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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