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INNOVATE | Interview INNOVATE HIGHER POWER Could the humble battery solve our planet�s energy problem? INSPIRING THE BUSINESS WORLD LAUNCHING BEATING GREAT BURNOUT LEADERS Why it pays to How to manage middle invest in you As featured in managers better INVEST IS IT TIME TO The IoT RETHINKINSPIRING THE THE BUSINESS WORLD Hype or BONUS SYSTEM? revolution? The CEO Magazine HOW TO SURVIVE A MANAGEMENT BUYOUT For more info visit Finding theceomagazine.com BALANCE David Jacob, CEO of Marsh Asia, explains “Be ISSN 24249831 why health is wealth humble and continuously improve.” McDonald’s is one of the planet’s most recognisable brands, but Philippines President and CEO Kenneth Yang says it is determined to keep improving. WORDS DANIEL HERBORN • IMAGES GOLDEN ARCHES (MCDONALD’S PHILIPPINES) ne of the most ubiquitous Hong Kong and Kenneth had his first and recognisable brands experience doing work immersion with the on the planet, McDonald’s crew. He then worked as a McDonald’s may be manager in a store before working in different nobody’s idea of a small, departments in the head office from business family business, but for development to supply chain. OMcDonald’s Philippines President and CEO Kenneth has been part of the executive Kenneth Yang, the famous Golden Arches and management at McDonald’s Philippines since the notion of family are strongly linked. The 2003 and says the growth of the company Philippines’ master franchise holder of the has accelerated significantly in the past restaurant chain is his father, Dr George Yang decade. He can reel off a whole raft of who opened his first McDonald’s restaurant in changes at the only company he has ever 1981 and where Kenneth grew up in the worked for. “The size of the organisation, the business. When he was 15, they travelled to areas we’ve been in, the customers,” he 130 | theceomagazine.com INNOVATE | Interview begins. “I think what’s good about all the McDonald’s outlets all over the world have to change is that we’ve been through many live up to. In the Philippines, we have really different economic cycles in the country. We taken the task of living up to these standards always found a way to thrive, even in not so to heart. Our ability to consistently meet all good environments. these standards is our strength – it’s “We’re now a larger company in every something that we’re very proud of. McDelivery, and increased its order points sense. I can see big changes from the “There may be other things like systems – customers can place their orders via the consumer side as well. Years ago, McDonald’s and processes but, essentially, it’s the people. McDelivery website, mobile site or mobile was perceived to be upscale, it was appealing We have to make sure that the people are app. Similarly, it has ensured alignment with to a specific segment of society. We have equipped, that the training and development an increase in overnight and shiftwork by curbed the perception of being upscale and is very strong.” There are now close to 100 opening more 24-hour restaurants.” now have a wide customer base that cuts independent franchises across the Philippines “We have to continuously look at ways of across all market segments and demographics.” and close to 60,000 employees, mainly crew. keeping things exciting for our consumers,” “ The philosophy we share Kenneth says McDonald’s Philippines Kenneth says that unlike many of their Kenneth says. “In the area of food, for understands the mass appeal of its restaurants. competitors, McDonald’s have never relied on example, we continue to introduce new with our suppliers is ‘As we “Customers know that they will get great contractualisation. This approach gives them products and improve the taste of local tasting, safe, quality food. They know we offer more stability and loyalty across their favourites such as the Chicken McDo.” grow, you grow also’.” our menu items and value items, enjoyed in a workforce, he says. Recent additions to the McDonald’s clean, bright restaurant environment.” In the He says McDonald’s Philippines has Philippines menu include the Burgerdesal (a Philippines, most people are economically evolved in line with societal trends. Traffic variation of the pandesal, the Filipino challenged. congestion has increasingly become an breakfast bread) and the McFreeze, a frozen “[McDonald’s Corporation] has set very obstacle to people coming into the beverage in a range of different flavours. high standards with respect to its food quality, restaurants, so the company has responded “Even the look of our McDonald’s service and restaurant environment that all with McDonald’s delivery service or restaurants are constantly updated to keep the Kenneth believes there are many close design appealing to the important millennial competitors in the fast food space, but says demographic,” Kenneth adds. McDonald’s