Tag Archives: mcdonald’s

10 Reasons to Innovate — NOW!

We’re busy gearing up for the annual SMA Summit, where innovation will take center stage. In the spirit of the summit, I started to gather some inescapable facts that could inspire us all to innovate and improve – to truly become the Next-Gen Insurer. But, rather than peddle the same old innovation benefits and business rationale, I thought it would be refreshing to share 10 facts about change and innovation that will directly affect insurance and that may inspire you, surprise you or reinforce why you should be continuously improving by reimagining and reinventing the business of insurance!

  1. Younger generations like Millennials and Generation Z are going to be the biggest consumers in the market in five to 10 years. Make sure you can reach them. They will not use paper applications or have a face-to-face meeting, but they will be searching for options from their phones and cars. A typical mobile user checks her phone more than 100 times a day (Marketing to Millennials).
  2. Innovative workplaces attract the best and brightest talent. Today, word of a stale, outdated work environment spreads fast. Don’t be one of those employers. Invest in talent, but also invest in your infrastructure and creating an innovative workplace (How Great Companies Attract Top Talent).
  3. A majority of insurers (65%) have focused on innovation for five years or less. You aren’t alone, and, surprisingly, you probably aren’t far behind. With the right focus, you can make remarkable strides in a short amount of time (SMA Research: Innovation in Insurance: Expanding Focus and Growing Momentum).
  4. 80% of all crowdsourcing is done by small business and start-ups. Embrace the crowd! It is often the most cost-effective way to generate ideas. Big business loves the crowd, too. Just look at McDonald’s crowdsourced burger or Apple’s crowdsourced mapping tools (Crowdsourcing: Great For Your Business).
  5. The amount of stored data doubles every 24 months. The U.S. Census estimates that the population has grown more than 27% in the last two decades. Changing demographics, aging citizens and diverse populations are changing the face of data accessible to insurers. To stay on top of the situation, you need a data and analytics strategy that makes the most of the new data available (Vernon Turner).
  6. Wearable devices have grown 200% every month since 2012. This doesn’t mean that wearables won’t eventually be replaced by something else or evolve. It does mean that wearables are growing so fast that it makes sense to try to tap into some of that innovation and apply it to your own organization, your processes or even your products (2013 Internet Trends).
  7. It is six to seven times more expensive to acquire new customers than it is to keep existing ones. One risk of not innovating is that you may start losing customers who can find better, easier-to-use insurance options. Studying consumer behavior might be the best indicator of market trends and areas to innovate. Don’t lose renewals because you haven’t kept up with market demands (15 Statistics That Should Change the Business World But Haven’t).
  8. More than 40% of the companies at the top of the Fortune 500 list in 2000 were not on the list in 2010. The digital age shuttered many long-standing businesses. Some experts think that, in the next decade, businesses that do not embrace innovation or adapt to market demands will suffer the same fate. Insurance is not immune to this phenomenon. Today, everything is connected (Sorry We’re Closed: The Rise of Digital Darwinism).
  9. Just 10% of cars were connected to the internet in 2012, but by 2020 it is estimated that 90% will be. It is amazing to think of how quickly we are witnessing innovation expand. What was once an outlier is now a standard (Amazing Facts Everyone Should Know About the Internet of Things).
  10. Internet of Things (IoT) technology has the potential to add $10 to $15 trillion to global GDP over the next 20 years. Like the connected car, IoT will eventually become standard. What insurers do with the new data available and the amazing growth potential will ultimately make or break them (Internet of Things Market Statistics-2015).

These facts are inescapable. Not only is innovation here, but the statistics are astounding. The time to embrace innovation and become the Next-Generation Insurer is now.

McDonald’s: a How-(Not)-to on Innovation

McDonald’s is in free fall, in the U.S. and abroad. Sales in the U.S. were down 4% in February, continuing a slide that cost Don Thompson his job as CEO at the beginning of 2015. The McDonald’s promise of a uniform food and dining experience wherever you see the Golden Arches across the globe has quickly become a liability. Consumers are demanding choice, freshness and more transparency about the ingredients that go into what they’re eating — all things McDonald’s has in short supply. Those videos on how McNuggets are made aren’t helping much, either.

How did McDonald’s miss the boat? The slow-moving car wreck of a declining McDonald’s is déjà vu for marketers who have watched other industry-leading brands squander their equity by failing to adapt to changes in tastes. Blockbuster and RadioShack are just two of the many examples of companies that stood fast, or made only cosmetic changes, as their industries were innovating and shifting below their feet. Whether the products were comfort food, videos or cheap electronics, each company took too long to realize that people weren’t buying what they’re selling any more. Chipotle, Panera and other fast casual restaurants have quickly grown over the last 10 years, but, even though McDonald’s used to own part of Chipotle, it still stopped innovating and missed the looming threat.

