Mike Luna’s story is an American dream come true, for him and his hundreds of employees that got a start in one of four McDonald’s franchises (he has sold all but two as of 2011). He spoke to my 20 students yesterday in McMichael Academic and gave the advice, “listen your mentors who have been successful”. Like those teenagers looking for spending cash, Mike started in the Galesburg McDonald’s flipping burgers  for Connie Miller Sr. in 1960. “I wasn’t good on the front counter, so I found a home “getting orders filled in the back”. He got so good at what he did he trained hundreds of employees for the Miller Family. Mike was asked to help open up a series of new stores all around Western Illinois. Luna went on to own four franchises of his own and now maintains the highest standards in his Monmouth location working alongside his son. You can find Mike filling orders today alongside a 17 year old Monmouth girl if you come in during a busy time. He realizes that being there in the store instills confidence and a little fear in the average McDonald’s employee. “They see I can do every job in this place and I expect the same from any of my managers”.

Luna explained the power of a great entrepreneur. I was inspired by Connie Miller Sr. my boss even though he rarely said a kind word. Mike knew Ray Kroc (McDonald’s Founder) and Fred Turner (McDonald’s Original President) personally. They were genuine heroes for people like Luna. I can tell you countless stories of people who became rich from following these everyday heroes. These are the men that changed people’s lives, gave them a start, experience in management that became a foundation for success in a variety of fields. “I dreamed a dream of owning my my store because I respected the men in front of me”, said Luna

“In the 1960’s we could get a franchise location if you had a good reputation and a few thousand dollars. That isn’t true anymore”. But the level of trust he earned under the steady hand of Miller was key for Mike Luna in securing his first franchise. “It was an incredible opportunity I earned because I had worked under Connie Miller Sr., a man Ray Kroc and Fred Turner respected. Plus I had the patience and stamina to wade through the process of getting a great location like Monmouth”.

How did he know he would be successful? He had a “hunch” Monmouth needed a quality, inexpensive place to eat. “I waited in lines outside of the local Hardees (the competition) for 30 minutes one day”. He said “Monmouth was exactly the kind of place he had dreamed about owning”. He opened on highway 34 in 1980 and knew after the first day, it was going to be a great ride. One young employee left for college telling Luna, “I am going to college so I don’t have to work like this anymore”. She came back the next summer and apologized telling Luna, “I learned how to work, how to take instruction, how to succeed from you. I am so sorry for what I said last year. Its people like you that make success possible for a lot of us” She is now a successful lawyer in Washington D.C. area.

What happens for Mike now? “I keep learning” , says Luna. I spent an hour studying In and Out Burger in California. “They are doing great things with training, plus the product is stellar”. “They push what we considered management decisions down to the staff level. Their staff is a cohesive, capable group of young people. We need to be ready for that kind of competition”. From what we heard yesterday at his discussion at Monmouth College, Luna will be more than ready.

I repost a recent article from an economist who appreciates former Midwest Entrepreneurs

New Heroes vs. Old by Thomas Sowell

1/25/2011

 When I mention that my family used kerosene lamps when I was a small child in the South during the 1930s, that is usually taken as a sign of our poverty, though I never thought of us as poor at the time.What is ironic is that kerosene lamps were a luxury of the rich in the 19th century, before John D. Rockefeller came along. At the high price of kerosene at that time, an ordinary working man could not afford to stay up at night, burning this expensive fuel for hours at a time.

Rockefeller did not begin his life as rich, by any means. He made a fortune by revolutionizing the petroleum industry. Although we still measure petroleum in barrels, it is actually shipped in railroad tank cars, in ocean-going tankers and in tanker trucks. That is a legacy of John D. Rockefeller, who saw that shipping oil in barrels was not as economical as shipping whole railroad tank cars full of oil, eliminating all the labor that had to go into shipping the same amount of oil in numerous individual barrels.

That was just one of his cost-cutting innovations. If there was a better way to extract, process and ship petroleum products– or more products that could be made from petroleum– Rockefeller was on top of it. Before he came along, gasoline was considered a useless by-product that petroleum refineries often simply dumped into the nearest river. But Rockefeller decided to use it as a fuel in the refining process, which made it valuable, even before automobiles came along.

Today, we tend to think of John D. Rockefeller as just one of those famous rich people. But Rockefeller didn’t just “happen to have money.” How he got rich is the real story– and it is a story whose implications reach far beyond that one particular individual. Before Rockefeller’s innovations reduced the price of kerosene to a fraction of what it had once been, there wasn’t a lot for poor people to do when nightfall came, other than go to bed. But the advent of cheap kerosene added hours of light and activity to each day for people with low or moderate incomes.

