Leadership ability is the lid that determines a person’s level of effectiveness. The lower an individual’s ability to lead, the lower the lid on his/her potential. The higher the leadership, the greater the effectiveness. Let me tell you a story that illustrates the Law of the lid. In 1930, two young brothers named Dick and Maurice moved to from New Hampshire to California in search of the American dream. They had just gotten out of high school, and they saw a few opportunities back home. So they headed straight for Hollywood where they eventually found jobs on the movie studio set.
Leadership ability is the lid that determines a person’s level of effectiveness. The lower an individual’s ability to lead, the lower the lid on his/her potential. The higher the leadership, the greater the effectiveness. Let me tell you a story that illustrates the Law of the lid. In 1930, two young brothers named Dick and Maurice moved to from New Hampshire to California in search of the American dream. They had just gotten out of high school, and they saw a few opportunities back home. So they headed straight for Hollywood where they eventually found jobs on the movie studio set.
After a while, their entrepreneurial spirit and interest in the entertainment industry prompted them to open a theatre in Glendale, a town about five miles northeast of Hollywood. But despite all their efforts, the brothers couldn’t make the business profitable, so they looked for a better business opportunity
A New Opportunity
In 1937, the brothers opened a small drive-in restaurant in Pasadena, located just east of Glendale. As people in southern Carlifonia became more dependent on their cars in the thirties, drive-in restaurants sprung up everywhere. Customers would drive into the parking lot around a small restaurant, place their orders with carhops, and receive their food on trays right in their cars. The food was served on china plates complete with glassware and metal utensils.
Dick and Maurice’s tiny drive-in restaurant was a great success, and in 1940, they moved the operation to San Bernardino, a working class boom town fifty miles east of Los Angeles. They built a larger facility and expanded their menu from hot dogs, fries, and shakes to include barbecued beef and pork sandwiches, hamburgers, and other items. Their business exploded. Annual sales reached $200 000, and the brothers found themselves splitting $50 000 in profits every year – a sum that put them in the town’s financial elite.
By 1948, their intuition told them that times were changing, so they made modifications to their restaurant business. They eliminated the carhops and started serving only walk – up customers. They reduced their menu and focused on selling hamburgers. They eliminated plates, glassware, and metal utensils, switching to paper products instead. They reduced their costs and the prices they charged customers. They also created what they called the Speedy Services System. Their kitchen became like an assembly line, where each person focused on service with speed. Their goal was to fill each customer’s order in thirty seconds or less. And they succeeded. By the mid – 1950’s, annual revenue hit $350 000, and by then, Dick and Maurice split net profits of about $100 000 each year.
Who were these brothers? On the front of their small restaurant hung a neon sign that said simply McDONALD’S HAMBURGERS. Dick and Maurice McDonald had hit the great American jackpot, and as they say the rest is history, right? WRONG. The McDonalds never went any further because their weak leadership put a lid on their ability to succeed further than they had. Dick and Maurice were good restaurant owners. They understood how to run a business, make systems efficient, cut costs, and increase profits. They were efficient managers. But they were not leaders. Their thinking patterns clamped a lid down on what they could do and become. At the height of their success, Dick and Maurice found themselves smack – dab against the Law of the Lid.
In 1954, the brothers hooked up with a man named Ray Kroc who was a leader. Kroc had been running a small company he founded, which sold machines for making milk shakes. McDonald’s was one of his best customers, and as soon as he visited the store, he had a vision for its potential. In his mind he could see the restaurant going nationwide in hundreds of markets. He soon struck a deal with Dick and Maurice, and in 1955, he formed McDonald’s Systems,Inc. (later called the McDonald’s Corporation).
Kroc immediately bought the rights to a franchise so that he could sue it as a model and prototype to sell other franchises. Then he began to assemble a team and build an organisation to make McDonald’s a nationwide entity
In the early years, Kroc sacrificed a lot. Though he was in his mid-fifties, he worked long hours just as he did when he first got started in business thirty years earlier. He eliminated many frills at home, including his country club membership, which he later said added ten strokes to his golf game. During his first eight years with McDonald’s he took no salary. He also personally borrowed money from the bank against his life insurance to help cover salaries of a few key leaders he wanted on the team. His sacrifice and his leadership paid off. In 1961, for the sum of $2.7 million, Kroc bought the exclusive rights to McDonald’s from the brothers, and he proceeded to turn it into an American institution and global entity. The Lid in the life and leadership of Ray Kroc was obviously much higher than that of his predecessors. In the years that Dick and Maurice had attempted to franchise their food service system, they managed to sell the concept to just fifteen buyers, only ten of whom actually opened restaurants. On the other hand, the leadership lid in Ray Kroc’s life was sky high. Between 1955 and 1959, Kroc had succeeded in opening a 100 restaurants. Four years after that, there were 500 McDonald’s. Today the company has opened more than 21 000 restaurants in no fewer than 100 countries. Leadership ability – was the lid on the McDonald brothers’ effectiveness.
To change the direction of the organisation, change the leader
Leadership ability is always the lid on personal and organisational effectiveness. If the leadership is strong, the lid is high. If it’s not, then the organisation is limited. That’s why in times of trouble organisations naturally look for new leadership. When the country is experiencing hard times, it elects a new president. When a church is floundering, it searches for a new senior pastor. When a sports team keeps losing, it looks for a new head coach. When a company is losing money, it hires a new CEO.
The ability to lead is really a collection of skills, nearly all of which can be learned and developed. But that process doesn’t happen overnight. Leadership is complicated. It has many facets: respect, experience, emotional strength, people skills, discipline, vision, momentum, timing, – the list goes on. As you can see, many factors that come into play in leadership are intangible. That’s why leaders require so much seasoning to be effective.
By John Maxwell
