The Founder Podcast

In this edition of Leaders of America, the focus is on Ray Kroc and his role in the film "The Founder". The podcast discusses conflicts in the movie, including Ray's takeover of the McDonald's Corporation and his clash with the McDonald's brothers. The experts analyze the conflict management styles used by the characters and discuss the differences in beliefs and values. They also examine Ray's approach to handling conflicts with franchisees and his leadership style, which is seen as task-oriented. My name is Kyle Sternberg, and on this edition of Leaders of America, we focus on Ray Kroc and his role in The Founder, a 2016 film that delves into the entrepreneur's takeover of a now multi-billion dollar company signified by the Golden Arches and McDonald's. He proposed the idea of franchising to two brothers of a local restaurant in San Bernardino, Dick and Mac, and despite many challenges, made it into the company as we see now. Today joining us on the podcast is two experts in the field of content, power, influence, and leadership, Foster Bertrand and Andrew Chime. Welcome to the podcast, guys. Thanks, Kyle. Appreciate you having us on here. Yeah, Kyle. It's an honor. Thanks for having us. Yeah. So the first thing we're going to talk about on the podcast today is a conflict. So there's several instances throughout the movie where a conflict is present, and one instance that comes to mind for me is when Ray sends over letters and makes decisions under the McDonald's Corporation name. And at the time, Dick and Mac are very conflicted by this because they think they're basically a three-way partnership. And at this point, Ray kind of starts taking over the business, and this is a big first conflict that they have in the movie. I think it's very interesting. Yeah. So, Andrew, as you being one of our experts, what do you think the type of conflict we are seeing here is? Yeah. When I was watching this, it was a pretty obvious relationship conflict where you're seeing the initial founders of the company realizing that their business partner is now making business decisions without clearing with them, and those founders are starting to recognize a shift more so in the company. Yeah. So just to piggyback off Andrew, there is an obvious source of conflict going on here through the shift in power in the company. And this is also more deeply rooted in the personalities of the individuals in question here. Ray is a go-getter. He's very cutthroat, and the McDonald's brothers are very laid-back and hold very different beliefs. They want it to be more of a mom-and-pop shop and more family-oriented. Yeah. I agree with that. One of the main things in conflict that we see is we go through the conflict management styles. You obviously have forcing, collaborating, compromising, avoiding, and accommodating. In this particular scenario, it just kind of seems like Ray is a very forcing conflict management style in this scenario. And how would you base that? Well, so Ray just kind of takes over. He doesn't really ask opinions. He has a high assertiveness and really no cooperation from the other party there. Yeah. I noticed he put the McDonald's logo on here, like a McDonald's watermark on the paper there without the McDonald's brothers' permission. So that's definitely an overstep in power there. Yeah. Right on. So Andrew, in your opinion, do you think that forcing was the right play here in Ray's perspective? You know, forcing may not have been the right way to go about it. But, you know, looking at these conflict style contingency factors, you know, to Ray, from his perspective, the issue importance is obviously high to him. The relationship seems to be low. The relative power, Ray actually has the power here because he is the one who is dictating the success of the most important business operation. And the time constraint, Ray would probably argue that it's high because they need to really make sure that the business is functioning at a high level. Yeah. But like you said, from Ray's perspective, that may be the case. But from Dick and Mac's perspective, obviously, they're still thinking that they have a high relationship importance. They think they're a big part of the company. Although from Ray's perspective, the relationship is low, I would say it'd be high in their perspective, which would mean they would probably want to take more of a collaborating approach to this. Yeah. And that kind of like sums up our first clip there and that conflict there. And I just kind of want to introduce another conflict that I remembered throughout the movie. And it deals with the whole concept of milkshakes. And Ray himself wants there to be an instant mix milkshake because it's cheaper and cost effective and he really thinks it'll boost the profit of the overall company. While Dick and Mac, on the other hand, don't want to budge on this idea because they believe that a milkshake should contain actual milk. And they feel like it's really important to the brand of McDonald's to keep it that way. Yeah. There's two important sources of conflict to identify here. A difference in beliefs and values. Ray just wants the business to profit. He doesn't care about necessarily, you know, what goes into the food as long as it sells. Whereas the McDonald's brothers are more based off principle here instead