It was much the same story with the advent of the automobile, which gave millions of people more range in space, as kerosene (and, later, electricity) gave them more range in terms of hours of daily activity. Here again, automobiles and electric lights were truly luxuries of the rich when they began. Only after ways were developed to cut their costs drastically were such things brought within the reach of ordinary Americans.

Henry Ford’s mass production methods cut in half the cost of producing the famous Model T Ford in just five years. People who had once lived their entire lives within a narrow radius of a relatively few miles could now go see places they never knew about before. The automobile expanded their horizons. People today who complain about the automobile’s pollution have no idea how much more pollution there was before the automobile came along. In New York City, for example, the 40,000 horses that were the backbone of the city’s transportation, before the automobile, produced 400 tons of manure per working day, along with 20,000 gallons of urine.

At one time, people like Rockefeller, Edison, Ford and the Wright brothers were regarded as heroes, for having opened vast new possibilities for other human beings. The fact that they got rich doing it was an incidental part of the story. We still have people revolutionizing our lives. Just think of the computer and the pharmaceutical drugs that have not only lengthened our lives but made them more healthful, so that being 80 years old today is like being 60 years old in times past.

But today we seldom even know the names of those who have made these monumental contributions to human well-being. All we know is that some people have gotten “rich” and that this is to be regarded as some sort of grievance. Many of the people we honor today are people who are skilled in the rhetoric of grievances and promises of new “rights” at someone else’s expense. But is that what is going to make a better America?

Thomas Sowell

Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.

Why should you learn about and from entrepreneurs? Because entreprenuers are the engine that power our economy and create jobs. Josef Schumpeter and Fredrick Hayek are possibly the most famous economists to focus their research on the value of entrepreneurism. Schumpeter’s ideas on the indispensable nature of entrepreneurs are part of his “theory of creative destruction” (Schumpeter, 1939). Disputably both of these economists contributed two of the greatest economic theories related to entrepreneurism prior to World War II.

Schumpeter’s theory is summarized by the following statement:

Without entrepreneurs we would have no risk taking and little innovation. Without innovation and risk taking there would be no market winners or losers. There would be little to no competition, leading to less and less innovation. Risk taking activities allow the market to creatively destruct the less desirable products and services in favor of those that satisfy or delight their customers. Products that fall out of favor can then adapt to the challenges posed by more successful competitors or die off (Schumpeter, 1939).

Hayek contributed the theory that specialized and specific information on markets and buying behavior collected by entrepreneurs provide valuable intellectual capital that can be monetized. In the past, economists taught price theory based on the concept that markets can assume all actors/participants have perfect information (Hayek, 1944). However, specialized information in the hands of an entrepreneur has value and can be monetized.

Modern practitioners take a more holistic view of entreprenuerism. Anthony Soohoo, Vice President of Marketing at Columbia Broadcasting System (CBS), founder of Dotspotter, and a self-proclaimed “serial entrepreneur” claims that entrepreneurism is identifying a market niche or unmet demand and having the courage to risk your personal resources and/or career to create a new product or service to fill that void. 

Some of the most important entreprenuerial activities today include:

1. risk taking to gain a competitive edge or profit
2. marshalling resources including financial, human, and technology
3. innovation (building a better mouse trap)
4. new product, process or market development
5. adapting to a significant change or disruptions in the market
6. exploiting opportunities for growth
7. establishing control systems

Any would be entreprenuer starts by staring at a blank page and dreaming big.

My ramblings have two purposes: 1. Learn what real entrepreneurs think and do everyweek to build their businesses. 2. Find common ground between the success and failures of entrepreneurs to learn what it takes to be successful. I heard a great question from Jay Matson, President of Seminary Street Ventures in Illinois. He said “Can you really teach this entrepreneur stuff?”. It is a really good question.

Why study Entrepreneurs?  They are an interesting lot that drive a huge part of any job creation. Plus I was raised by two entrepreneurial parents and it is “in my blood”. Today, I lead business courses and do consulting with small businesses, start-ups, and family owned businesses in transition. In August, I will begin my deep dive into Jacksonville by hosting 20+ guest speakers over the five months of the 2012 fall term. Look out for more postings and a schedule of future speakers as I transition to the Deanship at the Davis School of Business at Jacksonville University in Florida.

Welcome to a new Monmouth College Blog.