Business World: 'I'm Lovin' GM'
Ten years ago we quoted a famed short seller from the 1980s who, in a casual meeting at a dinner, shared the insight that made him rich: "People always underestimate how bad things can get."</br></br>Our subject at the time was McDonald's.</br></br>Since then, the world's biggest restaurant chain has committed one of the great turnaround stories of the business world, with most of the gains coming in a U.S. market saturated with competitors (everyone from Subway to Starbucks).</br></br>We'll save the burger-by-burger account for another day. If McDonald's can do it, so can the Detroit-based auto industry.</br></br>When large established businesses go bad, look at internal incentives. McDonald's operated for decades under a royalty system that rewarded the company for opening more and more stores. This approach worked for 40 years, until the new stores began cannibalizing the old ones and antagonized the existing franchisees, who tried to keep their heads above water by cutting back on service, cleanliness and quality.