Three Entrepreneurial Lessons From “The Founder”

Three Entrepreneurial Lessons from THE FOUNDER

Last weekend, my wife and I finally got around to seeing The Founder. The film, starring Michael Keaton, chronicles the real-life story of Ray Kroc and the building of the McDonald’s empire. It’s an entertaining movie with good acting. I’d recommend it whether you are in business or not.

For those unfamiliar with the story, here is a quick overview. (Spoiler alert! But since the movie is based on real events, don’t sweat it.) Ray Kroc is a serial entrepreneur who is mesmerized by the “speedy service system” developed by the McDonald brothers in San Bernardino, California. He convinces them to let him franchise the concept. It takes off.

Ray realizes he’s in the “real estate business” rather than the “hamburger” business, leading him to gain even more leverage and scale. Ray eventually buys out the McDonald brothers (and allegedly reneges on a handshake deal to pay a royalty that would be worth $100 million per year today).

But the movie was more than fun entertainment—I also learned some very important information about running a business. These are the three entrepreneurial lessons I took away from The Founder.

1. You Need Balance Between Your “Artists” and Your “Entrepreneurs”

There were many conflicts between Ray and the McDonald brothers. For example, Ray wanted to allow Coca-Cola to sponsor the menu board, while the McDonalds thought that deal would compromise the integrity of the brand. The McDonalds vetoed Ray. Ray wanted to save a ton of money on refrigeration by making shakes out of a powder instead of real ice cream. The McDonalds said no. Ray wanted to grow at a rapid speed, the brothers at a more measured pace.

The McDonalds held Ray back. But were the brothers doing the right thing for the brand?

I see this same tension between the “artists” of a company (editors, writers, designers, engineers, etc.) and the “entrepreneurs” (salespeople, CEOs, etc.) all the time.

Artists: Be thankful the entrepreneurs exist, otherwise you’d be a “starving” artist!

Entrepreneurs: Don’t dismiss the point of view of the artist! They are often in tune with what the market wants and are really the secret sauce (no pun intended) to your competitive advantage.

Of course, the truth is always somewhere in between. Here are some strategies I’ve used to break the log jam.

First, create an overall vision for the company and communicate it often. What are the values that you won’t ever compromise? What are the financial targets? Doing this proactively will come in handy when a dispute arises.

Then, when there is a disagreement, ask both sides to evaluate the impact of the change against the vision and targets. Where does the idea excel and where does it fall short? You may be able to resolve some issues at this point by saying, “Let’s pick our battles here. Does this issue meaningfully violate our values or meaningfully lead us to our financial goals?”

Once both parties have a chance to present their case, take a breather. Sometimes the issue is so emotional that the space of time can help people better measure the risks and benefits of the ideas. Thank both sides, say you’d like to think about it, and make a plan to reconvene in a few days.

Follow up with each party individually to see if their position has changed. Often it has. If not, consider running a survey or experiment to get feedback from your customers—they are the people who matter! For example, in the McDonald’s shake debate, the brothers and Ray could have tried the powdered shakes in 10% of the locations, then surveyed if customers felt any differently toward the brand after the experiment.

Make sure you clearly define success before you launch a test so that the decision-making will be easy once the results come in. For example, if more than 10 people complain about the powdered shakes, they’re done. Otherwise, we test in another 50% of the chain.

2. Building Consistent Processes Can Be a Fun, Creative Endeavor

When people hear the terms “process mapping” or “operational improvements,” they often think BORING. Who wants to be micromanaged and so detail-oriented?

But having consistent processes is important no matter what business you’re in: you need repeatable processes for efficiency and scalability. Even so, it doesn’t need to be boring! There are two ways to make building consistent processes actually fun.

First, you can make defining the process enjoyable. In The Founder, we saw how the McDonald brothers turned a tennis court into a prototype for a restaurant (by drawing in cooking equipment and walls with chalk). They ran drills (complete with a stopwatch and clipboard) to see which set-up and workflow led to the most efficient process. It was like a competition. How could they constantly improve? Your team will only be more excited once they have the mindset that process design is a creative process—that it’s like a game.

Second, remind your team that if you have a more efficient process for the routine stuff, that leaves more time for people to focus on more creative, strategic activities.

3. Don’t Be a Jerk

For about half the movie, I was rooting for Ray. I was excited about his entrepreneurial passion and ability to spot good ideas. But by the end of the movie, I thought, “What a jerk.” Who wants to live a life—even if they become a billionaire—if they are a complete you-know-what to friends, family, and business associates. Ray says, “Contracts are like hearts; they’re meant to be broken.” Who wants to spend time with deceitful people like that?

As an improv comedy fan, it made me think of an article by Kim Quindlen called “30 One-Sentence Lessons Anybody Can Practice to Live a Happier Life.” Here are some of Kim’s recommendations:

  • The most important thing is to be truthful.
  • Vulnerability makes you strong, not weak.
  • Listen to the person in front of you instead of thinking about what you’re going to say next.
  • Say what you feel.
  • Mean what you say.
  • When you make others look good, you look good.
  • Putting other people down will not make you look better.
  • In fact, putting other people down will get you nowhere.
  • Don’t waste energy trying to turn other people into your competition.

These lessons really hit home for me. Honesty, vulnerability, and kindness make you a better partner, regardless of whether you think of yourself as an artist or an entrepreneur.

One thing is for sure. It certainly seems like a much better way to go than the way Ray went.

About the Author, Rob Ristagno

Rob Ristagno is the founder of The Sterling Woods Group and partners with companies to drive rapid digital revenue growth. The key is a successful digital membership program. Prior to creating Sterling Woods, Rob served as a senior executive for several niche media and e-commerce companies. Rob started his career as a consultant at McKinsey and holds degrees from the Harvard Business School and Dartmouth College. He has taught Product Strategy at Boston College.