McDonald's and Kotter's 8 Step Model

Kotter’s 8-Step Approach

Introduction

When Eric Schlosser’s (2001) Fast Food Nation: The Dark Side of the All-American Meal hit the stands at the start of the 21st century, it sparked a new need for the fast food industry to reassess itself and make itself more appealing in the wake of the fallout of the book’s claims. One company that failed to take the public’s newfound aversion for the baby-boomer industry was McDonald’s—the restaurant that received most of the book’s criticism and the restaurant that served as the focal point of the 2004 documentary Super Size Me. Other restaurants like Wendy’s revamped their menu, their look, and their strategy by introducing a fresher, more wholesome approach to food and food service, offering home style fries, more organic options and more variety in their meals. McDonald’s on the other hand doubled down with its commitment to the status quo of fast food. Its stock, which hovered near $50 a share in 1999 fell to $12.82 a share by 2003. Since then, the stock price has staked a tremendous recovery, soaring well over $150 a share—but so too has the rest of the market, a phenomenon better explained by a stock market bubble fueled in part by easy credit and central banking intervention than by McDonald’s commitment to change. As the organic foods industry continues to grow and more and more “fast food” establishments like Panera Bread and Chipotle advertise a fresher, more all-natural ingredients menu, companies like McDonald’s serve as a kind of dinosaur in an industry that may be heading for extinction—at least in terms of what it used to be and what the 21st century of consumers, weight watchers, and health gurus now want it to be.

Company Overview

McDonald’s was founded in 1940 and quickly became the premier fast food restaurant of the latter half of the 20th century. It was the iconic baby boomer drive-thru restaurant where prosperous American families could take their kids for a burger and fries without having to get out of the car. It was quick, convenient, always the same no matter which franchise one visited, and always tasty. The underbelly of the McDonald’s secret was exposed, however, by Schlosser (2001) in his grueling takedown of the many ways in which the fast food industry—and McDonald’s in particular—not only cheats its customers with corner-cutting, cost-saving ways to get the most of their “meat” and “potatoes,” but also endangers their health.

In response to the bad press that came McDonald’s way in the first decade of the 21st century, the company set about trying to change its image (Choi, 2014). Instead of being seen as fast food restaurant selling junk food on the fly, the company sought to change consumers’ perception of the brand and be seen rather as “good food served fast” (Associated Press, 2014). It introduced new menu items such as egg-white McMuffins and the option of choosing a salad over fries with one’s burger—but these patchwork solutions failed to do the trick (Sutton, 2015). As Baerlein (2014) reported, “Chief Executive Officer Don Thompson owned up to some corporate image problems on Tuesday after it posted a nearly one-third drop in quarterly profit and warned that its global restaurant sales would fall again this month.” The image problem was affecting sales and McDonald’s brand was in decline among consumers all over the world. McDonald’s tried to step up its inventiveness: it saw the allure that the organic, all-natural diet was having for consumers, so it introduced the kale salad to its Canadian franchise menu and the breakfast bowl made with kale in Southern California (Sutton, 2015). But these solutions also failed to connect with consumers and make McDonald’s into the kind of hit it had once been.

Diagnosis

The problem was not the menu items, however: the problem was McDonald’s itself and the way it had embedded the golden arches into the consciousness of America (and the world) over the past few decades. Those arches did not represent anything wholesome to the new generation of buyers. They represented everything ugly and tainted about the artificial, commercialistic past—everything that Millennials wanted to reject: “the brand has a reputation for unhealthy, processed and sugary foods that it can’t quite shake, especially among millennials, no matter how much they improve the quality of their products,” Boston University professor Chris Muller explained (Sutton, 2015). McDonald’s had to stop being McDonald’s in order to be great once more. It had to become something else: it had to undergo a dramatic, cultural change.

The other problem that McDonald’s has encountered is that, aware of its image issue and “instead of boldly pursuing one marketing path, McDonald’s has tried to do everything at once” (Sutton, 2015). In other words, McDonald’s has not approached its brand crisis slowly or with caution. Instead, it has thrown everything at the wall including the kitchen sink, all at once, in an effort to see what sticks. In short, it has panicked—and in the process of trying to be appealing to the new generation of consumers, it has basically alienated them even more with what comes across as an inauthentic appeal to being, ironically, authentic. Even positive steps like no longer using hormone-infused chicken in its meals have come up short with consumers: the brand simply does not register as wholesome—only as cheap and fast—a place where one can get junk food on the fly.

In order to compete in 21st century world eager to turn its back on the fast food phase of the latter half of the 20th century, McDonald’s has to re-brand itself for the 21st century consumer. It has to transform into something thoughtful, elegant and true. The key to McDonald’s future is not in looking forward but rather in looking backward. The key is nostalgia—and that is the one thing McDonald’s has failed to tap into in order to reconnect with consumers. By appealing to people’s sense of and fondness for nostalgia, the company can get a foot in the door of the public consciousness and use that space to pitch its new culture—a more caring culture, one with a softer brand, one where the golden arches may not shine so brightly, boldly or brashly but maybe with a dimmer hue and a softer, gentler glow. Using colors to prey on consumer’s consciousness was a tactic of the previous century’s marketing bag of tricks. This century’s bag required something else: the tricks were all known. Indeed, it required that tricks not be used at all: today’s consumers want authenticity and value. They want a product that is grounded in an idea rather than in commercialism. They want a product that speaks to the environment, that is produced by producers who understand the challenges of the times and want to make a difference (Sinek, 2010).

