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Humberto Mariotti
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Revista BSP, vol 2., no. 1, março, 2011
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This paper aims to explore the McDonald's case with some concepts of complexity theory and its applications, according to the concepts and tools of complex thinking.
network, globalization, complexity, standardization, adaptability, complex adaptive systems.
McDonald's is still the world's largest fast food company. A market phenomenon, its history and performance have been examined from various angles and approaches. The purpose of this study is to examine the company from the point of view of complexity theory, particularly in relation to the challenges faced – at least since 2003 – in terms of results, need of image change and adaptation to the phenomena of globalization.
Whatever the perspective, what draws more attention is that the products and services provided by
McDonald's until now have been characterized by the application of Taylorist principles of scientific management, as well as the Fordist concept of industrial assembly line. In both cases, the core orientation is to simplify and standardize at the maximum the procedures and the end products. All procedures are based on objectivity, speed and repeatability. Uncertainty and error are avoided to the maximum, even at the risk of low creativity. The processes are of a linear nature and correspond to the definition of algorithms, that is, sets of step by step rules.
In practice, when a particular product or service reaches the point where it can be defined as an algorithm, it is considered "definitive." It is seen as a technique or set of techniques and procedures that provide predictable, reproductive results which can be easily reducible to numbers and statistics.
As is well known, measurement and quantification always move in parallel with reductionism and the
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................................................................................................................................................................................... idea of predictability.
The process of evolution from knowledge to practice follows a trail that Roger Martin (Martin, 2009) describes through the metaphor of the funnel of knowledge, which can be represented by the diagram below:
Mystery
↓
Heuristics
↓
Algorithm
From the mass of objects to be known we set aside some points or areas and then seek to interconnect them. This early, confusing and unclear stage, is what Martin calls mystery and I prefer to call complexity. It is the fundamental characteristic of the whole, according to Merriam-Webster
Dictionary being "a group of obviously related units in which the degree and nature of the relationships are imperfectly known”. In this searching process, the mind is able to identify and isolate specific elements and to discern relationships between them. This stage is called by Martin
"heuristic" because it generates ideas and insights. The next step is to continue the reduction and "sift" the data, that is, to simplify and turn them into standards or rules of sequential application. These are the step by step rules called algorithms. Thus, what at first was complex and diverse turns into something simplified, standardized and repetitive.
In other words, faced with the need to know we first think in terms of general ideas. This is the stage of philosophy. Next, we put the ideas into words, that is, we construct concepts, which tell us what to do. The concepts give birth to techniques that show us how to do, and finally we come to the results or products. I have called this sequence the Ladder of Knowledge (Mariotti, 2010). It is summarized in the diagram below:
Philosophy (Why to do)
↓ ↑
Concepts (What to do)
↓ ↑
Techniques (How to do)
↓ ↑
Results (Results/Products)
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Thus everything starts with the mystery – the world’s complexity. The complexity challenges us and awakens our need to establish and develop knowledge. For this purpose we use a set of attitudes and concepts that lead us to invention and problem-solving. All of this, as we have already seen, we call heuristics. Heuristics is different from algorithms. These are mechanistic and can lead to solutions, even when they are not understood. Heuristic discoveries often arise suddenly, in the form of insights.
Heuristics (the word "heuristic" comes from “eureka”) include a much larger degree of uncertainty than algorithms. Algorithms are linear, heuristics are nonlinear.
The need to reduce the mysteries that surround us and of which we are part – and also the need to achieve a reasonable degree of certainty and predictability – leads us to name things and phenomena, that is, label them in order to give them a meaning. Hence the need for step by step rules (algorithms) and formulas. This is a process that has been adopted by McDonald's since its founding: simplify to control. But even so it is always necessary to take into account the inherent complexity of the world.
Experience keeps showing us that simplifications are always provisional, since the real world is dynamic, unpredictable and always changing. When we think we have understood "definitely" no matter what, eventually doubts and questions arise in relation to this same understanding.
