 Welcome back to Think Tech. We're doing business in Hawaii today and we have a special guest from Northern Virginia and that's Dave Ramos. He's the CEO of Dave. What's your company called? Shift Points Jay. Yes. Shift Points. Okay. Shift Points. He's been in large companies and has dealt with management issues in large companies and we're going to discuss what's happening in McDonald's and Dave is going to render some advice on alignment which is a magic term used in corporate management. So Dave, welcome to the show. Thanks for coming down. Thank you Jay. Great to be here. So what happened in McDonald's and they lost two of their top guys and that's got to shake up any organization that size and can you tell us the story and can you tell us why the loss of these two guys is such a challenge for a corporation like McDonald's? Well of course it starts with the termination of Steve Easterbrook who was the McDonald's CEO and that happened on Friday and it was the result of a consensual relationship that Easterbrook had with one of the McDonald's employees and when the board learned of that relationship they decided that Easterbrook could no longer be the CEO and he was terminated on Friday. Along with that the chief people officer also resigned and a new CEO by the name of Chris Kempchinsky was appointed on Monday and so obviously that's a lot of turmoil at the top of a big Fortune 500 company. You've got to give them credit the board for acting so quickly and also I suppose they're sensitive to the you know the sexual harassment issue, the relationship issue in corporate governance right now it's so important since Weinstein and so I guess they jump right in that was is that to be admired? Yes it is I think that in today's environment and really in any environment it's just more sensitive today I think. Executives in particular are held to a higher standard and the CEO in particular has to personify the values and beliefs and aspirations of the company and ultimately the McDonald's board decided that this relationship although described as consensual was unacceptable behavior for the CEO. Yeah sure well it's interesting the world the world has certainly changed about that and I suppose I should ask you aside from his relationship and the issue that drove the board to do this so quickly and you know immediately you can shop right on the block. Was he a good CEO? Was he doing well for the company and was the director of people doing well for the company? Well in fact Easterbrook had been the CEO for about five years and during that time the stock doubled so you could clearly argue that he was doing a very good job as the CEO in terms of the business results as measured by shareholder value but of course there's other metrics now and there's other factors that go into how you evaluate the performance of any employee and especially the CEO. Yeah that's part of the package now you can't escape that and I suppose one of the things that must have crossed the mind of the board was if we let this fester if we let the press make hay on it we'll pay a much higher price so we might as well get it behind us right away I'm sure that's that's part of corporate planning when this sort of thing surfaces now. Well I think that's right swift action is appropriate although it creates turmoil for the organization in the short term I think in the long term it's better to take swift and decisive action on behalf of the board and I commend them for making this decision. Okay so now we have a new CEO and he steps into a bit of a disruption and we've got to get the ship right and so to speak everything stabilized and he's got to do at least as good a job as Easterbrook did so we're going to give him some advice today about alignment. Alignment being the operative word no. Well that's right and Kamchinsky has been with the company for about four years he came from the outside specifically from Kraft and he was an originally hired to do strategy and innovation work and the last several years was running the U.S. operations and then WAM over the weekend he gets promoted to be the CEO of McDonald's and so that's obviously a big new opportunity for him especially for someone who's a relative new company I mean McDonald's is a company that's known for having long-term employees especially at the executive ranks and so here's this new guy four years in the business who's now in charge so and he's got to take swift action right away. It's an interesting company I mean it's global for sure but a lot of the units that people think McDonald's owns McDonald's doesn't own it's franchises and they buy and sell and all that and the people who own these franchises do very well so presumably if McDonald's is a partner with the franchisees everybody does well it's a successful company for sure. That's right and there's about 38,000 McDonald's restaurants around the world and the vast majority of them are owned by what McDonald's calls owner operators or what we might call franchisees and McDonald's so one of the things that Kamczynski has to do is to build relationship with all those franchisee owner operators but he's got other stakeholders he's got to he's got to pull together too obviously the board the investors McDonald's has about 210,000 employees and he has to take action to win over the hearts and minds of those 210,000 employees and he's got to do so very quickly this is why the the challenge of the executive transition is to get off to a great start really the first 90 days. Honestly, honestly Dave don't you think you'd love to be in that position? What a tremendous challenge to have this unfold in front of you. Yeah what a great job and you got to love McDonald's though because you're gonna be eating a lot of Big Macs. So alignment okay in the corporate sense so let's see if we can tell the people what alignment is and why it's important in determining management policy. Well that's right it's extremely important and whether you're a small company with 10 employees or so or a huge company like McDonald with a couple hundred thousand the goal is to get everybody in the company going in the same direction driving in one direction as we would say and so we have to build the culture of creating a one company culture where we don't let the various divisions divide us or become siloed. We have to have a sense of teamwork where we're gonna operate against one plan and unfortunately most companies are highly fragmented. The CEO of Microsoft described his company when he took over as a federation of fiefdoms and unfortunately Dave a lot of companies that's how they run. Yeah it's really too bad and it would be especially threatening to a company like McDonald's because