No problem bedevils American corporations so much as succession.
Despite all our democratic and capitalist trappings, fact is most great companies are dictatorships. One person, often the founder, is called upon to have a vision, and to execute that vision. When that person leaves, the company often founders.
This was certainly true for McDonald's (MCD). The 1984 death of Ray Kroc was followed by two decades during which the company's image suffered, where it became a byword for the worst of America, almost a laughingstock.
Despite its global expansion McDonald's market share was falling by 2003, and it reported a loss for that year's fourth quarter.
That was also the start of the company's comeback.
Under Jim Catalupo, Charlie Bell and (now) Jim Skinner, McDonald's accepted the mantle of being a global brand. Its strategy, dubbed “Plan to Win,” involved redesigning stores, expanding the menu into breakfast, coffee and healthy offerings, investing in innovation, and bringing in ideas launched by franchisees in Australia and France.
McDonald's, in other words, focused on basics, on what it had already built. It sought to expand its base, and built a team-oriented management to replace the previous dictatorship. You probably couldn't pick Skinner out of a line-up, but that's the way he likes it. We replaced me. Responsibility for growth was broken up, and good ideas were allowed to percolate upward, from franchisees.
The results for shareholders are clear. From a low in the mid-teens in 2003, McDonald's is now a $90 stock, the whole company worth nearly $100 billion. You can now get a 2.71% yield on it and a P/E multiple of 18. That's Google-like. Tasty.
Apple (AAPL) did that, from the time Jobs left until he returned.
Now it has to find another way to do it. And McDonald's provides the template. Focus on the basics, on what you've built. Expand the base, let ideas rise from the bottom. Build your management team, and make lots of stars instead of just one.
Can it work in tech? It works at IBM. Yes, it can work. But it's hard. And the first step is humility. Tim Cook needs to remind himself every day that he didn't build Apple Inc., and he's not solely responsible for its future.
Perhaps a music analogy is appropriate here. Steve Jobs was a star, an Elvis among corporate managers. Tim Cook, like Skinner, needs to be more of a Chet Atkins. Sure Atkins was a fine musician, but he wasn't Elvis, and knew it. So in addition to his own career, Atkins nurtured others as a producer and executive.
And wound up building just as big a legacy.
Disclosure: I am long IBM.