Clinging to simplification/reduction and pretending to ignore changes is a very common way of trying to escape from reality. When we say the world is complex, it means that everything is connected to everything, and that we are a part of a huge network. The combination of complexity with ceaseless changes clearly reveals the limitations of algorithms. In the McDonald's case, allegedly the final algorithm, represented by its almost unique product (the hamburger), began to be questioned by the flow of time and by the social and economic changes. This phenomenon was accentuated when the company began to become international. The idea that different countries, cultures and markets would accept products and services exactly as they were offered in the United States turned out to be wrong.
The standardization of the sandwiches and flavors, and how to present and serve them – among many other variables – have become increasingly challenged by the complexity of the world and the markets.
In other words, repetition has been challenged by difference. Simplification/reduction has been forced to confront diversity, difference and transformation. Simplification (which is necessary in specific cases and contexts) when taken as definitive becomes oversimplification. It lacks the adequate means to deal with complexity. By its own nature, mechanical and sequential algorithms limit creativity and options. In practice this has led to the need for the opposite movement: amplify back what had been
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................................................................................................................................................................................... reduced to look for other alternatives, that is, go back to complexity and restart the process of knowledge, which is not a linear phenomenon: it is a feedback loop.
Reduction/simplification results from analytical thinking. One type of analytical thinking is the inductive way of thinking: it goes from the particular to the general in search of universal rules which are supposedly applicable to all cases. Or, as in the McDonald's case, in search of standardized products and services which supposedly pleases everyone. The starting point of analytical thinking is based on the use of past knowledge to come to future discoveries. It comes from the claim, so often unsuccessful but nonetheless abandoned, that thinks it is possible to anticipate the future based on past experiences. But of course this is not possible. If every new idea or knowledge were based on previous knowledge or ideas, there would be no new knowledge or ideas. According to the aforementioned
Martin, Charles Sanders Peirce (Peirce, 1955) wrote that an idea is really new when it does not have a past. It must come from the unknown, that is, the mystery or complexity of the world. As they do not come from a past that recommends or legitimizes them, new ideas or products/services must be tested.
After they emerge from the world’s complexity through heuristic intuition, they must be transformed into prototypes. It is these that allows them to be tested, modified, improved – or even discarded when they do not work as expected. This is how design has been used in business, under the name of design thinking. As noted by Tim Brown (Brown, 2009), design thinking and analytical thinking are not mutually exclusive. Rather, the first one includes the second and complements it.
We know that analysis can limit or even exclude creativity. But we also know that intuition alone can suggest to us what to do, but not necessarily tell us how to do it. This is the task of analysis and processes. These attitudes and domains are complementary and therefore – as noted by Edgar Morin
(Morin, 2001) -- exemplify a fundamental principle of complexity theory: the coexistence of opposites mutually antagonistic and complementary. All of this has happened with McDonald's. Over time it has seen its algorithm being increasingly challenged by the diversity, multiplicity and rapidity of changes in the real world. This phenomenon has made what was regarded as definitive turn into something that needed to be adapted. What once has been an algorithm started to be seen as a prototype. Everyday practices and the passage of time returned McDonald’s products and services to the domain of trial, that is, to the universe of prototyping. This has been a severe challenge for a corporation that has always based its success on standardization, repetition and customer loyalty through strategies of conditioning.
Just as happens in other spheres, we are always looking for unified theories, we often use the deductive method, which is another form of analysis that goes from general to particular. Reduction and analysis aim at explaining, and are opposed to intuition, whose purpose is to understand through experience. According to Gabriel Marcel (Marcel, 1965), we must understand and explain what can be
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................................................................................................................................................................................... solved, that is, the problems that are solvable by the two basic forms of analysis: induction and deduction. So, problems can and should be explained and resolved.
