Page 35 - Everything I Know About Business I Learned

Honesty and Integrity

the other way when Ray said 15-cent hamburgers,” Frank told
me. “But when Ray explained the concept, Dad was on board
with it. He thought it was such a great thing.”
Lynal Root, McDonald’s former director of purchasing, was
one of the key executives in the early years who got Ray and
Fred’s modus operandi. He followed in Ray and Fred’s foot-
steps, understanding the importance that honesty and integrity
played with the organization, as Peter Grimm, a 35-year sup-
plier to McDonald’s, shared with me. “Lynal Root got people
to spend billions of dollars building the system, building the
capacity of the system, bakeries, wheat plants, distribution cen-
ters, taking a chance of moving from Cleveland to Los Ange-
les, or building a bakery in the U.K. when they had seven
stores,” Peter noted. “This man did more with a handshake
than anybody at most companies does with a contract. Truly
incredible. And 85, 90 percent of it was done based on word
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and on relationships. John Paterakis [Peter’s senior partner]
tells this story about the time that he first went to McDonald’s
and they wanted him to build the first automated bakery on
the East Coast in Baltimore. He took his lawyer with him and
offered Ray and Fred a contract. Ray and Fred said, ‘Well there
is no point in trying to offer us any contract because any con-
tract you write, you can break. Either we are going to have a
relationship with each other that says you are prepared to
invest this money and build this bakery for us, or no contract
is going to get us comfortable if we aren’t comfortable with
you as people.’ And that was a lesson I have not forgotten.”
As Peter pointed out, vendors went that extra mile because of
the faith they had in McDonald’s.
Lynal laid much of the foundation of present-day McDon-
ald’s, and his business practices are evident today, as Bob Mar-
shall, who had worked closely with Lynal, explains. “The whole
idea that we could operate this long on a handshake agreement