Curiosities

• Pig Stand thin-sliced the future, not its sandwiches — lazy people, drive-ins, and carhops.
• Chris Argyris’ 45-year-old mystery and the self-transforming mind.
• Late to the game isn’t out of the game.
• Never hire bananas.
• Shunryu Suzuki defines Funnel Vision.
• The right solution starts with the right question.
• There’s never been one like it before — time machines need upgrades.
• We’re in over our heads, but there’s a way out. It’s not for everyone.

The combination of strategy and leadership is unbeatable. For strategists and transformational leaders, Roger Martin’s writing is a must-read. His insights are must-do’s. But many challenge convention, so putting his ideas to work takes leadership.

I highlight leadership challenges in Prof. Martin’s weekly PTW/PI pieces. So, if you’ve read his piece and are on board with his ideas but remain hesitant to run with them, please read on.

In this week’s post, Prof. Martin puts a spotlight on the task of innovation — namely, creating a future that doesn’t yet exist. He says it’s tricky, and it is, but it can be organizational Kryptonite. In 1978, Chris Argyris pointed out why the requirement is so unsettling. Thirty years later, the authors of Immunity to Change identified why organizations unintentionally resist change.

Leading to Win

Thin-slicing the future

I’m typically both critical and skeptical of business guidance that features tech and corporate giants like Apple and McDonald’s. The dynamics of the people involved are irreplicable (one Steve Jobs meets one Jony Ives once in human history), and the resources of multinational firms are unmatched.

But, Prof. Martin’s advice to thin-slice the future works at any scale across industries — like the concepts outlined in Playing to Win. They work for solopreneurs, start-ups, small and medium businesses, multinationals, and industries including tech, CPG, hospitality, non-profit, and retail — to name a few.

At the risk of self-criticism, I highlight McDonald’s in this piece for a few reasons:

1. They’re everywhere, and nearly everyone has been to one.
2. They’ve innovated to serve customers for 60+ years.
3. They innovate for customer time, and as I wrote here, “it’s all about time.”
4. Clayton Christensen’s Jobs to Be Done theory is rocket fuel for innovation.
5. Like Pig Stand did in 1928, McDonald’s prototypes the future.

McDonald’s also contrasts with what I wrote about Schrödinger’s Business — Fotomat, who reduced a single heuristic into code, contracted Funnel Vision — which sealed them off from the world — stamped out 4,000+ copies of the dodgy code, and went out of business.

But it doesn’t have to play out like that.

Fast Food Drove Off Without McDonald’s

Jessie Kirby opened a one-of-a-kind restaurant along a Dallas-Fort Worth highway in 1921. Servers ran up the customer’s cars as soon as they drove into the Pig Stand parking lot. Some of them hopped onto its running board before the car stopped and took the order. Kirby’s thin slice of time gave rise to the drive-up restaurant and carhops concurrently.

It was essentially table service in the comfort and convenience of your car. It was a breakthrough in its day because customers got restaurant food and service without leaving their cars.

Describing the point of drive-in dining, Kirby said, “People with cars are so lazy they don’t want to get out of them.” He had no idea how right it was.

Jessie Kirby rebuilt his restaurant to accommodate his customer’s preference to eat in their cars.

The next iteration of car-centric dining was to save time by bypassing the carhops, ordering food through a two-way microphone, which allowed food prep to begin before customers reached the window, paid, and drove away with their order packaged to go:

• In 1947, Red’s Giant Hamburger in Missouri was the first to deploy the format
• In-n-Out built its first drive-through in 1948 in California
• Jack-in-the-Box entered the fray in 1951
• Sonic drive-ins launched in 1953 out of Oklahoma

Drive-thrus were faster and more efficient than drive-ins. By the 1970s, drive-up restaurants were a functionally obsolete novelty. And, still, McDonald’s didn’t have one.

But They Caught Up

Because McDonald’s and drive-thru are virtually synonymous, it’s surprising it took McDonald’s until 1975 for its first drive-through, which opened close to Fort Huachuca in Arizona.

By opening it, McDonald’s wasn’t trying to compete with In-n-Out, Jack-in-the-Box, or Sonic drive-thrus — it focused on serving customers. The Army restricted soldiers stationed at the base from leaving their cars while wearing fatigues — the drive-thru option offered a workaround to the restriction (and saved soldiers a lot of time).

Twelve years later, in 1987, McDonald’s franchisee Bob Charles introduced the double-vehicle drive-thru in Boulder, Colorado. The double drive-thru significantly increased per unit volume. There’s little doubt the extra capacity was a time machine for commuters, cutting their wait time by at least half every visit (there’s a theme developing).

In 2022, drive-thru orders accounted for 70% of McDonald’s US business.

“Never Hire Bananas”

Whenever I think about McDonald’s in a business context, I think of Clayton Christensen’s Job-To-Be-Done theory of innovation. In the 30 years between opening its first drive-through and Prof. Christensen’s development of JTBD, McDonald’s drive-throughs were fine-tuned code.

