Thriving in an Era of Constant Change

When it comes to disruption, McDonald’s Corp. has seen its share. In the 65 years since its founding, the global restaurant chain has had to be innovative in responding to changing consumer tastes, economic pressures, competition from peers and evolving technologies.

Earlier this year, as the Covid-19 pandemic emerged, McDonald’s faced challenges as locations around the world had to close or shift to Drive Thru, take-out and delivery operations only in response to stay-at-home orders worldwide. While sales at locations open at least a year – a common restaurant industry metric – were significantly impacted at the outset of the crisis, the business is now recovering, including positive U.S. comparable sales of 4.6% in the third quarter.  

The company was prepared thanks to strategic foresight ahead of the pandemic to invest in Drive Thru, delivery, digital and its legacy of upholding the highest standards for safety and hygiene.

“When it comes to global crises like the Covid-19 pandemic, we recognize that partnership and collaboration with the industry and experts, like global professional services firm Aon, are key — both in assessing the right actions to take in the short-term, and in sharing key learnings to inform strategy in the long-term,” says Bill Garrett, senior vice president and head of the U.S. Covid-19 response team at McDonald’s.

McDonald’s has worked for years with Aon, which provides a broad range of risk, reinsurance, retirement and health solutions. The move is one part of the chain’s long-term strategy to deal with potential threats and disruptions.

Just as the pandemic was gaining a global foothold, McDonald’s CEO Chris Kempczinski in March rallied the organization around five guiding principles: We’re all in this together; Think and act with a long-term mindset; Be transparent with each other and stakeholders; Lead by example; and Stay true to the company’s purpose. Leadership established that the safety and well-being of customers and restaurant crew is the company’s top priority, guiding its decision making. 

As the number of cases of the virus soared globally, McDonald’s and its franchisees implemented nearly 50 process enhancements to ensure workplace and customer safety, including wellness and temperature checks at the start of each shift, social distancing for customers and crew, universal masking, protective barriers and contactless operations. McDonald’s also engaged Mayo Clinic to inform its longer term approach to Covid-19.

With customers opting for more contactless options, the company also leaned into strategic investments it previously made in delivery, as well as digital and Drive Thru ordering. And while many small businesses were struggling, McDonald’s took steps to ensure its franchisees could continue to serve their communities and support their restaurant employees. McDonald’s provided targeted, temporary assistance to franchisees, including significant short-term liquidity support and investing an additional $200 million in marketing in the U.S. and internationally owned markets to support recovery.

“Our Covid-19 response became everyone’s job,” Garrett says. “We implemented the swiftest and largest operational transformation in our history and have continued to evolve protocols and procedures.”

For businesses and industries of all types, two big lessons have emerged this year: Disruption is inevitable, and it’s important to be prepared to respond to the biggest threats that face your business — from pandemics, climate change and financial crises to rising health-care costs, cyber threats and workforce disruption.

Preparation is the best way to survive disruption.

Unlike McDonald’s, many companies were ill-prepared for 2020’s multiple disruptions. Indeed, an online survey of 800 C-suite and senior executives from the U.S. and EU conducted by Aon found that for about two-thirds of business leaders, the pandemic exposed new vulnerabilities that require significant changes in disruption preparation. The leaders said that preparedness requires not only widening the range of threats considered, but also expanding the number of executives responsible for anticipating them.

“The pandemic exposed how people contemplate business interruption differently. Business interruption would be traditionally defined as experiencing a fire, flood or some sort of event, but the contemplation that a business can be disrupted over a long period of time due to social unrest, geopolitical activity or a pandemic changes the way you think about business resiliency,” says John Bruno, chief operating officer for Aon and CEO of the firm’s Data & Analytic Services unit. “Businesses have to think much more broadly than they did before.”

Aon’s survey also found that the strongest companies are thinking more broadly as they look to the future for threats to their brand or changes in their workforce — not simply reacting to the events of 2020. That’s something Aon is helping companies prepare for. In fact, preparation for future threats and disruptions is at the heart of the planned combination of Aon and Willis Towers Watson, which, as a combined company, will have the analytical and technological capabilities to create new, powerful and predictive models that look forward, not backward, and develop solutions at a pace not previously possible.

“This is an enormous opportunity for our clients that are proactive in managing risks,” says Eric Andersen, Aon’s president. “We'll give them a competitive advantage in the future.”

Today, Aon offers the capabilities to help clients better respond to present and future disruptions and threats. The combined company will be able to offer even more tangible, immediate and long-term benefits to businesses by focusing on four critical areas: navigating new forms of volatility; building a resilient workforce; rethinking access to capital; and addressing the underserved. “It’s not just about the next generation of risks, it’s also about serving clients with more capability and better insight to help them make better choices,” Andersen says. “We'll be able to provide real solutions to clients on the topics that they are really worried about.”

Simon Burtwell, EMEIA Insurance Consulting Leader for Ernst & Young Global Ltd., says the insurance industry desperately needs to adapt to changing client needs. A recent report that Burtwell co-authored says that large commercial insurers and reinsurers must realign their organizations and update their offerings so they can better meet the needs of 21st-century businesses.

That includes more flexible, usage-based policies, stronger preventive services and more robust protections against new and evolving threats — such as pandemics, climate change and cybercrime — as well as a focus on ongoing digital transformations toward more efficient operations and better customer experiences.

“We're talking about an industry that really hasn't changed what it does for 100 years. By and large, relatively little has evolved,” he says. 

Sticking to a long-term strategy is key.

Garrett, the McDonald’s Senior VP, says long-term planning is key to pushing a business forward during periods of uncertainty and change. Aon helps to support business with long-term planning and strategies. 

He says businesses should define their guiding principles because all decisions should be made in service to a greater organizational purpose. Second, business leaders must take time to understand the shifting landscape, act quickly and adjust as necessary. Lastly, Garrett says it’s important to challenge the norm: Disruptions can be an opportunity, but you must challenge prior assumptions.

In part because of this strategy, McDonald’s has been able to recover since those first few months of the pandemic. Global sales are rebounding, down just 2.2% year over year in the third quarter and up 4.6% year-over-year in same-store sales in the U.S. Garrett says long-term planning and investments the company made prior to the pandemic have really paid off. About 25,000 McDonald’s locations worldwide have a drive thru, including 95% of its 14,000 U.S. locations, and delivery is available in 28,000 restaurants. Drive Thru accounted for 70% of sales in top markets throughout the pandemic in the most recent quarter, and Drive Thru times have improved approximately 30 seconds over the last two years. 

While Garrett acknowledges that there’s “no clear playbook” for this period of “unprecedented challenge,” he says McDonald’s is well positioned for the future.

“We’ve pushed ourselves to think differently about many things,” he says. “It comes down to staying committed to our values and the core principles we outlined at the outset of this crisis. They keep us aligned and grounded amid very uncertain times.”