The DOMINO EFFECT for Superior Innovation

Domino Effect

“Did we actually face our critics and reinvent our pizza from the crust up?  Oh Yes We Did!”  In 2009, Domino’s made a dramatic, bold, and risky move, with a product and commercial reinvention of their iconic and market-leading pizzas.  The product upgrade itself was impressive as they transformed what had been an inferior product to a competitive, if not superior, pizza.  More impressive, however, was in how they presented the upgrade commercially.  Essentially, their advertising message was:

    • We have listened to our customers and now recognize that our pizza has been inferior
    • We are embarrassed and this is unacceptable
    • We apologize and are committed to making it better
    • Our “pizza experts” have designed and engineered a far better pizza
    • We are so confident that our new pizza is better that we challenged even our harshest critics to test for themselves… and won!

The resulting market turnaround was instant (30 minutes or less?!?!) and totally reinvigorated the sales of the business and the equity of the brand.  The most impressive part of the story, however, was how Domino’s chose to acknowledge and to face their problems head on, and to humbly address their critics.  Instead of shying away from their deficiencies and focusing on their new innovation, they first publically and personally “faced the music”.  They even went so far as to admit and to present their biggest complaints such as “Your crust tastes like cardboard” and “Your sauce is like catsup”.  And while this was a bold move externally, I can only imagine how challenging this conversation was internally.  Before they could even begin to execute this plan commercially, the entire organization had to stop pointing fingers, hold hands, and work together to change their product, their strategy, and their culture.  They had to accept that the business model that had made them successful, “Faster, Cheaper, but NOT Better” pizza was no longer successful, and that they needed a new approach in order to win in the evolving competitive landscape.  They had to take accountability that the product that they had worked together to develop and sell was now failing to delight their customers and inferior to their competitors’ offerings.   They had to acknowledge that they needed to change… urgently and united.

I admire this story, not just for the success of the innovation on the business but moreso for the courage of the entire organization to recognize, accept, and execute the change that needed to be made.  How often do organizations, particularly those with a history of market leadership and success, fail to see the writing on the wall… either because they aren’t looking for it or because they refuse to accept it?  How many organizational cultures will support a truthful and pragmatic assessment that “Our competitors have surpassed us and we need to change course?” without killing the messenger?  How many teams can get past the “That’s not how we do it here” to a “How we do it here no longer works… we need to change”?  Domino’s is a great example of an organization who culturally, strategically, and innovatively made a bold change to save their business before it was too late.  How can other organizations initiate their own “Domino Effect” to establish, maintain, or re-establish product superiority?

Domino 1 Listen to your Customers.  This one probably does and should seem obvious, but is a critically important and frequently underestimated first step.  First and foremost, we are designing products and services for someone else to use, so we must understand what is delighting and disappointing our consumers.  In the case of Domino’s, it is not as if suddenly their pizza crust started to “taste like cardboard” with sauce that “tasted like catsup”… this is something that many of their current and past consumers had been saying for years.  It was only when the business results started to truly suffer that they began to accept this as a reality that needed to be addressed.  In our businesses, what are the “points of inferiority” that may have been acceptable when we launched, but over time have become a consumer dissatisfier and/or competitive disadvantage?  Whether through consumer research, reading consumer comments and complaints, or even shopping with and visiting the homes of our consumers, we must actively listen for areas of dissatisfaction (or potential new areas of delight) so as to proactively adapt and improve our offerings.

Domino 2 Know Thy Competition.  Particularly when working from a spot of market leadership, it is critical to remain constantly aware and alert of who your competition is and what they are doing.  Who are your top competitors today and what are their strengths, weaknesses, opportunities, and threats?  Who will be your competitors tomorrow… both the smaller players in your current industry growing via “niche” positioning and/or distinctive new points of superiority as well as new players from adjacent industries who potentially can change the rules of the game (e.g. Apple’s impact on Sony and the music industry)?  Personally use their products, talk to your consumers about them, and benchmark their performance head-to-head with yours.  Study their intellectual property, understand their business model, and analyze their cost structure.  Have a strong respect and pragmatic assessment for your competition today, predict where they will go tomorrow, and determine what you need to do now and into the future to maintain or obtain a competitive advantage.