of profit. So it's very clear that they're butting heads on that case. Yeah. And that's a great point. You know, what we're seeing now is there's an obvious task conflict here to where, you know, Ray wants to take the business one way. The brothers want to take it another way. They have a disagreement on the materials that are used for the milkshake. And you're going to see that this is going to play out within the business operations. Yeah. It's a great point, Andrew. Definitely lots of tension building. Yeah. And that tension building kind of just ends in an avoidance. You see at the end of the clip, Dick just totally avoids the conflict by hanging up the call and leaving Ray screaming at the phone without him being there and just trying to avoid that. He didn't want to talk about it. Didn't want to collaborate or anything. No compromise. Just hanging up the phone, which leads me to believe it was just straight avoidance management style there. Yeah. The McDonald's brothers going with an avoidance conflict management style might have not been a way to go here. The issue of importance to the McDonald's brother was very high. Same with relationship importance. Relative power was low. Time constraint also high as well because it's on their brand and they don't want that to be shipped out. So with all that being said, avoiding was not the way to go here. Instead, I think they should have opted for a compromising style based on a relatively high to medium issue of importance. At this point, it would be medium in the movie. Relative power equal. This is earlier on in the movie. And the time constraint would be medium to high as it's going to start being shipped out and used in production. Yeah. I totally agree with that, Foster, because in the end, it really doesn't work out for the McDonald's brothers using that avoiding conflict management style. Ray ends up taking it over with almost a forcing conflict management style by sending out his ideas to all the other branches besides the one in San Bernardino. So obviously, it didn't work out for the McDonald's brother to use his avoiding conflict management style. Yeah. And so I think we're going to move on until the third and final clip for conflict. It happens on the golf course. When Ray Kroc approaches some of his franchisees, they have been totally going in a different direction than where he sees the business. They include menu items such as fried chicken and pork chops and just don't have the same vision that he has, and it creates a very big conflict for Ray and his opinion. Yeah. So, Andrew, what is your opinion on how Ray handles this conflict with the other franchisees? Yeah. That's a great question. Through seeing the real tension in this clip, you see that there's an obvious relationship conflict to where Ray is noticing that the franchisees do not have the same standards as what he is planning to accept. It's something that their business does not really stand for to where the McDonald's brothers, they're very focused on the quality, and so is Ray. So he's recognizing that those investors may not be the best fit for the future of their company. Yeah. And just to go off that, kind of with the other clips, again, we can see a difference in values and beliefs here. The franchisees are not holding the standards that Ray is envisioning for the McDonald's franchise, and so it just becomes a real space for conflict. Yeah. And at the end of the clip, he just kind of storms away from this conflict and basically eliminates all these investors of these types, these country club type people, and moves it on to other people such as VFW workers, and kind of seems like he's forcing these McDonald's out of these people's hands that are rich. So that's kind of the conflict management style that he takes here. Yeah, I agree. He definitely is forcing here, nothing new. Forcing is definitely heavily tied to Ray's personality. As we can see, it's almost used in every clip we've seen so far, you know, with a high level of issue importance, low level of relationship importance with these franchisees, and a relatively high power and high time constraint he's going to force almost every time we see him. And I think Ray took a pretty solid approach to this, because if Ray wasn't as confrontational and if he didn't go straight to the source of the issue, we may not have the McDonald's that we have today. Yeah, Andrew. And I have, yeah, just imagine if Ray didn't use that forcing, I would never have to taste that grimace shake. Yeah, and I kind of want to stay on that clip as we move on to our next topic. Our next topic is leadership. In that same clip, with Ray going to the franchisees in the golf course, I really think it shows what kind of leadership style that Ray Kroc had throughout the movie. I would agree. I think in this particular clip, we see more of a task-oriented approach, where he's monitoring the performance of his franchisees and clarifying the roles and objectives through what the menu items that they're supposed to include on McDonald's and what McDonald's is as a franchise. And I would also go on to say that this was very effective, because he caught and solved the problem when it arose, instead of letting it fester. So yeah, Foster. I totally agree with your assessment there, and Andrew, I kind of want to ask you one question. How