This was the task of Ray Kroc, McDonald's main creator. He transformed restaurants for families who wished to have snacks away from home in a practical and effective solution, which worked well in
American culture and in other countries influenced by it. Let us remember that it all started right after
World War II when people, tired of insecurity and a frightening future, longed for clarity, simplicity and predictability. McDonald's role was to satisfy this desire and help to make things simple, operational, efficient and well known. In this sense, the network appeared at the right time.
But then came the test of globalization and with it the challenge of diversity and complexity. And then what once was clear, operational and well known no longer functioned like that.
Oversimplification was not enough. Experience has shown that piecemeal simplification (the proper use of the algorithm) helps us manage the complexity. But oversimplification (that is, to insist on an algorithm when it no longer works) takes us back to the complexity, that is, to the mystery.
Complexity forces us to look for knowledge and alternatives, and this leads us to return to the highest step of the ladder of knowledge (philosophy - concepts - practice - results).
Mystery is the complexity of the world we live in – and we are an integral part of it and not outside observers. We have seen that problems can be resolved and explained by the analytical mind, which is not only possible but desirable. But mysteries cannot be solved by isolated analysis. They need to be experienced, lived, and this requires open-mindedness and creativity, that is, design thinking. It is essential to understand that not every type of knowledge comes from analysis: complexity and its mysteries are understood by intuition and explained by analysis. It is necessary to combine the two approaches.
Standardization of processes and products at McDonald's has been the subject of several sociological studies, some of them rather critical. Among the most important are the studies done by George Ritzer.
His starting point was the idea of rationalization of society introduced by Max Weber. This means that the standardization of human beings, their choices and behaviors – what Ritzer calls
"McDonaldization of society" – has among its manifestations the standardization and quantification of everyday life. People are emptied of some of their fundamental human characteristics and come to be seen solely as clients/consumers.
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Some works of Ritzer (Ritzer, 1983, 2001, 2004) examine the process of oversimplification of the human condition, which I have also explored and called algorithmization (Mariotti, 2010). The process described by Ritzer – that is, “McDonaldization” – is a multidimensional phenomenon: all facets of daily life are affected by it. It is clear that the effort to streamline and standardize is nothing more than one of the many manifestations of command-and-control style of management (Mariotti,
2010). As we already know, the defining characteristics of this style are:
-The pretension to predict the future based on past data.
- The effort to quantify all aspects of the world.
- The attempt to reduce the human condition to their mechanical and operational dimensions.
And so we come to the mechanized, standardized and quantified human being. He/she is seen as a consumer - digester - excretory pipe (Mariotti, 2000). This human being has subjective experiences, but as a result of standardization he/she is almost entirely prevented from thinking. He feels but does not think, because others do it for him. The sensorial perception is judged sufficient and nobody needs to think upon it. I have described this state of affairs as an effort to "condition the people to hurry, immediacy, desire for instant satiety and, in particular, for the standardization of gestures, choices and desires" (Mariotti, 2000a). In these circumstances, the standardized world is inhabited by standardized people – men and women alienated from their sociocultural contexts. This standardization has some features that deserve mention:
- Exclusion of reflection on the feelings and emotions due to the standardization of tasting, smelling, seeing and gesturing.
- Exclusion of context: the philosophy of fast food in New York, for example, is the same as in any other city in the world.
- Exclusion of cultural, historical and social differences: with minor variations,
McDonald's restaurants around the world serve the same food, work at the same pace and with the same idea of quantification and compression of space and time.
It is obvious that these comments are not intended to be judgmental. Their purpose is to demonstrate that in practice, when the algorithmic stage is reached, there is no guarantee that the products and services will be definitive as is often thought. There are many other factors to consider, and here comes the application of one of the most important concepts of complexity theory – the idea of complex adaptive systems. This definition includes all systems in which there are living beings.
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Complex adaptive systems will keep living just as they are able to change, that is, while maintaining their ability to interact with the world and adapt to environmental changes. In the corporate world is no different. Every company is a complex adaptive system, because organizations are created and designed by humans, and their environment is the market, which in turn is part of the world.
