McDonalds, Apple, Disruption, 80/20 - Best of Host Matt on Business Topics - BRT S03 EP10 (109) 3-6-2022

McDonalds, Apple, Disruption, 80/20 - Best of Host Matt on Business Topics

- BRT S03 EP10 (109) 3-6-2022

 

Things We Learned This Week

• What Business Are You In? - McDonalds is a Real Estate Company

• Disruption in Business & Tech World - How to Handle The Innovator's Dilemma

• 80/20 Principle summed up is, 80% of outputs come from 20% of inputs – Focus on the 20%
• Steve Jobs 1997 Return to Apple – The Power of Focus & Simplify, Say No often, choose wisely

 

 

 

Seg. 1 of 2/9/20 show – MB on What Business Are You In? - McDonalds is a Real Estate Company

 

What Business Are You In? - McDonalds is a Real Estate Company

 

Replay Clip from 2/9/20, where Matt talks about the biggest franchise of all, and what their real business model is. McDonalds has built an business empire thru Real Estate, not burgers. 

The Dollar Menu is designed to get customers in the door. McDonalds loses $ when people purchase from the dollar menu, it is a Customer Acquisition Cost (CAC). This is also called a ‘Loss Leader’, selling a product at a low cost to get customers. McDonalds then makes money when people buy more, and off return business.

McDonalds is one of the biggest Real Estate companies in the world. The stock is valued on the $37 Billion in Real Estate they own. They make money as a landlord, because the franchisee is their tenant.

The Founder – business movie biography of Ray Kroc. Kroc started as a milk shake salesmen to the McDonalds brothers in California, then went on to create the franchise system we know today. The first President of McDonalds Franchise (Harry Sonneborn) helped Kroc create the real estate model that the franchise was base on, and used to scale to a billion $ company. Internally McDonalds used the Brother’s Speedee Service System created pre-Kroc.

The Question ‘What Business Are You In?’ comes from business consultant Peter Drucker. Business owners need to understand what problem or service they really offer their customers.

Ie – Starbucks is in the Customer Experience business, not coffee, but the atmosphere of drinking the coffee

 

Full Show: HERE

 

 

Seg. 1 of 2/16/20 show – MB on Disruption in the Business World – The Innovator’s Dilemma

 

MB on Disruption in Business & The Innovator's Dilemma book by Clayton Christensen

 

Clayton Christensen’s book, “The Innovator’s Dilemma”

Tech Disruption – technology changes and a small company startup can up-end big tech companies. Hence,  disruption - the power of disruption, why market leaders are often set up to fail as technologies and industries change and what incumbents can do to secure their market leadership for a long time.

Innovator’s Dilemma – how can big companies stay up with tech changes and pivot without hurting core business? All businesses (including tech companies) have trouble with disruption.

 

Example: Blockbuster – rented movies, DVDs, lost market share to Red Box (vending movie rental), then both disrupted by streaming movies.

Music industry went from records to cassettes to CDs to streaming (Napster).

MySpace taken out by Facebook in social networks.

Yahoo search taken out by Google (controls 75% of the search market)

Kodak afraid to get out of film business and passed on digital film, lost market share.

 

To solve the Innovator’s Dilemma, big companies acquire smaller tech companies; have in house R&D to be ready for next tech wave.

Steve Jobs of Apple was very influenced by  Innovator’s Dilemma  and took this idea seriously.

If you do not try to put your company out of business (w/ disruption / new tech), someone else will.

Jobs was not afraid to innovate, and cannibalize his own company and products to stay relevant.

Apple created iPhone, and now computer is in your pocket

Peter Thiel – “Zero to One” book - Great innovation is not A to B to C, it is vertical, jumps curves.

Current smart phones have more computing power than a computer 20 years ago.

Guy Kawasaaki (former Apple) Talk - “12 Lessons From Steve Jobs”

 

Full Show: HERE

 

 

 

Seg. 2 of 7/5/2020 show - MB on the 80/20 Principle

 

 

MB on the 80/20 Principle

 

80/20 Principle summed up is, 80% of outputs come from 20% of inputs

Other examples - 80% of sales comes from 20% of sales people

Microsoft – 20% of bugs caused 80% of problems

80% of client issues come from 20% of clients

You make business decisions based on the stats, and data on how to manage process and clients. 

Hence, you may fire bottom 10% of clients to cut out issues

Very few things create a lot of your results – could actually be ratio of 90/10 or 70/30.

Analyze who are top 20% of clients and get more of the top 20% types to grow business.

Also named Law of the Few or Pareto’s Principle 

Vilfredo Pareto studied land,  & farming in Italy, he realized 80% of land in Italy held by 20% of population.

Joseph Juran  - expert in efficiency and quality coined “Pareto’s Principle”

Richard Koch – wrote 80/20 Principle book in 1998.

Koch was a Bain & Co. consultant – worked with Bill Bain. Koch said Bain was smart and lazy.

Bain hired young brilliant and “cheap” talent, less accounts, but great customer service.

Focus Time on Key 20% effective work for best results to grow business.

‘To Do’ List can only have a few high priorities per day, focus on important tasks

 

 

Full Show: HERE

 

 

 

 

 

Seg. 2 of 7/19/2020 show - MB on the Steve Jobs Return to Save Apple in 1997

 

 

MB on Steve Jobs Return to Apple – Power of Focus & Simplify

 

Apple is an iconic brand with Apple symbol with a bite – symbolizes we use computers to unlock knowledge.

Iconic products – Mac, IPad, IPod, IPhone to become 1st Trillion $ company – few companies have hit that valuation

‘Dare to be Different’

Steve Jobs was forced out of Apple and created 2 companies – Pixar Animation (purchased later by Disney) and NEXT Computers, purchased by Apple in 1996 – Steve Jobs back in Apple. Apple was failing at the time.

Steve Jobs was made CEO again, had to save the company. He got a loan of $150 million from Bill Gated at Microsoft , Microsoft and Apple were bitter rivals for the past 10 years.

 

First move – Simplify. Cut products and focus, make a list off of 10 items & cross off 7. Focus on 3

‘Think Different’ ad campaign and Mantra.

Products were beautifully designed, sleek and easy to use.

Do less and do it better. Focus, then simplify. Then say NO often

Very careful in deciding what NOT to do.

Meanwhile, Microsoft was bloated and unfocused – would spend the next 10 years lost with Steve Balmer as CEO. In 2011 – new CEO at Microsoft and rebound with Cloud Business – last 8 years.

 

Jobs understood importance of not only what you do, but also what you don’t do.

Opportunity Cost – if you put time and energy in one direction or business, you may miss out on a better business opportunity. 

Pick your opportunities carefully in business and life. Pick your partners carefully.

Know your business, product, the problems you solve. Team gets this also, so do your customers. Creates fans of the company, who are also customers.

 

Full Show: HERE

 

 

 

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