much participative leadership do you think that Ray has in this example? Yeah, another great question. You see really none. Ray throughout the movie, and especially in this clip, you can realize that he believes that he knows what is best for the direction of this company, and he is making sure that the franchisees understand that his vision is really what is going to drive the success of the company. Definitely. His vision is absolute. Yeah, I totally agree with that. So do we think that was an effective way to communicate his leadership? Yeah, I would think it is. Again, without this forcing and absolute style of Ray Kroc, we wouldn't have the McDonald's we know and love today, and I definitely wouldn't have my Grimace Shake. Yeah, for sure, Foster. So one thing that Ray does is he's a transformation leader, in my opinion. He changes the organization. If he lets the organization go down this path, who knows what would have happened to McDonald's. But with him changing this organization as a whole, it really just shows his transformational leadership style here. Exactly. He developed and he's able to effectively communicate the vision that he has, and he is very committed to that. He's trying to build that through his franchises to have them share that same vision as him. Yeah, so we definitely saw that Ray really needs to find a perfect leader within the company besides him to basically take over these franchises, and he knows that these rich people on that golf course were not the answer, and that kind of leads us into our next clip where he tries to find these franchisees, and one way he does this is finding more ordinary people. He finds someone that is selling Bibles for a living and goes to VFW, and these are the normal people that he tries to find to take over his company, and this kind of shows what kind of leader he is. Also like what kind of image he wants for McDonald's as well. He wants more of the everyday man leading the company. Yeah, I mean he talks about family a lot when he's talking about McDonald's. McDonald's' family is a quote he uses a lot throughout the whole movie. Yeah, so in this particular clip, what kind of people or any leader behaviors do we see? In this particular clip, we're seeing recognizing and supporting behaviors, and this is prevalent because he's searching for new talent, so he wants to really find these people and then invest in them so that they make for good managers for the McDonald's Corporation. Right, and this is a very effective management style to where he's recognizing and supporting somebody that he wants to recruit to be a part of the McDonald's brand to continue growing that brand and who they desire to be. Yeah, and going back to Ray Kroc's image for the McDonald's brand, again, he doesn't really use any input. It's all his own brainchild, and we've stated this has been very effective, and it's a proven winner. Obviously, we have the McDonald's we know today, and without that, it wouldn't be. It's all attributed to Ray and his vision. Yeah, and just like the last clip we talked about, Ray shows that he's a transformational leader here again. He brings about changes within the organization for a good thing. This is Ray just being consistent the whole time, and I think it's a good thing for the whole company as a whole. Yeah, I would agree. Sorry to break it to you guys, but this is the point in the podcast where we have our regular scheduled advertising, and funny enough, this advertising is brought to you by McDonald's. Enjoy. What's up, world? Yeah, you. I'm Chavis Scott. This is my McDonald's order. Follow me. Here's my quarter pounder with lettuce, pickles, onions, ketchup, mustard, and bacon. Here's my fries. Sometimes I do this. Then I dip them into barbecue sauce. Oh, yeah. And my Sprite. Same order since back in Houston. You can try it, too. Gotta go. I'm Chavis Scott, ma'am. Here's $6. Thank you. I appreciate you. And we're back. Our next topic today on the podcast is going to be Influence, and I'm very excited to talk about it. It's lit. So the first clip we're going to talk about Influence is the pitching the idea of the franchise that Ray does to the McDonald's brothers. And really, this is just the most critical scene that sets up the rest of the story. Ray himself has to convince these brothers to move from a mom and pop shop in San Bernardino, California, and turn it into the multi-billion dollar company. And at first, they just don't budge at all, and Ray has to use a lot of his influence tactics here to influence them to do so. Yeah, and this is a real pivotal moment to where the company is actually starting to shift their business operations strategy to where they, you know, Ray had to come in using Referent Expert and Reward as a source of power to where with Referent, he has the charm to show them that he knows exactly what he's talking about, which piggybacks into his expert to where he has traveled around the country, he has seen what the market has to offer, and to where they can capitalize on it. And the reward for Ray and the McDonald's brothers is that they're going to have a higher valuation and a higher value company by making these decisions to where they are going to have these franchises across the U.S. in these small towns. Yeah, so I think, personally, Referent is the biggest thing here. It seems