle is right in his follow-up sentence:

…but, a great idea can come from anywhere.

Just look at the beginning of Domino’s Pizza, or most successful companies.  Very few were designed in a boardroom at a corporate headquarters.  Two brothers founded Domino’s Pizza when they bought a single shop for $900 in 1960.

Subway Sandwich Shops and Subway’s $5 foot-long are other good examples.   The founder of Subway borrowed $1,000 to open his first store (again not designed in a boardroom).

And Subway’s $5 foot-long promotion was discovered by a franchisee in Miami.  Executives at HQ were not fans of the promotion, but other franchisees began adopting it on their own, because it produced results for them.  Eventually these franchisee results convinced corporate.

I’ve seen this attitude at many companies.  I’ve seen quite a few failures resulting from business models designed by bureaucrats and consultants in HQ.

Good ideas can come from anywhere, sometimes even competitors (Blockbuster?).  I would advise companies to cast their idea net as wide as possible and be as open-minded as possible.

Here I wrote about McDonald’s approach to innovation.  They have a test kitchen and they let their franchisees experiment.

Unintended Consequences Realized?

In this post, I predicted that one unintended consequence of shrinking the fry size in a Happy Meal and including fruit — for the sake of health — would be higher sales at McDonald’s as folks would choose to order extra fries to make up for the reduced size.

McDonald’s just reported a 7.4% surge in sale in November.

Of course, its press release makes no mention of the Happy Meal change as a driver of the sales.  They claimed that the increase was caused by higher breakfast demand, the Peppermint Mocha and a McNugget promotion.

Could be.

All I know is that having contributed to press releases in the past, I know that reasons given for performance changes can be arbitrary and sometimes they can be hard even for the company analysts to decipher.

Black Swans at McDonalds

Nassim Taleb wrote a book named The Black Swan: The Impact of the Highly Improbable.  As you can tell from the title, a Black Swan is what Nassim calls a highly improbable event.  He asserts that these events are highly improbable, not predictable and they drive much of what goes on around us.

Many successful companies and products are the results of Black Swan events.  As much as we’d like to think that there are formulaic ways of building successful companies, there isn’t.  The best formula is lots of experimentation.  The successful companies are the one experiment that works out of many.  We just never really see the many because they die off before we ever take notice.

Many successful companies get their innovation wrong after they’ve become successful.  They try to innovate from the top down.  That is, high level management sit around at HQ thinking it’s their jobs try to dream up the next big thing.  They forget where they started. Continue reading