But the company didn’t have it all figured out. For example, why did milkshake sales growth stall?

Typical of businesses looking for improvement, McDonald’s looked down the Knowledge Funnel for ways to fine-tune their existing code, starting with customer research. Then, armed with fresh insights from customer surveys, they “improved” their milkshakes by making them more flavorful, enhancing the texture, and dropping prices.

But customers didn’t respond to the new and improved milkshakes — a classic symptom of Funnel Vision. Instead of going deeper, McDonald’s went looking for mysteries. They also stepped out from under their Golden Arches and brought in Prof. Christensen and his team for assistance.

Prof. Christensen describes the way the team working on the mystery found the insight that ultimately 4x-ed milkshake sales this way:

So one of our colleagues went in with a different question on his mind. And that was, “I wonder what job arises in people’s lives that cause them to come to this restaurant to hire a milkshake?”

“What do I hire when I do this job? You know, I’ve never heard the question framed that way before, but last Friday, I hired a banana to do the job. Take my word for it — never hire bananas. They’re gone in three minutes — you’re hungry by 7:30 a.m.

What do bananas for breakfast have to do with milkshake sales? It turns out that, previously unknown to the company, half of McDonald’s milkshake sales happened before 8:30 a.m. Why? Because the takeaway breakfast alternatives weren’t fit for purpose.

Prof. Christensen runs through a list of options for milkshakes described by customers:

• Donuts drop crumbs everywhere.
• Bagels are dry and tasteless.
• Eating Snickers bars for breakfast made people feel guilty.

In contrast, McDonald’s milkshakes got the job done:

“Let me tell you — when I hire this milkshake, it is so dense that it easily takes me 20 minutes to suck it up through that thin little straw. Who cares what the ingredients are — I don’t. All I know is I’m full all morning, and it fits right here in my cupholder.”

A new insight, namely why customers buy milkshakes before 8:30 a.m., not more data, enabled McDonald’s to innovate features that mattered and increase sales. For a commuter, time is everything. So, they innovated for time — they made milkshakes faster to buy and longer to drink. McDonald’s:

• moved milkshake machines from behind the counter to the front
• expedited payment with prepaid cards
• developed a thicker morning milkshake to last longer and added chunks of fruit to make it more interesting

Sales increased by 4X — (this figure from an unverifiable source; take it for what it’s worth, but the consensus is that milkshake sales increased after they understood the JTBD).

Time Machines Always Need Upgrades

After showing up to the drive-thru party 30 years late, this is how their restaurant design and development executive views their position in the marketplace, “At McDonald’s, we’ve been setting the standard for Drive-Thrus for more than 45 years. As our customers’ needs continue to change, we are committed to finding new ways to serve them faster and easier than ever before.”

This article published on Quartz says the company is positioning itself for a drive-thru-only future and recaps some recent drive-thru innovations at McDonald’s:

• Implemented technology in 2018 to adjust a digital drive-thru menu based on time of day, weather, regional preference, and more.
• Deployed voice technology in 2019 for “faster, simpler, and more accurate order taking.”
• Starting in 2019, license plate scanners identify repeat customers as they pull in. Upon recognition, AI predicts their order and makes suggestions.
• During 2022 in Fort Worth, Texas, McDonald’s prototypes and tests a separate “Order Ahead” drive-thru lane (in the general area where Pig Stand started it all — more below).

Thin Slicing the Future — Test, and Learn

In a way very close to what Prof. Martin advocates in his article this week, McDonald’s time sliced a future restaurant and turned it into a prototype. The company considers the restaurant concept a way to “test and learn.” The features exist in only one location.

The company designed the restaurant to meet higher customer demand for off-premises dining:

• In-store kiosks allow customers to place take-out orders themselves.
• A pick-up room supports food delivery services.
• A Back to the Future feature: dedicated curbside order pick-up (used to be called “drive-in”)
• Designated parking spaces for delivery drivers. Having McDonald’s delivered was unimaginable a few years ago.
• An “Order Ahead Lane” for customers who order ahead via the McDonald’s app uses geolocation tech, enabling the crew to prepare orders as soon as the customer is close to the restaurant. A food and beverage conveyor delivers the order to customers when they arrive.

Algorithms and code inside the Knowledge Funnel may not change, but customer experiences do. Those who don’t adapt to accommodate customers by thin-slicing the future will likely get crushed.

Playing to Win Takeaways

If there is any capability P&G has that’s universally applicable, it’s consumer-centered innovation.

As described in Playing to Win, innovation at P&G “must be consumer-centered … The goal is to connect consumer needs with what is technologically possible.” (p. 117) As is further explained, consumer-centered innovation engages the company’s key stakeholders, including P&G’s best customers, channel partners, and retailers.

It plays out the same way for McDonald’s. The connection between technology and customer preferences, such as delivery, order-by-app, and accelerated food service, is designed into their Texas test restaurant.