all over the world and there's thousands as you said thousands and hundreds of thousands of people involved to get them all on the same page is not so easy. It's actually easy to get them off the same page and get them doing fiefdoms and that's to be avoided especially now I can see you know that the new CEO has to do this this is very important so he wakes up in the morning well make it you you know you you were stepping in his skin here he wakes up in the morning and he says how can I get these people on the same page they're everywhere in the world there were different geopolitical situations different economic situation different markets different customers my goodness gracious how do I get them on the same page and how important is the McDonald's University in all of this I know about that. Well the very first thing he did was send an email to all 210,000 employees a two-page email that articulated his gratitude for being given the opportunity and the confidence that board bestowed on him in giving him this role reminding the employees about his own personal story of going to McDonald's as a kid and how much that meant to him and how proud he was to be associated with McDonald's. He then talked about what he had developed in his prior role the growth velocity plan and talked about the importance of getting everybody to work against that plan and work as one team together and you know that was that was a good first step for him because I think it it allowed him to introduce himself to the entire company with one email. It's possible with emails it's possible with social media who actually have relationships and of course you know you can make it very distant relationship or you can make it a closer relationship here in Hawaii there was a well there still is a national company by the name of Alexander and Baldwin and the fellow named this is like 20 30 years ago my friend was his name at the time Alexander Baldwin had a lot of plantation holdings and a lot of a lot of people on the payroll tons of people and he made it his business to know every single employee he made it his business to know every wife of every employee every son and daughter and every dog and cat and as a result they loved him all of them loved him. It's a great example it's just a little hard to do when you have 210,000 employees but nonetheless I think this is this is the attitude that he needs to project the attitude of connecting with each person individually to be able to help each person see their role that they play in the new McDonald's going forward help them each of them connect to the vision that he has and find their own path of success within that vision and his his success is going to come primarily from his ability to get all 210,000 people going in the same direction one plan one team one vision one McDonald's. What makes this a little more interesting is that he's a new CEO and his plan his vision may not be the same exactly as the old CEO so the first thing he's got to do is explain to him how how it may differ and what it is so that they can get on board this is not easy. Yes that's right that's right this is a particularly challenging transition as far as CEO transitions go because his boss was fired on Friday quite suddenly as opposed to some companies where it's a much more orderly transition where there's see your succession planning and maybe a year of the person being the COO before they get the CEO job but this happened over the weekend and so he has to gracefully recognize Easterbrook's role without really throwing him under the bus in light of what happened but yet be able to distance himself from it and articulate a new plan and a new vision and get people on board with that and so it's a quite of a trick as far as CEO transitions go it's one of the more complicated ones for sure. Yeah and he's got to be distant from what is predecessor what Easterbrook was doing in terms of relationships with staff so that he's not blamed for the same mindset as Easterbrook was having so he's probably selected to be just a little distant so he's not you know best buddies with Easterbrook. Well that's right and if you if you spend some time on Twitter which I did to prepare for our meeting tonight you'll see lots of posts on Twitter complaining about sexual harassment claims made by McDonald's employees or the crew that works in actual restaurants that they claim have been ignored so now the companies faced a little bit with having to have a bit of a double standard of taking action on Easterbrook but maybe not taking action on some of the claims that have come from other employees and you know it's important that we don't speak with work time. Yeah and the lesson here is that once you raise the subject the prospect of it on a corporation like that it's going to draw attention even if you fire the CEO now you're in the limelight. That's right and Kamchinsky has to be above reproach for sure. So your advice then let's assume we're all at the table you me and Klopinski and we're all sitting around where we're drinking a fine chablis what's your advice? Well certainly he's got to build his team at the top so some of these people let's think about this on Friday the people around that table were his peers and now he's their boss so he's got to be able to win them over perhaps some of them were aspiring to be the CEO and maybe feel passed over and so he's got to be able to assess that and quickly build a new executive team at the top because a fragmented executive team will never create an online company so he's got to start there. Then as I mentioned he's got he's got to be able to articulate a vision for McDonald's that inspires people that might be a a 10-year vision let's talk about the year 2030 where are we going at the team and how are we going to create an environment where we all win in this new creating this new one McDonald's? Well you always have the possibility that somebody on that team the one he inherits is not a good player and is going to pull negative and doesn't like it that he was selected doesn't like his style was a little concerned that that person himself wasn't selected or herself and so you may have people that are not really playing on the team and I've heard of many corporate situations I'm sure you have too is when the new CEO ascends he changes that team around he gets rid of the people he is worried about and gets new people and I've heard of one that just just changed their positions musical jobs changed everybody around the table so that he had control in that case it was a she so she had control of everything and they were you know they weren't able to retrench themselves in the old way it had to be something new new challenges for everybody what does he what does a what does a contempt can have to do about that? Well he does have to do that assessment about whether everybody's on board with them you know the classic illustration of alignment is like the eight person crew boat where everybody's rowing in perfect synchronous harmony but you know sometimes what's happened is it's like an eight person boat with seven people in it or with one person who's rowing in the other direction and so he's got to be able to figure out if there's anybody in the boat on the executive team that's rowing in the wrong direction and he's got to move them out quickly and bring in the people that really are aligned with him that buy into his vision that buy into his leadership style and want to be on board with the new McDonald's and you know this is tricky because you're gonna have to move some people out and that's hard. Well then now you assume you're satisfied with your your team assume you've communicated your vision not only them but the the 213,000 McDonald's employees who were involved there's always the follow-through because people are watching for the follow-through they want to see that you will do what you said you were gonna do and there won't be any hesitation about it how does he achieve that what's your advice on effectuating the alignment? Well he has to he has to be able to articulate the plan in a way that's simple enough that everybody can understand it. When Alan Mulally came into Ford he created a one page one Ford plan. Matter of fact it was so simple he could put it on the back of everybody's business card and I think that there's something to be said for especially an organization like McDonald's that is so globally distributed to be able to communicate that plan simply and so everybody in the company knows exactly what the priorities are what the plan is and how they fit in that plan and so he's got to develop that communicate it clearly get everybody on board and then of course as you mentioned you have to execute because he doesn't do any good to have a plan that you can't execute and you know Wall Street's going to be watching very carefully to see whether he's able to deliver results especially here in the short term. And with the new team he's probably going to have to find the people who are most reliable in terms of executing that plan. Sort of a brain trust don't you think within within the team and that may be different than the brain trust that existed under Ease of Burke before. What's the process there and how important is that in terms of implementing the plan that he comes up with? Well the fact of the matter is is that McDonald's has to change. They've been losing guests. I read one report that said over a half a million people had stopped going to McDonald's and they're struggling to reinvent themselves with a new fresher more contemporary menu and that means change that means not only the employees are gonna have to change but all of the franchisees are gonna have to change. So and these franchisees you know they they they have a different relationship with the company than an employee does because they've invested their own money they bought this franchise they have an operating agreement and he's got to be able to win over the franchisees and you know the good news is he spent the last couple years running U.S. operations so he knows the the major players but clearly he's got to you know be able to convince them to make the changes that are required. Dave we can take a short break that's Dave Ramos when we come back for this from this break I would like to talk about another aspect of this how do the lessons of alignment and this kind of recreating management and management style apply across the board and in preserving you know the United States is number one economic power in the world and of course these are the government which is also you know heavily dependent on good management we'll be right back after this short break. My name is Amy Ortega Anderson inviting you to join us every Tuesday here on Pinoy Power Hawaii with Think Tech Hawaii we come to your home at 12 noon every Tuesday we invite you to listen watch for our mission of empowerment we aim to enrich enlighten educate entertain and we hope to empower again Hi I'm Rusty Komori host of Beyond the Lines on Think Tech Hawaii my show is based on my book also titled Beyond the Lines and it's about creating a superior culture of excellence leadership and finding greatness. I interview guests who are successful in business sports and life which is sure to inspire you in finding your greatness join me every Monday as we go Beyond the Lines at 11 a.m. Aloha. Okay we're back we're live with Dave Ramos and we're talking about management we're talking about advising on alignment issues for McDonald's new CEO but we're also taking the lessons of that advice and trying at least in this part of the show to see how they apply those lessons for the new generation of managers if you will around the country so as to preserve its position globally as a leading economic power and then I also want to ask you Dave fair winning about how that applies in government where leadership is so important so let's talk about these entrepreneurs let's talk about these relatively young people who are coming out of business schools who are coming out of MBAs who are who are coming out of you know entrepreneurial situations with great ideas and now all of a sudden they have a big staff they have a lot of people they have a lot of issues and they need to act like real managers to preserve the company to get capital from wall street or from their parents as the case may be you know what are you what are you advising them well one of the things we learned in all of our research j is that alignment applies in every setting whether you're a small company like I said maybe 10 employees all the way up to government and so for the entrepreneur my advice would be to build alignment into the fabric of the company from day one because what you want to avoid is allowing the company to grow and become siloed and divided because it's much harder to realign a company once it's become divided than it is to build alignment in from day one and so that's the best advice I can give people that especially the entrepreneurs they have to be aligned with their customers and then they have to be able to articulate that customer vision to their employees and stay externally aligned and internally aligned and don't get fragmented because it's really difficult to fix well yeah and you know I just wonder what happens when when the manager we're talking you know has trouble doing that where he finds that