Kotter's 8-Step Model for McDonald's Brand Transformation

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 become more appealing in the wake of the book's claims. One company that failed to reckon with the public's newfound aversion to the baby-boomer fast food industry was McDonald's — the restaurant that received most of the book's criticism and served as the focal point of the 2004 documentary Super Size Me. Other restaurants like Wendy's revamped their menus, 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 greater variety. McDonald's, on the other hand, doubled down on its commitment to the status quo. Its stock, which hovered near $50 a share in 1999, fell to $12.82 a share by 2003.

Since then, the stock price has staged 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 any genuine commitment to change at McDonald's. As the organic foods industry continues to grow and more "fast food" establishments like Panera Bread and Chipotle advertise fresher, more all-natural menus, 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 21st-century consumers, health-conscious shoppers, and wellness advocates now want it to be.

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-through restaurant where prosperous American families could take their children for a burger and fries without having to leave their car. It was quick, convenient, consistent across franchises, and reliably tasty. The underbelly of that success was exposed, however, by Schlosser (2001) in his exhaustive takedown of the many ways in which the fast food industry — and McDonald's in particular — not only cuts corners at customers' expense but also endangers their health.

Company Overview

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 a fast food restaurant selling junk food on the fly, the company sought to reposition itself as offering "good food served fast" (Associated Press, 2014). It introduced new menu items such as egg-white McMuffins and offered the option of choosing a salad over fries — 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 worldwide. The company tried to step up its inventiveness by introducing a kale salad to its Canadian franchise menu and a breakfast bowl made with kale in Southern California (Sutton, 2015), but these initiatives also failed to reconnect with consumers in any lasting way.

The problem was not the menu items, however. The real problem was McDonald's itself — specifically, the way it had embedded the golden arches into the consciousness of America and the world over the previous several decades. Those arches no longer represented anything wholesome to the new generation of buyers. They represented everything artificial and commercialistic about the past — everything that Millennials wanted to reject. As Boston University professor Chris Muller explained, "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" (Sutton, 2015). McDonald's had to stop being McDonald's in order to be great once more. It had to become something else and undergo a dramatic cultural change.

A further complication was that, aware of its image problem, McDonald's reacted by doing too much at once. "Instead of boldly pursuing one marketing path, McDonald's has tried to do everything at once" (Sutton, 2015). In other words, the company panicked — and in the process of trying to appeal to a new generation of consumers, it essentially alienated them further with what came across as an inauthentic bid for authenticity. Even positive steps, such as eliminating hormone-infused chicken from its meals, fell short with consumers. The brand simply did not register as wholesome; it registered as cheap and fast.

Diagnosis

In order to compete in a 21st-century marketplace eager to turn its back on the fast food era, McDonald's has to rebrand itself for the modern consumer. The key to McDonald's future is not in looking forward but in looking backward. The key is nostalgia — and that is precisely what McDonald's has failed to tap into in order to reconnect with its audience. By appealing to people's sense of fondness for the past, the company can reopen a space in the public consciousness and use it to introduce a new culture — a more caring, softer brand, one where the golden arches shine with a gentler glow. Today's consumers want authenticity and value. They want a product that is grounded in an idea rather than in commercialism, one that speaks to the environment and is produced by people who understand the challenges of the times (Sinek, 2010).

A plan to change something as fundamental as a company's culture is never easy. Culture is the foundation of a brand. It is the source of a company's power in the consumer consciousness and the projection of its values and principles. 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 mind, before corporate hegemony had dominated the skyline and before artifice had overtaken the airwaves. The company could still thrive on the inertia of the past, but that past was gradually slipping beyond its reach as generations turned over, new ideas replaced old ones, and a new culture grew up around it — one that had not come of age basking in the glow of the golden arches. This generation was suspicious of all corporations, and none represented monolithic corporate inhumanity quite like McDonald's. Changing McDonald's would require more than a makeover and a menu refresh. It would require a transfusion of soul.

Changing a company culture does not have to be as daunting as that sounds, however. Using Kotter's 8-Step Change Model, the transformation can be implemented in a structured, manageable way — so long as the steps are carefully considered, planned, and executed. The eight steps of the Kotter model are:

Conclusion

McDonald's faces an uphill battle in the fight to stay relevant among 21st-century consumers. Its image and brand have been tarnished by journalists and activists, and the company must reinvent itself by appealing to consumers' sense of nostalgia and presenting a compelling vision — to both workers and the public — of a restaurant that values old-time principles and genuine sentiment. That is the vision McDonald's needs to promote, because it reflects what resonates with consumers today: authenticity and value over commercial spectacle. In order to reconnect with the public, McDonald's must shed its impersonal, corporate image and embrace the warmth of old-time America once again. Guided by Kotter's 8-Step Change Model, that transformation is not only necessary — it is achievable.