Define dying. Even with the recent sales declines, McDonald’s still generates nearly $100 billion of revenue a year, so reports of its actually going out of business won’t be coming anytime soon. But the company is squarely on the wrong side of current eating trends. After expanding the menu to try and provide “something for everyone,” the company is now shrinking the menu again to focus on traditional core offerings. It will all be to no effect if the company isn’t able to re-imagine and re-invigorate the dining experience. Simply having salads on the menu isn’t enough. Nobody really wants to get a Caesar salad from McDonald’s to start with, especially not when it has more calories than the iconic burgers. And the rise of gourmet casual burger chains like Shake Shack and Wahlburger’s has made even McDonald’s core burgers look much less appealing than they did in the past. The patient is still breathing, but there are few signs of improvement.

It could have been different. The McDonald’s brand used to stand for tasty (if not necessarily healthy) food, a fun environment and a little piece of Americana. When I was a kid, I remember that rare times we got to go the McDonald’s down the block on 96th and Broadway as a real treat, complete with a Happy Meal and a toy. By comparison, last year I was spending a Saturday with my boys and wound up in a neighborhood where a McDonald’s was the only option for us to grab lunch. Instead of being excited, my four-year-old solemnly told me, “You know this food isn’t good for you, Daddy,” as he picked at the burger and fries in front of him. And he loves burgers. Times have changed, but McDonald’s really hasn’t. Instead of window dressing changes like substituting apple slices for fries in Happy Meals, the company needs to rethink the menu and value proposition, especially for families.

How can McDonald’s be put back together again? The best companies don’t shy away from market changes. They face changes head-on. It’s hard to remember now, but Netflix was once completely focused on renting DVDs by email. Instead of fighting the streaming revolution, Netflix embraced it wholeheartedly and now makes much more from that part of the business (though the company still has 6 million DVD subscribers in the U.S.). Demands change, and even the most entrenched market leaders can see it all slip away quickly; just ask Blackberry. McDonald’s needs to change its strategy, food and even the look of the stores if it wants to keep up. It won’t be the same old McDonald’s any more, but it might just help turn the business around.

Workers Fight. . . to Automate Their Jobs

The news out of Illinois tells us that as many as 2,000 people, including 325 uniformed employees, descended on McDonalds’ headquarters recently in advance of the company’s annual shareholders meeting to demand that the company pay workers’ “what they are worth.” I am not privy to the convoluted calculations involved, and have no idea how the employees arrived at the magic number, but the general feeling seems to be they are all worth $15 an hour.

This is part of a movement pushing back against a minimum wage that many feel is too low and does not provide a livable wage. The movement bears watching because it could lead to significantly more automation, reducing the need for workers in many industries and, thus, the amount of workers’ comp and other types of insurance that cover them.

Let’s look at the core argument for a moment.

The workers at the demonstration are correct that the federal minimum wage of $7.25 an hour does not provide a livable wage. I don’t think it was ever intended to.

Honestly, I believe many people have lost sight of what the minimum wage was supposed to be. It was an “entry level” wage designed for low-skilled workers or those just entering the workforce. It was never intended to be a family-supporting, bill-paying, life-creating wage. We were supposed to start there and work our way up. And by work our way up I mean develop skills and expertise and leave that minimum wage job forever behind us — to be filled by some other unskilled or inexperienced worker.

It doesn’t matter if that new skill was fixing engines or operating on the human brain; we were supposed to do something with our lives. Not any more. Today we define worth by the rate of our respiration and pulse. “I am,” therefore you owe me. My own brother-in-law subscribes to this belief and constantly references some poor sap he read about who has worked for a fast food restaurant for a bazillion years and only makes $8 an hour. My brother-in-law really does not have a response when I say, “Wow, he should quit and find someone who values him more.”

Whether or not you agree with me, the issue here is pure, unadulterated economics. Here is what is likely to happen if the push for an increase in the minimum wage to $15 an hour succeeds.

  1. My brother-in-law, who in addition to speaking for the little man constantly complains that a fast food soda costs $1.50 when the cup and ingredients only cost the restaurant “like a nickel,” will have to get used to paying $2.50 for that soda. He is diabetic, so he shouldn’t be drinking that swill anyway.
  2. Unions, many of whom have contracts tied to the minimum wage as a base, would see immediate raises for their workers’ across the board. (That, by the way, is the real key behind unions’ support for fast food workers)
  3. Finally — and this is the BIG finally — you will see automation in these low-end jobs like you’ve never witnessed before.

That, in the end, is what these workers are really fighting for. They are fighting to be replaced by machines. It is Economics 101. Automation is not feasible at $7.25 an hour. It is at $15 an hour. A visit to a McDonald’s of the very near future may find self-service kiosks similar to those in some retail stores or airports. Customers could place their orders and pay on their own. Some of the food may be produced by automation, as well. A large machine, half freezer and half deep fryer, might cook and dispense the French fries based on what the kiosk systems tell it to do. Fast food restaurants already have self-serve soda machines based on the same principle; the fast food industry merely will expand the use of automation to other jobs within the facility.

I should not need to add that machines don’t complain, don’t have personal issues, don’t call in sick, don’t require benefits and never file grievances or workers’ compensation claims.

This automation, of course, will not be limited to the fast food industry. This will happen throughout the service and retail sector.

If the fight for a $15-an-hour minimum wage succeeds, that will make some people quite happy. The unions will be ecstatic. The robotics industry will be elated.