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McGolden Opportunity

Don Thompson engineers winning role as McDonald's president


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Don Thompson, left, flanked by some of the products developed under his watch.

Don Thompson, president of McDonald's USA, may be the restaurant company's first accidental executive. Thompson, 44, played an important role in McDonald's recent turnaround and helped create what some franchisees say is the best relationship they've had with their franchisor in decades.

But Thompson, who has a degree in electrical engineering, only took the headhunter's call that led him to the world's largest restaurant company because he thought the recruiter represented defense firm McDonnell Douglas.

His rise to the presidency of the iconic McDonald's is a study in beating the odds, and not being afraid to shift gears and try a new direction.

Thompson grew up on Chicago's South Side, "but by the time I was 10, the inner city was

Five Questions

1. Best Advice: 

Business: 

Always read the "Tea Leaves" (understand your surroundings and the circumstances which drive the behaviors of the individuals
around you), and "Trust the System" (McDonald's franchising system) to work

Life: 

Treat others as you want to be treated

 

2. Last Book(s) you read:

"Holy Bible" and "Crossing the Danger Water:  Three Hundred Years of African
American Writing" by Deidre Mullane

 

3. Guaranteed Stress Reliever:

Cooking for family and friends

 

4. Last Meal:

Breakfast today:  Sausage McMuffin and two Apple Dippers at my favorite
restaurant

 

5. Advice for my successor (once I hang up my spatula):

Always fully leverage the strength, entrepreneurial spirit and knowledge of the
full McDonald's system of franchisees, suppliers and staff Ð We're blessed with
an amazing McFamily! and, . . . Develop a very diverse team of talented leaders
who share your inspirational vision and represent impeccable values in their
daily lives

beginning to get tough," he said, "so my grandmother, who raised me, moved us to Indianapolis." Thompson was a "decent" student (he'd skipped a grade while still in Chicago) and an enterprising kid. "When I was 11 years old, I printed up little business cards and distributed them in a nearby convalescent home," he said. "The residents hired me to do errands or clean their apartments."

Thompson also had a gift for math and science and when he was in junior high, he was approached by representatives of the Minority Engineering Advancement Program (MEAP) at Purdue University's School of Engineering and Technology, a program designed to provide minority students with exposure to technical careers. "We started with a weeklong trip to Purdue (in West Lafayette, Indiana,) to see a college campus. It was like—wow!—after that I was hooked," Thompson said.

MEAP provided counseling while Thompson was in high school and summer jobs in their sponsoring companies, like Indiana Power and Light. Back then, minorities made up only 2 to 3 percent of Purdue's engineering students and MEAP's goal was to increase that percentage. "Many of us got to Purdue on a combination of scholarships and grants," Thompson said.

In 1980, at Purdue's fall scholarship banquet, Thompson was seated across the table from a fellow engineering student, a young woman named Liz who had grown up in Chicago's Cabrini Green housing project. "We started dating in 1981 and we've been together ever since," Thompson said. "Do I have to mention that we now contribute to MEAP?" 

After graduation, Thompson accepted a position with Northrop Defense Systems (now Northrop Grumman) near Chicago and Liz took an engineering job at Ameritech, "where they put her on a fast executive track," Thompson said. "But she wanted to give back to her community, so she resigned and became the executive director of a non-profit that runs youth centers like the one she and her brothers played in when they were young." They were married in 1988.

By then, Thompson was a project engineer at Northrop and soon became part of the engineering management team. "I'd never thought of leaving, but we'd hit a tough time and there was a lot of downsizing. One day a headhunter called and mentioned a position that involved robotic control circuitry and feedback loops. I assumed he was talking about McDonnell Douglas and asked when I should travel to St. Louis for the interview. He said that McDonald's was located in Oak Brook, Illinois." Thompson turned him down, but changed his mind after another engineer at McDonald's invited him to visit the company.

