Tastes like cardboard

By Bill Taylor via hbr.org   Article

How Domino’s Pizza Reinvented Itself

“You don’t have to be a programmer in Silicon Valley or a gene splicer in biotech to unleash exciting innovations and create huge value. Instead, you can rethink what it means to be in the retail-banking business, or the industrial-distribution business, or the office-cleaning business. Yet little did I know that some of the most extraordinary innovations I’ve seen would take place in the pizza business. …

[2010: Domino’s] …  growth was slow and its stock price was stuck, a lame $8.76 per share. Today, Domino’s is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and a share price approaching $160. …

How have Doyle and his colleagues unleashed so much change in such a short period of time? First, by reminding themselves of the business they’re in. Domino’s is not just in the pizza-making business, the CEO emphasizes, but in the pizza-delivery business, which means it has to be in the technology business. ‘We are as much a tech company as we are a pizza company,’ he told the audience, pointing out that of the 800 people working at headquarters, fully 400 work in software and analytics. …

… the pizza mattered too—and the pizza was bad. Soon after he took over, the company launched an ad campaign that has become legendary for its boldness, sharing comments from focus groups about what people thought of the product: ‘worst pizza I ever had’; ‘the sauce tastes like ketchup’; ‘the crust tastes like cardboard.’ Doyle appeared in the ads, accepted the withering criticism, and promised to ‘work days, nights, and weekends’ to get better.

… He also worked with crowd-sourced auto designers to create a Domino’s delivery car, the DXP, a colorful, cool-looking, modified Chevrolet Spark (an article called it a “cheese lover’s Batmobile”) with just one seat, and a warming oven with room for 80 pizzas.

‘Transportation is a core part of the business,’ Doyle explained, so it makes sense for Domino’s to create a ‘purpose-built pizza-delivery vehicle.’ (The company is also experimenting with robotic delivery, and delivery by drones.) …

… Doyle’s most important lessons are about the mindset required for organizations to do big things in tough fields. Two of the great ills of executive life are what he calls, borrowing from behavioral economics, ‘omission bias’ and ‘loss aversion.’ Omission bias is the tendency to worry more about doing something than not doing something, because everyone sees the results of a move gone bad, and few see the costs of moves not made. Loss aversion describes the tendency to play not to lose rather than play to win. ‘The pain of loss is double the pleasure of winning,’ he argues, so the natural inclination is to be cautious, even in situations that demand creativity.

Leaders who want to shake things up have to be comfortable with the idea that ‘failure is an option,’ Doyle concludes. In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all. That’s a recipe for reinvention that makes for good pizza and big change.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: