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McDonald’s Digital Transformation Special Sauce Is Curiosity

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Digital transformation is routinely cited as a top board priority. Yet, companies struggle mightily when functional experts are cast as strategic difference makers.

Competitive labor markets and ongoing pandemic upheaval only compound that widespread problem. Deloitte’s 2021 CEO survey found that 71% of leaders reported that their organization was undergoing or preparing for “a workforce/talent transformation” and 34% expected a “cultural transformation.”

McDonald’s is well ahead of those trends. In late 2020, McDonald’s launched its “Accelerating the Arches” growth strategy which builds on the company’s historic strengths, while also addressing opportunities to meet rapidly evolving consumer preferences. Importantly, the cultivation of a curiosity culture underpins that growth strategy — bettering the odds of digital transformation success.

New era

Digital transactions through apps (including delivery) or kiosks now account for a significant and growing percentage of McDonald’s major market revenue. In addition to driving sales, digital programs enable McDonald’s to elevate customer engagement, measure marketing effectiveness and forecast future performance.

“Accelerating the Arches took shape in response to changing customer needs early in the pandemic. Rooted in the inherent strengths of the McDonald's system and brand, it's proving to be the right strategy with the right focus at the right time,” McDonald’s CEO Chris Kempczinski explained on a recent earnings call.

“Our three growth pillars known as our ‘MCDs’ – marketing, core menu and the 3Ds (digital, delivery and drive-thru) guide our business. This includes amplifying contactless channels like delivery and drive-thru and creating digital experiences that are seamless, personalized and easy to use.”

Specifically, Kempczinski credited strong cross-functional collaboration for the digital loyalty programs expedited success, noting that several company teams worked together to standardize infrastructure and align the system which paved the way for MyMcDonald's Rewards — their first global digital offering.

Those efforts are swiftly delivering. McDonald’s new loyalty program has over 22 million enrollments, with over 15 million active members. “It’s a good example of how our core menu and personalized marketing come together through digital channels to build a stronger relationship with customers,” Kempsczinski said.

Curious and creative

Led by Global CIO Daniel Henry, McDonald’s tech team plays a key role in daily operations and long-term success. While unwavering strategic investments benefit IT greatly, it’s culture that Henry views as the group’s real differentiator.

“It's been a cultural journey, just as much as a technology journey,” Henry explained. “Culture is more than best practices. We have to be curious — which means we're doing research and challenging ourselves to find ways to drive the business forward.”

Henry fosters that workplace dynamic by motivating his team to understand McDonald’s customers and study tech usage in other industries. “It starts with great listening. We listen to our customers, business partners and crew members,” Henry highlighted. “We appreciate that our customers are using technology every day at work, home and in every aspect of their life. If we complement what works well for them, our business will be rewarded.”

“We work very closely with our customer experience team which researches how customers are interacting with McDonald's, our competitors and other consumer industries,” he continued. “We feed that curiosity with hackathons and creativity. We bring in startup companies to pitch ideas and help us see what we may not be thinking about. We dedicate hours at a time to unconstrained brainstorming and idea-sharing.” In addition to innovation, these unfiltered sessions build trust.

The result is a creative, business-savvy and highly respected IT workforce. “Individuals in the technology organization know the business and technology very well. When we combine those two, we get pretty innovative ideas.”

For instance, McDonald’s has invested in digital menu boards to improve drive-thrus by updating menu selection, displaying relevant product recommendations and empowering customers to confirm orders and personalize their experiences. These modernizations result in better run restaurants and higher customer satisfaction.

Outcomes focus

Henry also attributes the tech team’s success to cross-functional partnerships. “Our CFO Kevin Ozan and I work closely. Productive collaboration happens when conversations center on value, not cost. It's really been important to me that the technology has a seat at the table and that we are part of strategic conversations, as opposed to simply being asked for solutions. At McDonald’s we overcome that common challenge by focusing on the business outcomes,” Henry emphasized.

“Together, we find where investment is needed, not just in technology, but in the business,” he added. “We spend a large amount of time talking with our business partners about our objectives and key results. They challenge us by explaining how and why we are trying to grow digital penetration, acquire more customers, boost customer loyalty and increase transaction size. We have a lot to measure and manage well at the tactical level every single day, but we never lose sight that long term success is about outcomes not outputs.”

As McDonald’s exceeds $100 billion in annual systemwide sales, that sound technology investment approach is vital to fulfilling the “Accelerating the Arches” growth strategy and bolstering revenue, profitability and competitive strength.

Futureproofing

Henry often reminds his team that “it’s exciting to work on something that over 65 million people use every day,” and he sees an even brighter future. “We want to be viewed as a great destination for top technology talent. Smart people love working with other very smart people. Our clear strategy, genuine partnerships and curious culture make McDonald's a force to be reckoned with for sure.”

That’s a foundation for digital transformation success in any industry. Who’s curious?

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