Domino 3Admit when there is a problem… with Humility and Honesty.  Before an organization can focus on fixing a problem, it must first admit and accept that there is one to be fixed.  Having regular two-way communication with consumers and rigorously studying and testing the competition are key activities, necessary to understand and to dimensionalize any problems that may exist.  More important than “collecting the data”, however, is supporting and encouraging a culture that demands and rewards honest and open communication of real, unfiltered “bad news”.  Don’t kill the messenger… reward himIf consumer research shows that our marketing message isn’t working… don’t rationalize it, repair it.  If technical testing illustrates that our product is being out-performed… don’t “spin” the data, learn from it.  If an organizational culture and reward structure is such that it punishes failure and hides “bad news”, then it will be virtually impossible for an organization to realize, much less react to a critical gap in performance.  In order to promote a culture of open communication, each individual must feel safe, secure, and even rewarded for humbly and honestly uncovering and sharing real-time data… especially when it is bad.

Domino 4Invest in winning.  So… you know that you are “losing”, so what do you do now?  Again, this is an easy answer in principle, but often far more complex in practice- if you are losing today, then you must invest in winning tomorrow.  Conceptually, no one will disagree on this point, but often this simple and obvious approach will cause dramatic shifts in strategies, goals, and success criteria.  Particularly if you are coming from a position of market leadership, it is likely that much of the technical organization has been focused on and rewarded for measures such as scale improvements, cost savings, and profit margin improvements.  All of these are of course critical to the long-term success of the business, and especially valuable and appropriate when you own both market leadership AND product superiority.  However, when losing market share, especially due to product inferiority, the focus must shift to investing in the product and re-growing market share.  In the case of Domino’s, they had grown on a platform of speed and cost-effectiveness, without necessarily focusing on the quality of the product.  “Cheap and fast” tend to be easier to copy than “good”, and as competition closed the gap, they did so with superior product offerings.  In our own organizations, we need to insure that our strategies and our measures reflect the realities of our position… when we are winning we can focus on cost-savings and efficiency, but when we are losing we MUST INVEST in superiority.

Domino 5Prove It.  Once Domino’s improved their product, they ran an independent study showing that they were now actually preferred (3 out of 5) in a blind taste test to Papa John’s and other leading competitors.  Running this study effectively “put their money where their mouth was” showing their consumers, their competitors, and their critics that not only had they invested in superiority… they had achieved it.  Again, it is important to not underestimate this step.  In placing this study, there was a risk of generating “bad data” that could have shown that they had failed to meet their goals.  By having the confidence to place this study, they not only proved externally that their work had paid off, but also proved internally that the cultural shift had worked.  When responding to a business crisis that is the result of an acknowledgment of “losing”, there is no better way to turn the tide than to generate and promote data highlighting that the new strategy is now “winning”.  This step will help the organization to put the past behind them, to celebrate in the present, and to boldly and fearlessly march into the future.

Domino 6Remain vigilant, agile, and innovative.  Once all of the “dominos” have fallen and success has been achieved, an organization cannot stop there… it must set up the dominos and do it all over again.  This “domino effect” is not an event- it is a process.  The reality of the moment will be fleeting, as consumer desires and competitive offerings will change continuously… necessitating constant monitoring, adjustments, and evolution.  Once a successful “dramatic” transformation has occurred, the organization must now insure culturally and structurally that they are prepared to fight to maintain that superiority.  Successful results are an important landmark of success and proof that a strategy is working.  The critical element though in maintaining that success is through continuing, developing, and rewarding the behaviors of vigilance and agility to develop an enduring culture of winning.