Thompson joined McDonald's in 1990 and did so well that fellow workers told him he was a shoo-in for a 1993 president's award. "When I didn't win it, my supervisor said he'd never even submitted my name, because the engineering department had won two awards the previous year and he didn't feel right about applying again. "I never got the president's award (which recognizes the top performing 1 percent of employees)," Thompson said with a smile, "but I got something better—the chance to be president myself."

 At the time, his frustration was the culmination of a lot of events and "I felt it was time to go. When I told Patricia Harris (McDonald's chief diversity officer) my plans, she said I had to talk to Raymond Mines first."

Mines, 62, who retired recently, was an unlikely mentor. He has a degree in transportation logistics and had taken a pay cut to join McDonald's as an operations trainee in the early 1970s. Mines had risen through several departments before becoming a regional manager and McDonald's highest-ranking African-American. "I believed I had a responsibility to African-Americans and minorities in general," Mines said in a telephone interview from his home in
Naperville, Illinois. "But I can be a hard ass. My attitude was 'do your job, don't come to me and whine about it.'"

Thompson looked out the window of his sleek executive conference room while remembering their first meeting. "We sat under the arch of the other corporate building and Raymond asked in his gruff voice, 'What do you want?'" When Thompson said he wanted to have an impact on decisions, Mines told him he'd have to transfer out of engineering and into operations. "He said he could promote me into a new quality assurance group, then added, 'One day you might be able to work for me.'"

Nevertheless, Thompson thrived in his new position. "Back then McDonald's had 40 regions and the quality assurance team flew around the country, helping to solve their problems," he said. "I facilitated discussions, worked on strategic planning and helped to write the company's first team-building modules. About a year later, Raymond saw me in the hallway and said, 'Now it's time to pay the piper.'"

 

Don Thompson’s grandmother, who raised him, was a rock for him when he was growing up. When his South Side Chicago neighborhood got too tough, she moved the family to Indianapolis.

Which meant working for Mines, as a strategic planning director. "Raymond would call and say, 'Pack a bag for X number of days and meet me at the airport. Don't worry about where we're going.' We'd go into one of Raymond's regions to lead workshops and facilitate their problem-solving. Of course, we were talking to mostly white faces and at McDonald's all newcomers are greeted with a question, 'How good are you at what you do?' Once you prove your competency, that question goes away pretty quickly."

The next test involved Thompson's burger-flipping competency. Mines said, "Every operational person at McDonald's has to work in our restaurants. I don't care who you are, if you don't understand the restaurants, you can't help to run the company."

"I turned in my suit and tie for a crew uniform," Thompson said. For six months he worked in the Chicago restaurant of longtime franchisee Rod Lubeznick, "being trained by 16 and 17-year-olds on how to make french fries and Big Macs. I cleaned and worked openings and closings. I asked Liz not to tell our friends where I was, but they ultimately found out and came in a few times."

Thompson learned quickly and was promoted to shift manager, assistant manager and for a period co-managed the franchise. "I loved every single day," Thompson said. "In fact, I told them I'd be glad to stay there, if McDonald's would continue to pay my director's salary."

"Of course he did well," Mines said. "If he hadn't done well, he wouldn't be where he is today."

Thompson re-donned his suit and moved with Liz and their young son, Xavier, to Denver, where he was promoted to operations manager for that region. "The thought of leaving our extended families was hard, but being away for three years made our own family closer," he said. And larger, because daughter Maya was born there. In 1998, Thompson was named regional manager of San Diego, an area with 300 restaurants that ranked at the bottom of McDonald's regions. Here, Thompson honed his turnaround skills, improving the restaurants' service and cleanliness, re-focusing their marketing messages, instituting incentive
programs for crew members and managers and introducing low-cost promotions like
29-cent hamburgers to bring in more customers. Within a year, the San Diego region rose to No. 2 in McDonald's rankings.

In 2000, Thompson and his family were called back to Illinois, when he was named president of the Midwest division. But sales were softening all over the country and management sent Thompson back to San Diego as head of the 4,000-restaurant western division. "All those relocations were the tough part of the deal for Don," Mines said. "To my mind, that's the price you pay for success." 

