I’m currently reading ‘Grinding it out‘, the tale of McDonalds through the eyes of Ray Krog. A review will follow eventually, but here are some initial conclusions. The first few pages were about Krok’s rise to power, what made the man the man he is.

A first note is that he was really a blue-collar worker, he dropped out of high-school and married before he was even 18. He excelled in sales, and did a million little things to make some money for his family. Some highlights included selling real-estate, playing piano in clubs, and selling paper cups. That aspect of it reminded me a little of the internet. At that time, in the 1920s-50s, there was not much of established industries. Not like today, where everything in the real world seems like it’s part of a value chain, and there are big players in pretty much any industry. The internet, however, is still a realm filled with chaos. A million little businesses, started on micro-things like paper-cups.

Ray Krok is the perfect example of the American Dream. The idea that you come from nothing and do great things. With a simple background but a drive to excel, he started with very small things, but foresaw that they could transform the world in a very big way. The US is perfect for this, with a large mono-linguistical culture and little in trade-barriers. Europe, on the other hand, is a nightmare for these types of strategies, with each country cherishing it’s own culture and language, and, until recently, erecting huge barriers to prevent change. In some cases, these barriers still exist.

But this, in combination with the media-stories you hear about the innovative slump in Europe, made me think a little bit. Are we talking about radical or process innovation? To briefly define it, radical innovation is something that really changes the game, e.g. the computer. Process or incremental innovation is an improvement in existing process, e.g. a machine that produces 2000 paper cups instead of 1500. There are some great examples of process innovation in the US, e.g. the Ford Model T, Walmart, and McDonalds. In Europe, there are probably some also, but I’m very much reminded of logistics in the Netherlands, which is centered around the port of Rotterdam.

The strength of process innovation is that you can use it to grow big quickly. By introducing cheap mass-production to industries, you can effectively serve regional, national, and global markets. The weakness is, at the same time, that incremental innovation is just incremental. It is easy to replicate. Hence countries that can leverage certain advantages like cheap labour-costs and combine that with incremental innovation, have an advantage over countries that have a bigger cost-burden. Case in point, the US car industry in the 80s vs. the Asian car-manufacturers, and today, the Western world vs. China and India.

There is a pressure to innovate in radical way, which is reflected in the media, government policies, university courses, business acquisitions, and the movement of venture capital. The Netherlands is a great example here as much of its industry is geared towards logistics. At the same time it is constantly competing with other hubs in Europe for traffic, and other hubs in the world for technologies. And the Netherlands is in a slump, at least the politicians would like you to believe, and they are trying to fix it by encouraging a knowledge economy and more radical innovation centres. And I’m sure many other countries, including the US, have similar pressures and policies.

The question is if they are doing the right thing and in the right way. I also wonder if much radical innovation is happening on the internet, or of it is rather like the US in the early 1900s and we are building businesses based on simple process innovations.

Gee, all that from reading 20 pages in a book, huh? It is interesting though to see what conditions encourage innovation and in what way. And what the repercussions are years later, when other players catch up. McDonalds is not my favourite company, but it certainly makes for a great case-study. More thoughts as I finish the book.

Vincent is a (vegetarian) co-author on Tech IT Easy. You can find out more about him on this blog’s initial announcement or on his site. The picture is of McDonalds the Videogame.