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Check out my book, Agents of Change, available in paperback and eBook additions on Amazon.com

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On this INDEPENDENCE Day, Give Our Teams the Gift of FREEDOM

Freedom

For those of us in the United States, yesterday was Independence Day… a day to celebrate and reflect upon our freedom.   From the Declaration of Independence on July 4, 1776:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

An individual who feels truly free… free to be himself, free to speak his mind, and free to take risks will be happier, healthier, and more courageous.  And this will lead to increased empowerment, accountability, and innovation.

As we think about our own organizations, do we have a culture of freedom and independence or one of fear and subordination?  As we manage our teams, are we developing leaders or only followers?  Are we delegating ownership and accountability or merely complexity and uncertainty?  This is not to say that we should replace our hierarchies with anarchies, but are their ways that we can better create a culture in which our leaders serve the organization more than the organization serves the leaders?  Essentially, what can we do to help our people to “declare their independence” and to help each individual to lead, to work, and to innovate under the blanket of freedom?

F.R.E.E.D.O.M.

Fairness, Not Sameness.  A critical trait in being an empowering and successful leader is the ability to treat each individual fairly.  A critical mistake, however, is in equating fairness with sameness.  Every person has different talents, approaches, and work ethics, leading to a wide range of behaviors and results.   As such, different approaches, different responsibilities, and even different rules can and should apply to different people.   This is not to say that we should fail to provide equal opportunities to our people, but we must acknowledge, respect, and reward differently according to the unique capabilities and potential of each individual.  This spring I coached a 7 and 8 year old softball team, and the girls came to the first practice with a wide range of experiences and skills.  It was clear from the beginning that every girl wanted to play first base- that is an important role and one that gets more action that most other positions on the field.  However, to play first base a player must be able to catch the ball- not only to help the team to be successful in the game but more importantly for their own safety.  When the season started, only a handful of girls were able to catch the ball consistently enough to safely and successfully play first base, and these are the girls who got all of the playing time.  As the season went on, some of the other girls worked hard, practiced with me, put in extra time at home, and developed their skills… and thus got playing time at first base as well.  While the playing time ultimately was not the same, it was fair… providing equal and evolving opportunities based on the individuals’ talents and results.  As this relates to our organizations at work, this may translate to differences in project responsibilities, special privileges, or varying rewards.  Yes, this means that some individuals will get “less than” others and may even feel slighted.  However, for the overall good of the organization, this variance is critical as it recognizes and rewards critical talents, behaviors, and results and encourages the freedom to take risks, to grow, and to excel.

Represent Your Team’s Vision and Approach.  I believe that all management approaches can generally be boiled down to two basic philosophical differences.  1) As a leader, I am the single-point of accountability for the vision and strategy of my organization, and the individuals on my team are responsible for executing my vision, or 2) As the leader, I empower the respective leaders within my group to create their own vision for their work, and make myself accountable for helping them to bring their respective visions to life.  Under the first philosophy, there likely will be more clarity and efficiency, but the breadth of work is limited by the capacity of the one leader.  Under the second approach, the leader must give up some degree of control and assume additional uncertainty, but the breadth of work can expand exponentially as it now reflects the vision of multiple individuals.  Also, under the first approach the organization will likely approach the work more as executors than as owners and be less invested overall, while with the second philosophy the organization will approach the work as architects and leaders assuming more personal accountability.  Clearly I am a proponent of the second approach, as it will almost always lead to bigger initiatives, better results, and a more empowered culture.  This is not to say to say that the leader should not have his own strategy and vision- this still remains critical.  However, he should build and develop strong teams and empower them to develop their own plans and strategies for designing and delivering the work, and serve as an agent and barrier-buster to help bring their vision and approaches to life.