like when he shows up at their door for like, it seems like the third time, they're just amazed that this guy just keeps on coming back to them, believes in the McDonald's brothers, and I just think that's really what ends up influencing them in the long run. I would agree with you. Definitely at this point in the movie, Referent power takes the front seat, but as we'll see later in the movie, I would say definitely more his expert power comes into play in terms of making decisions. I would also go on to say that the two contingencies of power that Ray draws from here is centrality and substitutability. Ray is very central to the whole growth of the company at this point in the movie. The McDonald's brothers cannot grow without him, and because of that, he's also not easily substitutable, which is another point of leverage that he has against the brothers. Yeah, and you said it great there, but it's very obvious that there's not really anybody else in this movie or in this story that has leverage as Ray does. And overall, I mean, all of this is just very effective. I didn't think at the start that Dick and Matt could really be influenced because they were really dead set on their values of having a mountaintop and didn't really want anyone else coming in and changing their ways, so it just really shows how effective Ray was. And he showed that he can grow the company, and he had plans cut out for this entire thing. It's just really, really interesting to see. Right, and what's pretty amazing is you see an outsider of the original company coming in and telling their founders, you know, this is the best way to run the business that you started. I know, and just to go off Kyle's point, Ray is an amazing individual in the beginning of the movie, just his determination and sales tactics, because he is a hardened veteran in terms of that. He travels all around the country, and this is what we see at the very beginning of the movie. He travels around the country and tries to sell milkshake machines, which is a very hard sell, especially to companies that don't really need them, so if anybody's a pro, it's him. And this whole influence tactic is reciprocity. Both people are benefiting from this. Kroc is growing this huge business, and at the time, the brothers get 4% of everything he does, so they're really not worried about anything. They're really just focused on getting that 4% and letting Kroc do everything else, so both people are benefiting from the situation in their eyes at this deal. And he's very effective at this. He uses, you know, persuasion and information control. Information control is a huge, huge theme in the movie. Ray is definitely center of all the information, so, you know, there's times in the movies where the brothers will be shocked with what they find out through hearsay. Right, and honestly, this is a pretty appropriate tactic for Ray to take. You know, it's something to where he has better knowledge than the brothers have, so he's able to make those better decisions. Yeah, I mean, that pretty well sums up his influence there, and you use his influence throughout the rest of the movie as well. One clip that comes to mind is his influence on the whole business with the real estate side of it. He decides that he needs to take a different approach because the contract is really binding him and what he wants to do, so he wants to influence the business in different ways, and he takes a big part of the real estate, and he owns all the properties now after meeting with the lawyer that tells him how to do this. And yeah, this is a real pivotal point in the movie because this is what really grows the McDonald's franchise. Instead of now selling burgers and fries, they're more selling a prepackaged company, and they're making their money off the rent and lease instead of, you know, the burgers and fries and sodas that they'd been selling prior. Ray here has legitimate power. He is increasing his influence through his control over valuable aspects of the company to where, you know, back then the company had a few sites to where now today you can go to any exit or any city anywhere, and there is a McDonald's brand there because they have this very valuable real estate acquisition strategy. And that was one of his intentions with this whole deal is to undermine the McDonald's brothers and to further legitimize his power. Right, and through doing that, they grew the brand. He knew the direction that they needed to go, and through Ray's guidance, the McDonald's brand is what it is today. And this, again, draws from the two contingencies of powers as well with centrality, discretion, and substitutability. Now that Ray is in charge of these real estate deals, he now has full discretion on his decisions. He's not very substitutable either because he's the head of the company, and he's central to all of this. Yeah, and just going off of everything that we just said, it's very obvious this was a very effective leadership strategy that Ray took. You know, the McDonald's brothers knew that when they took this concept, when Ray took this concept to them, and it is very obvious seeing to where the brand has grown to now. Yeah, and I think the reason it's so effective is that he was very assertive. He was assertive, and just telling them how it is, he wanted to make sure that his presence