Change or Die?
Let’s face it…most people don’t like being wrong and will go to great lengths to prove their right – even in the face of overwhelming proof to the contrary. At Dominos Pizza, senior level executives were proven wrong about their consumers and are undertaking the reinvention of what has made them a lot of dough over the years. But what took so long?
Fifty years ago, Dominos launched their pizza restaurant with a simple recipe and a simple brand promise “to deliver your pizza in thirty minutes or less”. This brand promise allowed Dominos to grow faster than any other restaurant chain through the 1980’s – and today with 9000 restaurants you’d think they were doing well. But that’s not the case. While their recipe was a differentiator for a period of time, today’s consumers want something else – great taste as well as great delivery times.
According to a 2009 survey of national restaurant chains, Dominos finished first in pizza delivery and value and dead last in consumers’ taste preference. I’ve got a question about this survey – specifically who participated in the survey? I’m guessing college students with a blood alcohol level above the legal limit! For those of you loyal Michigan residents who stand by Dominos because they’re from your home state – please accept my condolences, I mean my apologies. Needless to say with pizza deliveries down 6% compared to last year, Dominos knew it needed to make a change.
Dominos has recognized that their product life cycle has reached its peak and that they can no longer rely on what made them successful in the past to sustain them in the future. It’s time to change from the ground up…not little minor tweaks exercised by Black Belts in Lean Pizza making, but a fundamental redesign of their pizza recipe from the ground up. Executives are betting big in the hopes that they can reinvent their brand and change their reputation from one based on delivery time to one based on taste as well as delivery time. Two years of research involving customer taste tests of new seasonings, sauces, and cheeses has led Dominos to launch its new recipe to customers this week with a sweeter sauce, a newly seasoned crust, and a different blend of cheeses.
What does the future hold for Dominos? While I understand and feel comfortable in the world of marketing, I’m not a full-time marketing professional. I’m a business consultant who understands the implications of corporate culture, leadership and innovation and feel comfortable being both pessimistic and optimistic about what I see happening at Dominos.
New Pizza? Do you remember New Coke? How long was its life cycle? Did it last as long as the spirit of bipartisan politics in Washington DC? No. New Coke had a longer life cycle and so may New Pizza. Executives at Dominos have the right intentions but they haven’t exemplified and role modeled innovation and being intimately engaged with their customers – this is the death knell for organizations and I believe Dominos will experience a shorter life cycle “organizationally” because their focus is on one product and not the staid one dimensional thinking that got them where they are today.
Why do I say this? Attached is a link to a YouTube video entitled “The Pizza Turnaround”. You’ll see Dominos employees saying how shocked they were to hear customers describe their crust like cardboard. Frankly, I’m shocked to hear Dominos employees say they were shocked by their customer feedback. My first reaction was “you’re kidding me – haven’t you been listening to your customers for the last ten years?” Where were the marketing, research and development, and quality assurance functions for the last ten years? Do these employees truly believe that only recently did something happen to change the public’s perception of their product and allow the wheels to come off on customer loyalty? I’ve personally heard comments like this for years. Where were the focus groups, the customer feedback mechanisms? Or, is it possible that in light of a six percent reduction in sales Dominos decided to listen to their customer for the first time?
Mark Antony, in his famous speech from Julius Caesar said: “friends, Romans, countrymen, lend me your ears I come to bury Caesar, not to praise him.” Well, that’s not my intent here. I don’t want to bury Dominos, but to praise them also. The video shows a deep commitment on Dominos part to be transparent about where they stand with regard to their customer’s views about their product. They’re not hiding behind the poor survey numbers and trying to spin the results. They’re tackling them head on and going public with every aspect of the launch of their new pizza. They’re setting up social media / interactive sites to hear what people think. That’s pretty gutsy and I commend Dominos for doing so.
Senior executives at Dominos were missing a key thought process about change, growth and innovation. They didn’t understand that every product, team, organization, and individual goes through a process of birth, growth and decline that is similar to the shape of an S.
You can’t avoid this process. At the beginning of every growth curve, you make investments with little or no reward. It’s only through squeezing out operational inefficiencies, gaining and or growing market share that companies recover their initial investments and grow the bottom line and pay dividends to their stakeholders. Dominos rested on the part of the S-Curve where the maximum profits were being realized without understanding that decline, death, and decreased profits weren’t just probable, but were inevitable. Dominos is trying to jump the curve and are at the beginning of a new S-Curve – time will tell as to whether they will grow or die.
Strategic Questions For Your Consideration
As an organization, where are you on the S-curve? Where was Dominos?
As an organization, what portion of the S-Curve are your senior leaders strengths, talents, and skills best utilized? Where was Dominos?
What part of the S-curve do your customers hire you for? Is there alignment between their perception and your organizations perception?
Have you tried Dominos new pizza? What do you think?