How IMD led Woods Staton down a golden path
Addressing the 2016 IMD MBA class, Woods Staton, CEO, Chairman of the Board and controlling shareholder of Arcos Dorados Holdings Inc. – McDonald’s largest franchisee in the world – said that the year he spent gaining skills in IMD’s MBA program was one of the most important in his life.
Staton, the grandson of the founder of Panamerican Beverages, Inc., the leading beverage bottler in Latin America, attended IMD in 1976 to acquire a better understanding of finance and accounting. However, after he obtained his MBA and returned to the family business in Columbia, he discovered to his dismay that he no longer spoke the same language. Taking for granted that everyone knew what he was talking about, Woods was perceived as arrogant, which led to a gradual fallout. “You need to learn how to manage knowledge,” he shared from his experience.
From traineeship to IPO
At the age of 32, Staton found himself without a job. Speaking of the lifelong bonding in the network of IMD, he said that his former MBA classmates came to his rescue by helping him regain his self-esteem. He decided to join a McDonald’s training program, which, he admits, was a humbling experience because he learned what it was like to be a subaltern in a chain of command: he was serving the customers, but cleaning the toilets as well. “It taught me what the business is all about. It also taught me that all jobs are good.”
By 1983, the situation in Columbia had become untenable with the terror perpetrated by Pablo Escobar and the Medellin cocaine cartel. Staton moved to Chicago, where McDonald’s headquarters are located, and things started to move very quickly for him.
The US corporation offered him the choice between a cash-generating franchise in Florida or a joint venture partnership in South America for which he had to put up the funds. He opted for the latter when McDonald’s helped him raise the required amount by matching every dollar he put up with an additional three. He started with Argentina, Chile, Uruguay and Panama, but was given all of Latin America to manage by 2000, with the exclusion of Brazil.
Arcados Dorados, ‘golden arches’ in Spanish, was formed in 2007 when McDonald’s decided to sell the Latin America operations for US$700 million. “They had never sold anything as big.” He put on a road show to attract a group of investors and succeeded in raising the capital. But he didn’t stop there, because by 2011 the company became a publically traded company listed on the New York Stock Exchange. It is currently one of the largest employers in South America with more than 90,000 employees.
On the operational level, Staton stressed the importance of building a meritocratic environment where honesty, hard work and team efforts are rewarded. Three-quarters of Arcados Dorados McDonald’s are company-operated restaurants, but one quarter are franchised, where owners give a family feeling to the restaurant that allows it to become part of the community. Staton is a firm believer in that personal touch.
He acknowledged that a lot still has to be done to combat the image of unhealthy food that the hamburger chain generates. “Food has a psychological issue to it, we need to work on that to change the drift.” There hasn’t been enough remodeling and reimaging, but he is confident that the radical changes underway will change that, namely by personalizing the customer experience and setting up an Uber-inspired delivery program. “Everything is about you and how you want it,” he summarized.
Sustainability is also part of the picture, both in the food chain and in energy consumption. A re-cycling program has recently been implemented by collecting the condensation from the huge refrigeration units and using the water to clean external areas and water plants.
Asked his views on investment in the post-Brexit era, he reminded that Latin America has a growing middle class and a new business friendliness, at least in the countries leaning to the right. It is a homogenous society that has been spared the radicalization facing many western nations. Argentina needs huge investments, and Mexico is doing relatively well. But stay away from Venezuela he warned, and wait for peace to return to Colombia.
Reflecting on his career and the hard times faced when he left the family business, Staton ventured that he was “more a product of failure than of a dream.” “But I learned from my defeats and turned them to my advantage.” He then added: “Most people are working for their next job, not me, I focus on the present.”
He admitted however that his seven-day working weeks took a toll on his family, a situation he has since remedied. He impressed upon the MBA candidates to be careful about striking the right work/life balance. “It’s not all about money. Families too are a measure of success.”
From his own experience, as an investor with a diversified portfolio that includes a private equity firm, real estate, ice cream shops, a chain of pharmacies and pharmacy labs, he said that he observes human dynamics, and not just financial or geographical opportunities: “Look at people, get a sense of how things are going.”
Staton was in Lausanne on the occasion of an alumni reunion. “I’m extremely grateful to IMD for everything it’s done for me,” he said, adding that even after all the years that have passed, he enjoys being with former classmates.
Learn more about IMD’s MBA program.
MBA alumnus Woods Staton serves as a member of the Foundation Board for IMD business school.