Encourage Risk Taking.  Probably the biggest barrier in having an independent and empowered workforce is fear of failure.  If an individual or team feels that they will be punished for failure, they will inherently be less willing to take risks.  Employees will default to safe approaches and solutions and worry more about making sure that every box has been checked than on delivering something that is outside of the box.  Some managers might think that they are helping to protect a team by limiting their scope, minimizing the risk that they can take, and trying to eliminate a chance at failure.  While this might be somewhat true, in eliminating degrees of freedom in the work they also are eliminating the existence of freedom for the individuals.  The encouragement to take risks and the acceptance of failures as the result of these risks will help individuals feel a greater sense of freedom, satisfaction, and independence, leading to bigger and better results.  “Freedom is not worth having if it does not include the freedom to make mistakes”. –Mahatma Gandhi

Embrace Individuality.  It is often now said that “Creativity is the new Currency”, when it comes to winning in business, innovation, and economics.  At the same time, all organizations are consistently looking for ways to standardize work processes and approaches to drive scale and efficiency.  While ultimately both are important, we must allow for some tension between the two and to give individuals some space for personalization in their approach to innovation and execution.  Said differently, while we align with our teams on the “What” (the mission, success criteria, and objectives), we should let them manage the “How” (technical approach, research techniques, and team collaboration) how they best see fit.  This is not to say that we should not guide, coach, and steer, but rather that we should help find ways to strengthen and support their individual approaches rather than to ask them to adjust into ours.  Instead of saying “That is not how we do it here”, we should ask “How would you recommend that we approach this problem?”.  This freedom will demonstrate trust, create ownership, and encourage creativity.

Delegate Decision Space.  One of the greatest gifts that can be bestowed upon an individual or a team is the ability to own and make real decisions about their programs and projects.  Far too often, rather than delegate accountability to our teams, we instead delegate complexity.  We make teams responsible for executing the work but not accountable for making critical decisions to move the work forward.  This can create a culture where teams will always “ask permission” rather than to “beg forgiveness”.  Instead, we should invest early in aligning with teams on the overriding success criteria (financial goals, timing objectives, resource constraints, performance criteria, etc.) and then allow them the freedom to make decisions on how best to satisfy those criteria.  By delegating this decision space, teams will spend more time trying to meet project success criteria and less time worrying about how to persuade management on details.  Additionally, “management” will buy themselves more freedom by getting out of the “weeds” of the projects and letting the team handle the details of how to execute the work.  Getting clear at the onset on who is accountable for decisions, and delegating as may decisions as possible to the project teams will create accountability, drive efficiency, and encourage innovative solutions.

Openness in Communication.  “The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness.” (Niels Bohr).  We are all in this together, and for teams to truly feel freedom, trust, and ownership, there must be transparent and open two-way  communication.  Managers must be willing and able to provide big picture context and perspective to their teams, so that each individual on the team knows where his or her work fits in the grand scheme of things.  Additionally, the team must be allowed and encouraged to communicate challenges and “bad news” to management without fear of retribution (and even be rewarded!).  When collaboration channels are always open, both the teams and managers will be free to focus on solving the real issues, will treat each other as trusted partners in the process, and will proactively give each other information to drive greater work efficiency and better decisions.

Motivate Not Mandate.  Dwight Eisenhower said that “Motivation is the art of getting people to do what you want them to do because they want to do it.”  Leaders should work with teams on developing a shared “rallying cry” and mission to deliver amazing business results.  Teams don’t want to be told “what to do”, but rather “why it is important”.   As leaders, if we can invest in helping our teams understand the problem to be solved, in inspiring them to own the solution, and in empowering them with the accountability to execute with excellence, we will be far more effective than if we spend our time on directives and micro-management.  Our job as leaders is not to develop followers who execute for us, but rather to develop leaders who execute for themselves.

Albert Einstein once said that, “Everything that is really great and inspiring is created by the individual who can labor in freedom.”  On this long holiday weekend, let’s ask ourselves “What can we do to create more FREEDOM for our teams and for ourselves to create a more independent and innovative organization?”