Unlike many brands in 2008, McDonald’s was in the right place at the right time with the right price. But they didn’t just turn up there out of dumb luck. In a post last week, I cited Don Sull’s “Five myths about business failure in a downturn.” One of Don’s themes was that companies that suffer during recessionary times are reaping the seeds of failure sown well before the downturn occurred. But as McDonald’s success in this year’s BrandZ Top 100 Most Valuable Brands ranking demonstrates, the seeds of success are also sown well ahead of harvesting.

McDonald’s ranked number five in the 2009 BrandZ Top 100 Most Valuable Brands ranking, up from eighth in 2008 due to a 34 percent increase in brand value. The only brand in the Top 10 to grow faster than McDonald’s was Vodafone, which grew 45 percent on the back of skyrocketing demand for mobile services. While McDonald’s may serve less voracious appetites, the brand has benefited from its geographic reach, the recession and its value positioning. As Jim Skinner, the company’s vice chairman and CEO proclaimed in the Annual Report,

2008 was a banner year for McDonald’s. Revenues increased to a record $23.5 billion … global comparable sales increased 6.9 percent and we marked our 68th consecutive monthly increase … operating income and earnings per share rose 17 and 15 percent, respectively.

During recessionary times, a value menu is bound to pull business away from more expensive options, but there is more to the success of McDonald’s than cheap prices. Particularly noteworthy in Skinner’s letter is the reference to nearly six years of consecutive monthly increases, because six years ago, in 2003, things were not so happy at McDonald’s.

During that year, in an effort to address lackluster business performance, McDonald’s introduced its “Plan to Win.” As I noted in this post last year, while McDonald’s did well at home (in the U.S.) with new menu items, the real driver of the company’s turnaround has been its success abroad. Since 2003, more than 40 percent of McDonald’s traditional restaurants around the world are either new or substantially remodeled. The modern designs incorporate natural lighting, contemporary colors and elements such as community tables, McCafés, WiFi and digital technology. And in 23 countries in Asia, the Middle East and Latin America, McDonald’s delivers to homes and offices. The 2008 BrandZ data finds McDonald’s to be the strongest fast food brand in countries as diverse as Brazil, Hungary and Taiwan.

By being in the right place at the right time, McDonald’s has achieved significant growth. In 2003, McDonald’s served an average of 47 million customers a day. In 2008, that average increased to 58 million customers a day — an increase of about 25 percent. But importantly that growth has not been at the expense of the customer experience. McDonald’s is delivering on its strategy of being “better, not just bigger.”

McDonald’s is not the only brand in the Top 100 to benefit from reaping the rewards of significant change. Just outside the top 10 sits another brand that has benefited from both long-term investment and recessionary times. Wal-Mart’s brand value grew 19 percent from 2007 to 2008, taking it to 11th place in the 2009 BrandZ ranking. There is no doubt that Wal-Mart’s value positioning has stood it in good stead of late but so too have its sustainability efforts. Originally envisaged as a defensive strategy to fend off mounting criticism, Wal-Mart’s sustainability program proved to make good business sense (click here to review a previous post on the topic). With sales rising, Wal-Mart benefits from increased margins as a result of reduced packaging, equipment and energy costs.

As McDonald’s and Wal-Mart demonstrate, innovation and change are critical to continued business and brand success. It is not unusual for a brand to enter a period of stagnation and have to re-invent itself, if only because there is little imperative to change when things are going well. But when the need arises, truly successful companies make the right business moves—moves that are aligned with the brand positioning or those that extend the brand in a positive direction. Brand building is a long-term game. To win over the long-term, you need a planning horizon of years, not weeks.

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