people are pulling in another direction that his staff doesn't really get it that things are fragmented and he's got to do correction you know it's like training my my favorite puppy to do the thing sometimes you have to correct my puppy if you want her to really learn how to be aligned with the rest of the family so what do you do when you find that your puppy is not buying it well I I'd like to say there's three roles that that person has first they have to be a leader they have to articulate a vision of the future and a sense of direction of where we're going they have to be a manager it means that they have to manage budgets they have to manage projects they have to manage deliverables and they have to operate as a hands-on manager when required and they need to be a coach they need to be able to come along that side that employee who might be struggling and help them and coach them and help them understand where they fit into the plan better because I found that if you if at the top we have people that are leading managing and coaching that's the winning formula you know what reminds me of Nathan Hale you know the price of liberty is he the price of business success is eternal vigilance so I think inherent in what you said is you have to be fully aware as a manager of how things are going and whether people are you know on the plan aligned with the plan or whether they're you know off and yon in their own silos you can't correct them unless you find out they need correction am I right that's correct and one of the things that is also happening now is people are using technology to help improve alignment specifically things like goal alignment software where the corporate goals and the divisional goals and the departmental goals down to each individual person's goals are publicly visible creating this culture of transparency where I can see all of my co-workers goals and they can see mine this has been proven to really help people stay aligned because when they can see their own job and their co-workers jobs and their boss's jobs and everyone's goals and how they all fit together it makes it easier for them to stay aligned yeah sure transparency so everybody knows what's happening I recall when I first started practicing law my firm would have meetings with all the associates and we would compare notes on productivity and hours build and all that and at first you know for all of us it was hard because you put yourself you put you know you put yourself on the table for inspection and sometimes you would not do the way you wanted to do sometimes you would be embarrassed but at the end of the day I come away with that with the lesson that it was positive it was a positive experience that transparency helped me understand how the firm in general worked you know the same thing that's right but it can't see it can't be punitive the goal isn't to punish people who are falling behind per se where our goal is to coach people so they catch up and to learn the lessons from the people that are over delivering so that we can all apply those lessons and best practices so I think it's the nuance of having that transparency not be punitive that makes it work right and to excite them with the notion of change because change is exciting it's productive it takes us to new and better places presumably and that's what takes me to my last question for you actually Dave government okay I think one of the one of the reason one of the phenomenon that we have in this country is that people are not confident of government they somewhere along the line who knows when exactly they have lost confidence in government they don't see government as part of them or them as part of government and so management of government is you know it's a confidence crisis as far as I can see and the question is these principles apply to achieve good management in government and and uh you know how would you change for example any of the advice you would give to uh Clem Clem Clem Tic the new CEO of McDonald's yes how would you change that say again Kim Chinsky Kim Chinsky how would you how how would you yes how would you how would you change the advice that we've talking about for McDonald's and for other you know business enterprises in the United States uh when you're talking now about government instead well I'm here in the Washington DC area so government's right here in my backyard and tonight's election night so there's a lot going on the polls are you know just closing and so we look forward to seeing what the results are but government has some systemic challenges that businesses don't uh for example the coexistence of long term uh bureaucrat employees and political appointees those who and the political appointees come in and out every four to eight years to change the direction and so this creates a systemic uh extra challenge that government has that the businesses don't have uh in government it's very difficult uh to let people go uh for performance or being out of alignment or whatnot uh which creates additional difficulty and I think ultimately um we need to remember the first principles of e pluribus unum that uh we were founded as this great experiment to be one country out of many coming together as one and I think we've lost the the sense of wonder and awe about that idea and I think it's time to put that front and center first and that says at the end of the day we have to be one country and we have to work together as one uh citizenry to make the country better and not let the divisions become so caustic and divisive that they tear our society and our fabric apart yeah well that's just an extension of the same thing isn't it alignment well on the same page and the basic principles of of how we live together um I have one more I have one more question for you and that is uh you've written a book and I believe it covers some of these points can you identify the book and tell us about it and and how we can get a copy well the book's called drive one direction how to unleash the accelerating power of alignment it's available on amazon I spent uh about 10 years I studied 300 companies I interviewed 100 CEOs and the book has 50 case studies of exemplar companies of how they created alignment companies like amazon and ford and tesla and netflix and usaa and small companies as well like bog net construction or bti 360 that are small companies using the same principles and so um drive one direction available on amazon and I appreciate the opportunity to be here tonight sure thank you Dave Ramos really appreciated great to meet you great to have this conversation I hope we can continue at some point in the future let's do it again jay okay you'll know how Dave