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SAFe at McDonald's

21 October 2016


McDonald’s is reinventing itself by changing its innovation cycle. I’m writing this to find and connect similarities that exist between McDonald’s innovation cycle and SAFe principles and core values. I’d like explore how these SAFe principles correlate with innovation at the world’s largest fast-food joint.

This article is based on Samantha Bomkamp’s Chicago Tribune article "How McDonald's menu is made — and how it's changing." I could not resist comparing McDonald's innovation cycle to SAFe and the Lean product development flow principles.

When you talk about quick-service restaurants or fast food, McDonald’s is always the first choice for a significant majority of people worldwide. No matter what is going on in the business or economic cycle — whether it is a boom or recession — McDonald’s is always available at the breakfast nook or on the dinner table. With their breakfast-at-any-time menu since October 2015, the innovation at McDonald’s has fired up even more and has culminated in such an economic benefit that they might report their best quarterly profits in the last several years, as the article puts it.

While there are many quoted examples and case studies of Agile, Lean product development, and SAFe in manufacturing and software development, the same can be implemented in the food innovation cycle. Reading Bomkamp's article from the Lean/SAFe perspective, it sounds as though McDonald’s is performing in just that way, or at least similarly.

Based on what has been said about the innovation cycle, I’ve drawn several similarities that relate to SAFe’s/Lean’s product development flow principles and values.
 

McDonald’s plan: Test, feedback, tweak, repeat

Looks a lot like SAFe’s Plan, Do, Check, Adjust incrementally. All organizations do this, but what is key with McDonald’s in recent years is their rapid product innovation, which spans only months. Nine months from inception to implementation and realization, to be exact. As the fast-food industry goes, time to market and scale are the keys to winning customers from the competition, and McDonald’s has repeatedly achieved great success in bringing customers back day after day.
 

McDonald’s requires franchisees to carry any 40 items

Talk about decentralized decisions and empowering the locals to make the right decision. These ideas are key. The franchisees are driven by local customer needs. Allowing this freedom is a big win to both the franchisees and McDonald’s, not only for sales and revenue but to effectively serve the local needs, collect feedback, and innovate further.

Another SAFe principle is Assume variability; preserve options. Giving leeway to carry any 40 items enables McDonald’s to gain insight and learn what works best for each store — localization that results in better economics wherein the stores continuously evaluate cost and economic trade-offs over time and evolving human behaviors. This is why you have varying menu options in different geographies. Even within the U.S., New York is different from Chicago, which is different from Texas, yet different to what is offered in Northern California or Southern California, let alone the options offered across Europe, China, India, and the rest of the world.

I can also relate to another key aspect of Lean and SAFe: the "release strategy." Simply put, the release strategy is incremental — they test-introduce in a specific geographical location, and if successful (hypothetically measured by a net promoter score or similar measure), then a larger release plan evolves and is incrementally implemented. If the product is not received well by the markets, then yes, invoke "Pivot without guilt" fearlessly.

I have only scratched the surface of an extremely complex issue of the release strategy, whereby "synchronization" becomes a mandate to scale to serve hundreds of thousands of stores and millions of customers, day in, day out. I’m talking about synchronization among food manufacturing, transportation, vendor or supplier coordination and management, quality and consistency, and so on.

The cadence required for the new product (most likely in conjunction with other menu items already offered) is practiced prior to the release of the new product in a simulation center, where several practice sessions continue over several weeks in a closest-possible simulated environment (including cars, mock drive lanes, tables, chairs, etc.).

The cadence is where my inquisitiveness increases to take part, learn, experience, and improve further.
 

90-second average wait time for McDonald's customers

Visualize and limit work in progress (WIP), reduce batch size, and manage queue lengths. You'd get frustrated if you had to wait more than a few minutes to get your order. Just rewind a bit, and I am sure that everyone has felt their own version of frustration while waiting in line or waiting to get your tray with your items. But if you are like me — you ordered a hot, freshly brewed coffee — then yes, take that extra few minutes, won't you? But imagine the scale of McDonald's. Hats off to their automation.

Visualize WIP. The order board TV monitor shows the WIP to all. Whoever took your order fills it in, then moves to the next one. So depending on your order, WIP is limited to two or three.

"As a cook, I'd really like to focus on 20 items, and do them really well, [rather] than have 50 that we can only do OK," said Dan Coudreaut, McDonald's executive chef. "It's all about balance." I read this as, "It is all about built-in quality of food and effective delivery."

More about quality and tests below.
 

McDonald’s innovation engine: In the test kitchen

The team makes an action plan, brainstorms concepts, and then ranks them. Weighted Shortest Job First or equaling is thoroughly done here, and I am sure that it is applied in multiple levels repeatedly.

In the test kitchen at McDonald's Oak Brook, IL, headquarters, where some products are conceived, chefs, food scientists, and nutritionists all weigh in.
  • A cohesive team is evidenced: The team is empowered to weigh in or prioritize.
  • The mindset is, "Nobody beats the U.S. in the kitchen" rather than "Nobody beats me in the kitchen."


