Scaling Up Blog

In the movie The Founder, two remarkable discoveries occur that shape the fast food industry for years to come. The original founders, the McDonald brothers, and the subsequent founder, Ray Kroc, each had epiphanies that drove their success.  Within a very short period of time, each found an “X-Factor” that gave McDonald’s a massive competitive advantage over the competition.

Described in his book Scaling Up and in his Fortune article titled “The X-Factor”, Verne Harnish describes the X-Factor as the 10-100x competitive advantage that organizations gain by solving an industry bottleneck or revolutionizing the marketplace with a new way to create customer value or conduct business.

The McDonald Brothers Redefine the Drive-In Dining Experience

In the first clip from The Founder, one of the McDonald brothers state that their goal is to reduce the drive-in dining experience from an order being ready in 30 minutes down to a nearly-unbelievable 30 seconds. This push for innovation solves a long-standing restaurant industry bottleneck and fundamentally creates “fast food”, the rapid production process that has formed the backbone of chain restaurants for decades.

This was not merely an example of “lean”, as the YouTuber posting this clip underwhelming declares in the video title. I’m a big fan of lean, but mislabeling this achievement as equivalent to mere process improvement is an insult to innovators and entrepreneurs everywhere. This was a change, a magnitude shift, that would alter an entire industry despite some early adoption hurdles shown in the last minute of the clip. This was the McDonald brothers finding an X-Factor that would re-shape how the world perceived the speed, quality, and value of the drive-up dining experience.

What I love about this is that their X-Factor begins with a simple idea, a solution to something they dislike about their entire industry. From there, they rigorously work the problem until it becomes feasible. Hours are spent designing the perfect kitchen, where productivity and efficiency are paramount.

This is how the X-Factor works: You may discover yours in minutes, hours, days, or months. But, it’s the planning, preparation, testing, and implementation that sets you apart. Be prepared to put extra effort into finding and creating your X-Factor. I will discuss how to find the X-Factor shortly.

The second clip shows how Harry Sonneborn figures out that Kroc is looking at the world incorrectly (inefficiently) by assuming he’s in the fast food business. To maximize capital and fuel expansion, Sonneborn suggests that Kroc needs to be in the real estate business, purchasing land and leasing it to franchisees. This concept fast-tracks the chain’s growth, helping it to become a worldwide phenomenon before other competitors could even get out of the starting gate.

What stands out to me about The Founder is not whether the McDonald Brothers or Kroc played the role of the protagonist or the antagonist. It is that these purpose-driven, connected individuals created not one, but two, X-Factors that revolutionized the fast food industry in the span of about three years. This should make business owners and CEOs hopeful that they can do the same.

How to Find Your X-Factor

Find the bottleneck in your industry. Verne Harnish states that the first and easiest way to find your X-Factor is to look for common industry bottlenecks that, if solved, could put your business in the driver’s seat. These bottlenecks are things you or your consumers generally hate about your industry and center around the three factors we all balance: Time, quality, and cost. Harnish offers a great suggestion on how to find these challenges: Look at the breakout session content from your last few industry tradeshows and find patterns. You will likely find that you and your competitors are all faced with similar problems, that, if solved, couldhelp you dominate your market.