It's dinnertime at the McDonald's outlet on Linsen South Road in Taipei on Sept. 24. Congregating in front of the counter, Steven Lee, CEO and managing director of McDonald's Corporation Taiwan, and several high-ranking managers are glancing at customers ordering food and others eating in the dining area. Whenever something draws their attention, they immediately jot down notes.

The group's on-site fact-finding serves to finalize the hamburger chain's business plan for the coming year, which was announced internally in early October. Lee is a strong believer in Management By Wandering Around, because "in order to make changes you need to know the truth. If you don't understand the current situation, your strategy will be very weak."

McDonald's business model is based on a three-year strategy, annual business plans and quarterly reviews. But Lee admits that given the rapid and dramatic changes in the international situation, market trends three years down the road are hard to predict.

The fast food chain trains its employees to always observe changes in the market and consumer preferences because only if they are able to stay on top of the rapidly changing business environment and consumer habits can the company's strategy be successful, from the planning stage through execution.

Training Employees to Be Keen Observers

First and foremost, every employee needs to hone his five senses to become a keen observer. Lee still remembers his first training class in 1984 when McDonald's opened its doors in Taiwan, where trainees were shown a video that had been shot at the unusual height of 100cm. The camera's perspective brought into full sight the dead spaces between cash counters and restaurant tables that were littered with forgotten ketchup packs and dropped French fries. To this day every newcomer to the company still must watch that video to learn to look at restaurant management from another perspective.

The hamburger chain also requires its staff to give some thought to across-the-counter quality. Employees are asked to not only stand behind the counter, but also get in front of it, to put themselves in the customer's shoes and experience the feeling themselves. A question that an alert employee should ask himself when wandering around is, "Why do some customers not finish their meals?" When employees get out from behind the counter and look at things from the customer's perspective, they discover that the restaurant's ambience is almost as important as the tastiness of its food.

When entering Taiwan's first McDonald's restaurant on Minsheng East Road, customers' attention is immediately drawn to the new McCafe area on the right, which occupies about one third of the outlet's space. The addition of the coffee shop with its warm décor, soft lighting and comfortable couches has changed the atmosphere and brings in a new type of customer. In the afternoon a woman comes in with two little schoolgirls, not for hamburgers and fries, but for coffee and cake.  

"In the past we used to emphasize customer service. Now we're talking about customer experience," says Lee in explaining McDonald's recent efforts to diversify by jumping on the gourmet coffee bandwagon.

McDonald's trains its employees not only to serve customers faster, but also to satisfy each customer's need for customized products. Over the past years McDonald's has been trying to shed its fast-food image by focusing on mass customization. Three years ago it came up with the Made For You cooking concept, a new method for freshly assembling made-to-order hamburgers and other foods within 87 seconds instead of selling precooked hamburgers with uniform condiments.

In the past the company emphasized speed, whereas it now works on strengthening employees' basic knowledge about the company. For instance, cashiers are able to tell customers that the chain's fries taste good because they are made from imported American potatoes.

But given that each outlet serves at least 2,000 customers per day, how is it possible to ascertain the wishes of different customers?

It Takes Teamwork

Teamwork is the secret behind understanding what customers want. In May McDonald's employees from all around Taiwan went to Kending in southern Taiwan for a training event, which included assembling Lego bricks. Teams had to help a colleague suspended in the air on a cable to glide over to a far-away bucket with Lego bricks. After they hauled him or her back, the colleague had to describe the shape of the Lego bricks to the team, and the team built a second Legos structure based on the description.

Lee believes that such exercises help build observational ability, enabling employees to better observe customer reactions in the speed-driven fast food world. "It's not easy to figure out what the consumer truly needs. We need to use observation, patience and communication. Only then can the team truly understand customer needs," notes Lee.

McDonald's is not only strengthening its employees' observational ability, but also demands that they have "emotional fortitude." Lee has even taken to randomly quizzing staff on what the English word fortitude actually means.

Since recently reading the business book Execution, the Discipline of Getting Things Done by Larry Bossidy and Ram Charan, Lee has been talking about emotional fortitude a lot. Emotional fortitude means honestly facing the truth and accepting diverse and even opposing views. It is considered crucial for successfully executing business decisions.

"If the overall situation is bad, there is little room for making mistakes. Efficiency needs to be high and things need to be done right," says Lee. He has discovered that if you want to do things right you need to communicate clearly and allow doubts and opposition within the team to come to the surface at the right moment. Only then will team members be able to identify with the changes that the company makes.

With the growing localization of international brands, McDonald's in 2002 boldly moved into the rice-based culinary market, launching a series of rice dishes with sauces such as curry. But within less than half a year, they pulled the Asian-style meals off the menu. The inclusion of rice on the menu actually suits the Taiwanese consumers' palate. The only problem was that the execution of this concept was flawed. The rice dishes were difficult to reconcile with McDonald's longstanding image as a hamburger chain and were also less convenient to eat than a hamburger that can be grabbed in one hand. Ultimately, consumers did not accept them. But when McDonald's subsequently switched to rice burgers, they scored a success.

"Reading the air will only get you halfway there. The second half of the equation is emotional fortitude," says Lee in analyzing the lesson he learned from the rice dish fiasco.

For McDonald's Taiwan, honing observational abilities is Part I. The next chapter will be learning to use emotional fortitude to improve execution, as it faces a dramatically changing environment. After all, the company does not want to just scrape by, but to do brisk business.

Translated from the Chinese by Susanne Ganz

McDonald's Secrets for 'Reading the Air'

1. Strengthening employees' ability to observe with all five senses, emphasizing service quality across the counter.

2.  Strengthening team cooperation, providing customized services.

3.  Training emotional fortitude, the courage to say No and launching efficient communication.

Chinese Version: 跨出櫃檯 五感觀察顧客