McDonald’s food testing

A focus group tests the food, which is then tweaked to account for everyone’s input.

This invokes SAFe’s core value of built-in quality and the Test-First practice. The computer industry (software, hardware, and firmware) calls it User Acceptance Testing (UAT) or simulated tests in a production-equivalent environment for quality assurance (QA). The manufacturing industry also practices quality certification (QC) in addition to QA.

SAFe suggests "fitness for use." Although you can relate this to both QA and QC practices that are appropriate to your industry, in McDonalds’s case, both are mandatory because every item delivered to the customer must have passed the QC (taste, quality, look and feel, size, shape, temperature, and caloric value) to the specifications. Any variation in this could result in immediate rejection by the customer, and that would impact the store economically and be reflected in the NPS, if and when measured.

QC addresses the specification of the food item itself, whereas QA addresses the process of achieving the required specification, such as how long it should be cooked, how and where automation can be leveraged, how the assembly line works (think of Krispy Kreme doughnuts in the assembly line), etc. QA aspects are also tested and practices in close to real-life simulated environment with (cars, mock drive-through lanes, chairs, and tables) to ensure it meets real-world needs. In addition to the central testing approach, the company also tests products in the regions where that type of product is more popular. So, again, both centralized and decentralized (local) testing approaches are different, and there is probably a unique testing strategy applied by McDonald’s to ensure success.

The centralized and localized testing definitely invokes a combination of SAFe principles: Decentralize decision making and Assume variability; preserve options. Therefore, driving conditions, packaging, and payments may vary by local needs.

SAFe’s "Fitness for Use" should be applied carefully and consistently to achieve the desired QA and QC outcomes. In addition, McDonald’s also leverages heavily on "Developed and tested locally; value delivered globally." Proliferate the local success globally to all the stores across the world. This calls for more than centralized fiduciary controls (e.g., Portfolio Program Managers, or PPMs, not just for product innovation but also for program execution. I can see that the franchisee no longer remains a franchisee but gets elevated as a partner in innovation.

I am beginning to see a strong case for establishing a fiduciary role (similar to a PPM) to be extended from portfolio level to the pallet so that appropriate fiduciary controls and empowerment can be exercised, when required, at the value stream or program levels. Of course, a PPM at the portfolio level should be well aligned with the fiduciary role in the pallet. Such an enhancement to the framework can potentially add value and be practical in the context of implementation.

Below are a few of my thoughts on how to leverage the SAFe 4.0 framework components, specifically the value streams and pallet, in the context of McDonald’s innovation cycle.

Products and values offered in India are totally different from those offered in other parts of the world. In fact, a significant percentage of the population there opts for vegetarian menu items. I have proposed (yes, bravely!) some value streams that I could see as a good fit for this kind of business and innovation cycle, based on some assumed essential characteristics.

It would be a great opportunity to engage with McDonald’s and do a case study (at minimum, an academic exercise) and ponder the value delivery of SAFe in their innovation cycle (assuming that McDonald’s is not already doing so) to learn and improve further.

Here are few thoughts that could take it further:
  1. How SAFe can enhance the product development flow and innovation cycles and reduce the cycle time even further by using a combination of Kanban and ScrumXP (SBX)
  2. How strategic themes and value streams may be useful in fast, incremental food innovation. Separate value stream for each item below (dare I propose!):
    • McCafĂ© coffee and beverages
    • McDonald’s vegetarian options — why not extend this from India to other parts of the world where there is interest in vegetarian menu items?
    • McDonald’s Frozen Menu, which includes smoothies, swirls, frozen yogurt, etc.
    • McDonald’s Desserts Menu, which includes pie, cheesecake, and other desserts
    • McDonald’s Healthy Eats Option Menu, which includes salads, fruits, and low-calorie food items
    • McDonald’s burgers considered as separate value streams from chicken burgers, which are served more broadly over the world than the beef burgers
    • McDonald’s build-your-own burgers (yes, these were recently introduced in some markets) as a big goal in the coming years (vision)
    • Streams for R&D: Trade secrets, products under development, etc.
  3. How they define success or acceptance criteria. For example, what can be standardized models using model-based systems engineering?
  4. An approach to encompass central or local Agile architectural needs that involves more than technology aspects.
  5. Automation that can improve the effectiveness of testing and meeting the specifications.
  6. What could be the ART team size? SAFe suggests 50–125 people.
    • How many Agile Release Trains?
    • Team composition in QSR/fast-food industry innovation made of primarily nontechnology staff members.
  7. Consider the role of suppliers in the innovation cycle and the role of the franchise as an innovator.
  8. Case for a fiduciary role in the movable pallet — a suggested framework enhancement?
I would like to hear any community feedback on these suggestions.
 

Opinions represent those of the author and not of Scrum Alliance. The sharing of member-contributed content on this site does not imply endorsement of specific Scrum methods or practices beyond those taught by Scrum Alliance Certified Trainers and Coaches.



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