A Plan to Change

A plant to change something so fundamental and inherent about a company like its culture is never easy. Its culture is what serves as the foundation for its brand. It is what serves as the source of its power among the consumer consciousness. It is what projects its sense of value and principle. For McDonald’s its culture had existed mainly on the fumes of the 1950s—an era when a simpler life was still fresh in the public consciousness, when corporate hegemony had not yet dominated the skyline, and when artifice had not yet taken over the airwaves. It could still thrive on the inertia of the past—but that past was gradually slipping beyond its reach as generation followed upon generation, and new ideas replaced old, and a new culture grew up all around it—one that was external to it; one that had not grown up basking in the glow of its arches with a sense of fondness. This generation was suspicious of all corporations—and none represented the kind of corporate, monolithic inhumanity like McDonald’s. Changing McDonald’s would require more than a makeover and a touch-up to its menu items list. It would require a transfusion of soul. McDonald’s own inherent culture and approach to people and to food would need to change.

Changing a company culture does not have to be as challenging as that sounds, however. Using Kotter’s 8-Step Approach, the change can actually be quite simple and easy to implement—so long as the steps are carefully considered, planned, and executed according to the method. The 8 steps of the Kotter model are:

1) Create a sense of urgency

2) Create a guiding coalition

3) Create a vision for change

4) Communicate the vision

5) Remove obstacles

6) Create short-term wins

7) Consolidate improvements

8) Anchor the changes

Using this model, an effective change of McDonald’s culture and brand can be accomplished and the way to do that is to implement each one of these steps carefully and cautiously (Kotter’s 8 Step Change Model, 2018).

Create a Sense of Urgency

First, McDonald’s has to convince its marketers that there is a need to revamp its entire culture. The way to do this is to recognize the new modern culture of the 21st century and show how and why it is different from the culture in which McDonald’s was born and the culture in which it grew into maturity and seemingly fossilized. By seeing the current culture of the Era of Millennials, McDonald’s can look at its own and realize that it does not reflect the modern culture’s values, principles or tastes—and in order to connect with the modern culture it has to change its own. Marketers must develop a way to project a more caring, gentler and respectful brand. That means revamping the company from top down but at the same time maintaining a nostalgic feeling for the good times of the past, as this is the inroad into the public consciousness.

Create a Guiding Coalition

Second, the company must create a project team that can focus solely on addressing the change that is needed—i.e., the problem of instilling in the company a new culture that will help restore its brand’s value. This team will be tasked with encouraging the company’s workers to contribute from every department of the company—from sales to customer service to marketing to product development. Every department has to be represented within this team so that the totality of the company is considered in this change. Every aspect of the company has to see this project team and every employee has to feel represented by it so that the team can act as the platform for all workers moving forward. In other words, this team must represent the force of change for the company—and all stakeholders must realize that and appreciate it.

Create a Vision for Change

Establishing a new vision is never easy but it has to be done and the main way to do that for McDonald’s is to tap into its strengths—and that is its history as the family-restaurant of choice for much of the latter half of the 20th century. By going back to its roots in the 1940s and 1950s, McDonald’s can create a new vision of itself—one that does not rely so heavily on cartoonish props like Ronald McDonald but rather on the genuine wholesomeness of mid-century Americana.

Communicate the Vision

The vision has to be supported and accepted by stakeholders—and that starts with employees. Employees of the company have to be on board with the vision and they must embrace it, imbibe it and project it in their daily work. That is how cultures change and that is how McDonald’s will fix its culture problem. The vision that it creates for itself in the third step of Kotter’s model is the vision that must be communicated to workers—and that means management must talk with them at every level and in every department. The vision has to be shared and understood. Workers have to be motivated to support it. They have to find it appealing. They have to want to get behind it. They have to connect with it. One way to do that is for managers to communicate the vision and then respond to feedback from the employees.

Remove Obstacles

Some workers will be nervous or will resist the concept of change. They might argue that their nieces and nephews love Ronald McDonald and Happy Meals. Managers must be prepared to respond to objections in order to keep workers focused on the new vision and why it is important. They must have responses ready—such as the idea that Ronald is not going anywhere: he will still be with the company in spirit, but he is going to take a backseat for a while so that the old families and images of the 1940s and 1950s can come back to be with consumers of the new generation. There has to be a reconnection here—and that is where the vision begins and obstacles are removed. Encouraging employees to accept the vision will help the change process to move forward. Obstacles to change have to be dealt with directly by management—and that means they have to be anticipated and solutions developed to help neutralize resistance to change.