The Upside of Falling Flat

In the end, the decision by McDonald’s to build a couple of four-star European hotels, with arch-shaped headboards for the beds and fast-food restaurants on-site, wasn’t as bizarre as it seemed. The Golden Arch venture in Switzerland ended in 2003 after two and a half years, when the pair of McDonald’s hotels closed. But as […]

by

Stefan Michel

by

Stefan Michel

From the Magazine (April 2007)

Summary.

Reprint: F0704B

The failed McDonald’s hotel project is a good example of a “real option”—a set investment for an uncertain but potentially high return—and shows that the company is willing to nurture innovation.

In the end, the decision by McDonald’s to build a couple of four-star European hotels, with arch-shaped headboards for the beds and fast-food restaurants on-site, wasn’t as bizarre as it seemed.

A version of this article appeared in the April 2007 issue of Harvard Business Review.

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SM

Stefan Michel is a professor of marketing and service management at IMD, in Lausanne, Switzerland. Follow him on Twitter @michelstef.

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The Upside of Falling Flat

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