To adapt is to survive. The topics below show some data about how McDonald's is trying to get rid of algorithmic oversimplification which, among other factors had lead it, in 2003, to have a net loss for the first time in its history ($ 343.8 million, corresponding to the last quarter of 2002). Among other things, it may be helpful to examine the following events which show how the McDonald’s algorithm way of thinking has being challenged:
Since the end of 2002 the current model of fast food companies is no longer working as it used to be (that is, the algorithm is being increasingly challenged).
The competition has been and is increasingly aggressive
-Anti-globalization militants have done demonstrations and even attacks on McDonald's facilities in various cities around the world.
-Some lawsuits have been filed by obese people against the company, following the pattern started against the tobacco industry.
The anti-obesity attitude has progressed towards a growing demand for foods with fewer carbohydrates and more vegetables, especially salads, fruits and other low-calorie stuff.
The above data, selected among many others, are sufficient to show that in global terms the cultures of repetition and standardization (the algorithmic model) have been questioned and have to learn to live with differences and diversity. Thus, adaptation is a mandatory strategy. Below are some aspects that show how McDonald's is trying to fit all these changes.
- Changes in corporate image and search for new directions. Marketing initiatives have sought to revitalize the brand worldwide. Hence the creation of the worldwide motto, whose emotional nature contrasts with the usual linearity and objectivity: I'm lovin 'it. This slogan has been sought to be both global and local.
- Diversification of restaurant design, decor, marketing and even the way of work.
- Diversification of products, in an attempt of getting out of the hamburger and potato chips model.
All that said, some experts have noted that, despite the evidence that the ads and other marketing
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................................................................................................................................................................................... initiatives have sought to adapt the brand and its products/services to different markets, the
McDonald’s image of standardization and repetition remains strong. It makes sense. For a company whose philosophy has always been the compression of time and repetition, that is, the immediate and the reproducible, all of these efforts make up a painful endeavor. Moreover, nothing guarantees that it will achieve the desired results. As it is clear that it is not only a matter of recovering the image of a brand and the profitability of a corporation: it is also about how the organization will be able to adapt to the uncertainty of new times, new markets and –even more difficult –new ways of thinking.
It is necessary that all who participate or will participate in this effort of adaptation understand that first and foremost we are in an age of difference, diversity, and thus must recognize that no one can predict the future. We are also in a time when, if our ability to spark changes is somewhat significant, our ability to control the effects and side effects of these changes are not as great as we imagine.
It should be understood that not all small actions (causes) always lead to small results (effects) and not always great actions lead to big results. In other words, in the real world causality is not uniformly linear as Isaac Newton supposed. On the contrary, causality often is non linear: small actions can lead to big results. For example, a simple rumor can cause catastrophic effects on the stock exchanges around the world. In terms of complexity, it is has been called butterfly effect. Conversely, major actions can lead to minor effects, or may not produce any effect at all. Therefore, if common sense often tells us that major actions, whether marketing ones or whatever, invariably lead to great results, everyday experience shows us that this is not always so.
It is worth repeating: there is no guarantee that a huge marketing campaign invariably provides huge results. It is crucial to remember that what evolves is the entire system and not one or some of its components, however important they may be. In Darwinian terms (and Darwin was one of the great pioneers of complexity theory), what evolves is the entire set of species, not one or some of them in particular. And the natural extinction of certain species (provided not caused by man) is part of the natural evolution. In business terms, what evolves is the entire market and not a company or a group of them. As emphasized by José Eli da Veiga, nothing prevents that the continued sustainability of a system (the market, for example) implies the creative destruction of one, several or many of its components. (Veiga, 2010).
Still, none of this means that we should remain passive in the face of the complexity of the world. It means we must be prepared to deal with uncertainty and error, that is, we must be prepared to manage complexity.
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© Humberto Mariotti, 2011
HUMBERTO MARIOTTI.
Médico e psicoterapeuta. Professor, pesquisador e autor em ciências da complexidade e suas aplicações.
E-mail: homariot@uol.com.br
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