"When I met Don in 2001, it was one of the low points in our history," said Don Armstrong, a franchisee with 14 McDonald's in the Portland, Oregon area who was then the president of the western division of the franchisee National Leadership Council. "We had lost our way. We were trying a lot of things that weren't working and franchisees and corporate managers were debating each other's ideas. Don came in and started bringing people together. We traveled all over the region together and talked continuously. The turnaround wasn't the result of one
idea or approach, but because of Don it came about as a partnership between franchisees and corporate."

Once McDonald's ship was righted, same-store sales began their record-breaking rise (November marked the 56th consecutive month of increases) and the stock price tripled. Thompson returned to Illinois as the vice president of Global Innovation Orchestration. After McDonald's lost two CEOs in quick succession, James Cantalupo to a heart attack and Charlie Bell to cancer, Thompson rose to COO of the entire U.S. In August 2006, when Mike Roberts resigned as COO of McDonald's Global, Ralph Alvarez, who had served as president of McDonald's USA replaced him, and Thompson took Alvarez's place as president.

Thompson gained a corner office, but no door. The executive floor at McDonald's headquarters has an open floor plan, a configuration that seems to suit the new president's expansive personality.

McDonald's 2,400 domestic franchisees also feel they have a strong voice at corporate. "In a coincidence of history that could not have been scripted," said Armstrong, "I became chairman of the Leadership Council in 2007. Going forward we know that franchisees will be part of all decisions. Don and I have built a relationship of trust. I respect his leadership skills, insights and perspectives and he respects mine." 

Despite his original hesitancy at working there, Thompson is also a champion of McDonald's food. "In high school," he said, "I could eat a Big Mac, a Fillet of Fish, a shake and fries whenever I wanted to and stay skinny as a rail." Today his physique has   filled out, and while Thompson still enjoys the wide variety of menu items McDonald's has to offer, he also will choose the salads, chicken sandwiches and Apple Dippers over the burgers and pies.  "But I love our french fries," he said.

His children are also McDonald's fans, but he imposes restraints that he wishes other parents would copy. "If I were to let my 14-year-old son do what he wanted all the time, he'd eat anything and everything. We try to position our menus so that parents have options, but one parent may offer a child Chicken McNuggets, milk and Apple Dippers while another orders McNuggets, french fries and a Coke."

Thompson's own beverage of choice is McDonald's iced coffee. "I'm a fanatic," he said. He recently announced that the chain is rolling out a specialty beverage plan for all its stores that includes espresso and other upscale coffee drinks, plus sweet tea, frappes and smoothies. The new equipment will cost franchisees about $25,000, plus up to $75,000 to retool their restaurants to accommodate it. Thompson and his corporate staff are so committed to the plan that they've offered to pay 40 percent of each franchisees' cost of making the conversions.

Franchisee Ric Richards, who has seven stores in the Raleigh, North Carolina, area, said he already has the new equipment in four of his restaurants and will install it soon in the rest. "We like the model of economics based around coffee and an expanded breakfast menu," Richards said.

Future economics are less certain. In the past month, Wendy's, Burger King and Yum! Brands have all announced plans to copy McDonald's Dollar Menu and expanded beverage and breakfast offerings. Thompson said he's not worried. "As long as we keep focusing on our customers and stay in alignment across the system, with our owner operators, suppliers and corporate officers driving the same plan, we'll continue to have success."

Personally, Thompson's own focus is on bringing more balance to his life— flying back from meetings early to catch his son's football games or to watch his daughter play basketball—and helping to create a pipeline of diverse future leaders. He and Liz support a number of organizations, including several that provide educational opportunities for minority youth. "I want to make sure others achieve their goals, just as I have," he said.

As for Mines, he said he wasn't at all surprised that Don has risen so far. "He has the ability to listen, blend in, analyze and communicate. People feel at ease with him. A lot of corporate executives have little time for those below them. Don makes everyone part of the process. Frankly, if I hadn't seen his leadership abilities, I wouldn't have helped him in the first place."

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