These sustaining innovations, as Clayton Christensen of Harvard calls them, have "diminishing marginal returns." That's an academic's fancy way of saying that you have to spend ever greater amounts to create the variations, but their benefits keep having less and less impact on growing, or even maintaining, sales. At that time, offering new products - like a Big Mac - that are variations on the theme that is riding the trend is a good way to expand sales.īut over time trends change, and adding new features has less and less impact. Like McDonald's was in the 1960s and 1970s, offering quality food, fast and at a consistent price nationwide at a time when customers could not count on those factors across independent cafes. When a business, brand or product line is growing it is on a trend. It is an incremental effort to make a small change when competitors are offering substantially different products and experiences. Due to the dramatic reconfiguration, only about 500 stores will be changed - roughly 3.5% of the 14,500 McDonald's. Similarly, McDonald's CEO's effort to revitalize the brand by adding ordering kiosks and table service in stores, in a new format labeled the "Experience of the Future," will not make much difference. While a version two of the Big Mac might have driven incremental sales in 1977, in 2017 the product has grown tired and out of step with too many people and there are too many alternative choices. Customers are looking for a very different dining experience, and different food. Many new competitors have emerged, and people are eating at Panera, Panda Express, Zaxby's, Five Guys and even beleaguered Chipotle. Fewer people are going to McDonald's, and fewer are eating Big Macs. After 50 years, times and trends have changed.
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