was known, and the way he did that is through his assertiveness. Yeah, and I kind of want to go off that as well, you know, he's not going to be the most liked guy, but he definitely was the most influential when it came to the business world in this particular time and business setting. So I guess heavy is the head that wears the crown. And now, kind of like with his influence, he uses it in the final stage of the McDonald's brothers and Ray. It comes to an end. Ray buys the McDonald's brothers out, and it's kind of where he's most influential in this whole thing. There has been so much conflict, so much leadership, and everything that has gone into this whole ordeal, and this final influence tactic is what completes the whole cycle here. Yeah, and so the agreement at that table was Ray gave them a $2.7 million lump sum payment, and today that's $26 million, so chump change, right? Yeah, and I also want to point out that they had a handshake agreement of 1% of the company in royalties, and this goes back to information control. Ray said this to them, and a handshake is non-binding, but 1% of McDonald's today would be a lot of money, but those promises were never recognized. And from this position, we see that Ray has a legitimate source of power here, to where he's the one who's directing the shift and the direction of the company. Yeah, he's very coercive during this whole ordeal. He mentioned several times to the brothers how they kind of have to take the deal right now and that everything's coming to a close. Yeah, he just kind of gets them at the wrong time, honestly. You see Mac is in the hospital bed, and kind of everything is just hurting on their end, and he knows that they're weak, and he knows that he can coerce them into kind of doing whatever he wants at this time, so he takes the perfect time to influence the brothers. Yeah, and you know, as bad as the deal looks, it is their only lifeline at this time in the movie. Right, and then look at the contingencies of power. You can see that it's remained consistent with Ray, to where centrality and substitutability are two factors that are remaining prevalent throughout his character development and the development of McDonald's. Yeah, Andrew, just going off that again, he is consistent. He is very assertive in this situation. Again, you see in the clip, he just puts his hand out for a handshake agreement, kind of just pressuring him, gets him in a room, and just kind of is very assertive the whole way. Doesn't take a backseat to anything, wants to get the deal done and do it his way. And again, no need to rehash anything, but he is very effective with his approach here. The McDonald's brothers knew they had to make the decision, and you know, Ray stays having the front seat in all of this. Yeah, guys, so that really concludes our podcast here today. We went over a lot of things, conflict, power, influence, leadership, and those are just really all-important things that our leaders have that we talk about here every week on the podcast, and seeing Ray Kroc as the forefront today was very beneficial, I think, in my eyes, and I hope you guys, too. I'm just really excited to deeper dive into his life and his story through the founder. And finally, I couldn't ask for two better guests, Foster and Andrew. I really, really appreciate you guys coming on the show today, and I know our viewers love it as well. Yeah, thank you for having us on here. You know, I thoroughly enjoyed being on this podcast. Great movie. Can't say he was the greatest guy at all times, but, you know, I love his brand. I love the food. Love the Grimace Shake. Number five is my meal. It's all great. Yeah, I really appreciate you having us on today. It was, you know, very relevant throughout the whole movie, seeing that Ray was very assertive. Ray understood the business, and he understood where he wanted to take the company. You can see the McDonald's brothers, they were rather complacent with where they were until Ray came along. He made some rather... Questionable decisions. Obviously questionable decisions, but also, you know, it was very calculated. Ray understood what he had to do, and he took his past experience and the experience of other professionals to make sure that, you know, McDonald's would grow to where he saw that McDonald's needed franchises. McDonald's needed to focus on the real estate. And by doing that, he was a highly effective leader that, you know, maybe wasn't always the most liked person, but what he did, it worked. And, yeah, that's something I want to, you know, point out as well. He's always very calculated. He's not doing this to just be harsh or malicious all the time. It was for the betterment of the company. And he even says at one point in the movie, for America, do it for America. So, you know, this was for the American public. This was for you. This was for me. This was for little Johnny. This was for everybody. Yeah, Foster, I really agree. Just one thing in the movie that also stands out at the end, he was saying how every church has a cross at the top. Every courthouse has its bell at the top. And just kind of this culmination of what we see today, that every town now has those golden arches, and he built that. He did build that. Thank you guys again for coming on, and I hope you all enjoyed the podcast today. That's it.