remains best in class. “In terms To make such changes, one must walk a of offering fast and friendly service, the fine line in a business that is strongly highest quality food and the affordability of associated with familiarity and consistency; the prices, I think we set the industry customers do not come to McDonald’s benchmark.” hoping for an unpredictable experience, but He offers some counterintuitive ideas on valuing the comfort of knowing exactly what competition, saying that McDonald’s is aware they will get. Kenneth says that McDonald’s of its competition, but is not focused on high-volume business model is designed to rivals, wanting to focus more on its encourage repeat customers. “We keep our consumers than its competitors. Staying true menu prices very low and affordable so that to its own identity and brand is also people can eat in our restaurants often. For something that flows from a more inward- breakfast, they can eat for around 60 pesos. looking focus. Half page advert Glades International MCDO LISTENS McDonald’s Philippines is implementing a consumer feedback system called McDo Listens, an online website which allows customers to review the overall performance of the restaurant. “The system has been fully rolled out and Kenneth says the insights it provides are truly invaluable. We have financial metrics as well; returns and how we are doing on profit. But customers are the life of our business, so for me, that is the most important feedback. We want to know how they feel about our service, our people and our food.” theceomagazine.com | 133 The external companies McDonald’s are interested in observing and learning from, Kenneth explains, are generally companies in at delivery or payment,” Kenneth says. “The completely different industries. In particular, kind of relationships we have, they continue he feels there are many lessons to be gleaned right until the product gets to the customer.” from new technology companies. “They are The company also facilitates forums for very consumer driven and really know their suppliers across nations to help raise standards. consumers. They’re very fast and agile and we “We call them supplier councils,” Kenneth want to be like that. We look for inspiration says. “We might get the bun supplier in the in many places and we try to encourage Philippines together with bun suppliers from several values in our people: to be humble, Japan and Taiwan, so they can learn from continuously improve and recognise your each other, teach each other and improve.” people - your employees, your franchisees Many suppliers began as small businesses and your customers.” and are now thriving multinationals after Strong relationships with their suppliers 10–20 years of consistently supplying for have also been a key part of the company’s McDonald’s, Kenneth explains. The loyalty ongoing growth. “Many of our suppliers have and upskilling is mutually beneficial, with been with us for a long time,” Kenneth says. long-term suppliers equipped to meet sudden “We work with them closely and spikes in demand. They can also upscale their communicate with them regularly. The operations, passing these savings on to philosophy we share with our suppliers is: ‘As McDonald’s, which in turn passes them on to we grow, you grow also’. We have strong and the consumer, resulting in greater business. stable relationships with our suppliers. For It’s a business model which has proven many of them, we are probably a very enormously successful, but one that Kenneth Full page advert significant part of their business.” Yang and his staff are committed to continue Genosi The suppliers are given the opportunity improving. By refining their processes, to be involved in the company’s long-term introducing innovations and staying in touch planning. They may be alerted to a with the needs of suppliers and customers promotion months in advance, allowing them alike, they hope to stay at the cutting edge of to ramp up production or change focus as the nation’s fast food franchise industry. necessary. “We have a very straightforward, transparent relationship CORPORATE SOCIAL with them. They RESPONSIBILITY INITIATIVES understand our business.” McDonald’s asks all McDonald’s Philippines charity of choice is the Ronald McDonald its suppliers to spend a House Charities or RMHC. The local chapter of the global charity couple of days a year working in a restaurant was established in 1995 and has raised more than 215 million to understand the pesos for a range of programs that have helped more than demands of the front- 11.8 million children nationwide. end of the business. Its current programs include the Ronald McDonald Read to Learn They are also expected to visit program, a partnership with the Department of Education that restaurants throughout teaches beginning reading in public schools.

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