A Different Approach to the McDonald’s ‘McExit’: Leading with Your Values
Associate and Assistant Chief of Staff
A company’s core values should reflect its beliefs and the guiding principles that inform its conduct. In today’s world, with consumer skepticism of major corporations at an all-time high, it’s critical that those core values inform all significant corporate decisions and, importantly, all communications related to those decisions.
Communications are key to ensuring that consumers and other stakeholders, who are increasingly expecting companies to be responsible stewards and corporate citizens, can feel confident that a company is making good on its promises. Any perceived discrepancy between a company’s stated values and its actions can severely undermine its credibility with consumers.
Last week, McDonald’s announced its plans to exit the Russian market in response to the ongoing war in Ukraine. The announcement followed the company’s decision two months prior to temporarily close all restaurants in Russia and pause operations, earning it the distinction of being one of the only companies to completely cease operations in the country. This piece looks at what the company said about why it made the decision, how it was communicated, and whether McDonald’s effectively leveraged it as an opportunity to reinforce its core values with consumers. We also explore the decision in the context of other companies who took similar action in the Russian market.
McDonald’s announced its decision to exit Russia in a public letter authored by CEO Chris Kempczinski, who listed the five fundamental questions he considered when determining how the company should respond to Russia’s ongoing war:
1) Are we legally allowed to operate in the country?
2) Do we have the freedom to operate the business and meet the needs of our customers and crew unimpeded?
3) Is our presence in the market brand-enhancing to our global operations?
4) Does it make good business sense?
And lastly:
5) Does it align with our values?
Given the ongoing war in the region and sanctions imposed by the U.S., the answer to each of Kempczinksi’s first four questions was decidedly No, thereby rendering the decision obvious. So, if the purpose of sharing this thought process was to convince shareholders that leaving Russia was a no-brainer, it was likely effective.
However, the question remains: Was that the best way for McDonald’s to position its thinking on the matter?
Kempczinksi ultimately recognized that continuing to operate in Russia would not align with the company’s core values, but not before addressing the practical and commercial concerns. Though it may not reflect the company’s actual decision-making process, positioning it in this manner will lead stakeholders to believe that the business imperatives, as opposed to the company’s core values, were given priority. It therefore begs the question, would a No to Kempczinksi’s final values-focused question have outweighed a Yes to all four of the other questions?
What might it have looked like if McDonald’s had considered its values first, not last? What if it had put its practical and commercial concerns aside to focus first on what the company believes in and stands for, particularly when facing issues that deal with a war and humanitarian crisis? If Kempczinksi had replaced his first four questions with questions that addressed the company’s five corporate values – serve, inclusion, integrity, community, and family – arguably, the decision to exit Russia would have been made much sooner. If McDonald’s had taken this approach, perhaps its fundamental considerations would have been as follows:
1) Serve (“we put our customers and people first”) – How can we best serve those who have been most affected by the war? Does exiting the market help them or hurt them?
2) Inclusion (“we open our doors to everyone”) – Can we justify closing our doors to a select group of people if we believe that it’s for the greater good?
3) Integrity (“we do the right thing”) – Who are we doing right by if we continue our operations? Who are we doing right by if we exit? Is it better to continue to provide access to affordable food to Russian citizens, who are being cut off from the world, or is it better to firmly stand with the Ukrainian people?
4) Community (“we are good neighbors”) – Are we causing harm to our Russian neighbors if we take away the access to food and employment that McDonald’s provides? Are we being good neighbors to Ukraine if we don’t?
5) Family (“we get better together”) – Can we call those responsible for this humanitarian crisis, and the country that they represent, our family?
To McDonald’s credit, the company did tackle some of these questions in its letter – though not in a way that seemed to put them at the forefront of the decision-making process. Instead, the letter positioned its values as secondary to its business needs (and thereby, its shareholders’ needs).
Further to that point, Kempzinski stopped just short of actually condemning Russia’s actions in his letter, stating only that “it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.” It’s difficult to know what drove Kempzinski to avoid taking a firmer stance. Optically, it has the effect of making McDonald’s seem wavering, perhaps cautious of its relationship with Russia in case the company decides to return to the market after the war. Kempzinski even hints at this possibility at the end of his letter:
Thus, let us not end by saying, “goodbye.” Instead, let us say as they do in Russian: До новой встречи. “Until we meet again.”
McDonald’s decision came amid a lull that followed the flurry of March announcements from companies suspending their operations in Russia in immediate response to the start of the war. Of those that have since announced their exits, most made the same misstep as McDonald’s by appearing to put their practical and commercial concerns first. For example, HEINEKEN and British American Tobacco concluded that they would exit Russia because it was no longer “sustainable” to maintain a presence there. Carlsberg Group said that it would seek a full disposal of its business in Russia because of the “strategic review” that it had conducted. And Renault Group agreed to sell Renault Russia and its controlling interest in AVTOVAZ because it was “the responsible choice.”
Again, it is important to credit these companies with being among the only to decide to leave Russia. However, if they had communicated their decision as being driven by their values, rather than by operational, fiscal, and legal necessity, the potential reputational uplift for those businesses could have been much greater.
Their communications stand in contrast to those issued by Starbucks, which announced this Monday that, after previously suspending its operations in Russia, it had decided to exit the market. The announcement came as an update posted to CEO Kevin Johnson’s original letter responding to Russia’s invasion, which he began by condemning “the unprovoked, unjust and horrific attacks on Ukraine by Russia.” Johnson had attributed the suspension to the tragic events that were continuing to unfold in Ukraine, and said “we will continue to make decisions that are true to our mission and values and communicate with transparency.”
Johnson demonstrates that it is not the practical and commercial concerns that must be considered first – rather, it is a company’s values that must guide the company’s practical and commercial next steps. His letter, much shorter than Kempczinski’s, is succinct and unwavering in its strong condemnation of Russia’s actions. It communicates a decision that is rooted in, and a pillar of, Starbucks’ values, including “acting with courage.”
With transformational decisions needing to be made against the backdrop of a war and humanitarian crisis, the stakes for all companies have never been higher. To ensure that their actions and words reflect their companies’ beliefs and principles, executives must prioritize their companies’ core values when deciding how to drive their business forward and then communicating those decisions to their stakeholders.