Echoing the benefits realized by P&G, McDonald’s commitment to customer-centric innovation:

• Deepens customer relationships and earns new ones
• Bolsters the investment franchisees make in the platform
• Strengthens the company’s competitive advantage

In his piece this week, Prof. Martin writes, “A central task in successful innovation is to generate data that will provide guidance on and encouragement for the task of creating a future that does not now exist — and is markedly superior to the world that exists today.”

Of its Test-aurant, McDonald’s says, “There’s never been a restaurant like this before.”

You may not think McDonald’s is in your competitive set, but your customers (or future customers) are in McDonald’s. Ignoring how they’re remaking customer expectations is dangerous.

Leadership Takeaways

The Sysisphian task of a leader is to prevent organizational Funnel Vision. People like predictability and reflexively resist change. It’s easy to be lulled into a false sense of security when people walk into the same building at the same time, sit at the same desk, and see the same group of people day in and day out (HQs are particularly vulnerable to Funnel Vision).

“In the beginner’s mind, there are many possibilities, but in the expert’s, there are few.”

— Shunryu Suzuki

In the story Prof. Christensen related about McDonald’s, the company did two things to combat Funnel Vision:

1. When straightforward product enhancement (down-the-funnel fine-tuning) failed, McDonald’s brought in fresh eyes.
2. They collected data to understand the circumstances that caused a customer to buy a milkshake before 8.30 a.m. — understanding why they were buying was more consequential than what they were buying.

At the story’s heart is the question asked by a member of Prof. Christensen’s team. Discoveries always begin with a previously unanswered question. And their impact is like a stone dropped into a pond.

As a direct effect of the why-do-people-hire-milkshakes question, McDonald’s uncovered a mystery: why 40%-50% of milkshake sales happened before 8.30 a.m. They took that insight, invented a milkshake fit for purpose, and increased sales.

The more significant — and continuing — ripple is Prof. Christensen’s Jobs To Be Done theory. In the introduction to this 2016 HBR article, he and his co-authors outline how inadequate down-the-funnel “innovation” leaves companies:

“In a recent McKinsey poll, 84% of global executives reported that innovation was extremely important to their growth strategies, but a staggering 94% were dissatisfied with their organizations’ innovation performance.”

To generate innovation takes a shift in mindset.

Leading with a Self-transforming Mind

The key to building a winning strategy, leveraging the Knowledge Funnel, or using JTBD can’t be realized by adhering to models; it’s developing the mental complexity to harness the power of the models.

In their book Immunity to Change, Robert Kegan and Lisa Lahey point out the conflict between traditional expectations for leaders to create organizational stability and expectations — current in 2010; still unmet in 2023 — for organizational transformation and innovation.

Kegan and Lahey pinpoint the core of the conflict with a quote from Organizational Learning, written by Professors Argyris and Schön in 1978, stating that demands on corporate teams to transform long-standing business practices “change the very image of their business.”

In the language of Prof. Martin’s series on heuristics, traditional expectations for leaders to create stability and predictability (working down the funnel) directly oppose the requirement for change (solving mysteries). Leaders find themselves at the point of impact between an irrepressible force and an immovable object.

But there’s a way out.

Kegan and Lahey wrote [formatted as bullet points for easier reading]:

“For more than a generation, Argyris (and those who have been influenced by him) has unwittingly been calling for a new capacity of mind. This new mind would:

• Have the ability not just to author a view of how the organization should run and have the courage to hold steadfastly to that view.
• It would also be able to step outside of its own ideology or framework, observe the framework’s limitations or defects,
• And re-author a more comprehensive view — which it will hold with sufficient tentativeness that its limitation can be discovered as well.

In other words, the kind of learner Argyris rightly looks for in the leader of today may need to be a person who is making meaning with a self-transforming mind.” (Immunity to Change pp. 26–27)

Kegan and Lahey unwittingly describe what’s needed to use at scale (distinct from understanding) complex business models like the Strategy Choice Cascade and Knowledge Funnel. To realize the potential of those models, a leader must have the capacity to:

1. Create an original view of the business / Turn a mystery into a heuristic.
2. Unflinchingly hold that perspective / Turn a heuristic into an algorithm and that into code.
3. Reassess the validity of the perspective / Look for faulty assumptions in the code.
4. Re-form a fresh, original view of the business / Go back UP the funnel to solve new mysteries.

They also diagnosed why, 45 years after Organizational Learning was published, there’s a chasm between what businesses need from leaders (change) and what is delivered (efficiency). Developing mental complexity to meet current leadership demands is not part of business education or professional development, and it’s counter-instinctual.

“Our own mental complexity lags behind the complexity of the world’s demands. We are in over our heads.”

— Kegan and Lahey

It’s the same issue undermining the widespread adoption of Prof. Martin’s approach to strategy. So, any leader serious about building a winning organization with a winning strategy owes it to their organization, team, and themselves to do the work required to overcome immunity to change.

As they caution in their article, “The Real Reason People Won’t Change,” “… the process may sound straightforward, but it is by no means quick or easy. On the contrary, it challenges the very psychological foundations upon which people function.”

Changing the world starts with changing our worldview. Like leadership, it’s not for everyone.