Domino’s: It Takes More Than Campaigns To Look Good Naked

 

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My fellow Forbes contributor, Chunka Mui, has an insightful and entertaining article, How Dior, Galliano and iPad2 Reinforce the Need for Businesses to Look Good Naked. It gives multiple examples of businesses that failed to respect the inexorable trend towards greater transparency and suffered the consequences when poor performance was capture on amateur videos, including:

• David Carroll’s singing video about United Airlines breaking his guitar
• The video of a Comcast technician asleep on a customer’s couch
• John Galliano’s anti-semitic comments captured on a cell phone video
• The prank video that showed how bad are Domino’s pizzas [DPZ].

A brand is helpless in the face of a convincing amateur video. And the problem for firms today is that most people are carrying a video camera in their pocket or handbad. Something bad happens? Record it, and with the help of social media, send it spiraling on the Web to millions of interested customers.

There is, as Chunka Mui notes, “the prospect that any and every aspect of your business might go viral on YouTube.” Indeed there are now organizations are now springing up, whose object in life is to do exactly that, such as Witness.org, an organization tagline is “See it.  Film it.  Change it.”

“Campaigns” can make temporary gains

Once a video has gone viral, Dominos discovered that apologies didn’t work.  In desperation, after discovering that its critics were correct—its pizzas did taste like cardboard— Domino’s admitted the reality and invited its harshest critics to help improve its product. It jettisoned its 49-year-old cardboard/ketchup recipe, and replaced it with a product that won blind tasting tests against its competitors’ pizzas. They even had Stephen Colbert taste-test their product on his show, and drooling: “Is that pizza, or did an angel just give birth in my mouth?”

The results, as reported by Adage in October of 2010 have been spectacular: For 2010, Domino’s posted a 14.3% same-store-sales gain — a record for the fast-food industry. In the most-recent quarter, the number was 14.5%. The chain, which opened its 9,000^th store worldwide in March, recorded a 56% increase in profit for the quarter.

At this point, conventional management thinking would be to declare the battle won and go back to running the business as usual.  The truth is that a few battles may have been won, but the real war has only just begun: how to change the organization on a permanent basis. Despite the recent gains, Domino’s share price is still barely ahead of where it was in 2004.

Marketing is more than “initiatives” and “campaigns”

As Al and Laura Ries document in their wonderful book, War in the Boardroom: Why Left-Brain Management and Right-Brain Marketing Don’t See Eye-to-Eye–and What to Do About It, the marketing department is generally viewed by traditional management as no more than a temporary problem-solver.

“Got a brand problem? Bring in the marketing folks and maybe they can help solve it, so that then you can go back to grinding out production, tweaking the supply chain, searching for efficiencies and all the standard preoccupations of traditional management. “

The problem is that grinding out production in the traditional management manner is what caused Domino’s branding problem in the first place. It was the reason why Domino’s could go so for many years without either realizing that its pizzas tasted like cardboard or doing anything about it.

Going back to running the company by grinding out production would be a guarantee that similar problems will re-emerge in due course, as employees are dispirited by traditional management and customers are frustrated by lackluster service from dispirited employees.

Nor is it going to help for Domino’s to ask customers to video problems and send in the video, so that management could weed out “poor performers”. The problem of cardboard-tasting pizza wasn’t a problem of a few “poor performers” at the working level. The problem of the cardboard-tasting pizza was the result of company policies and management at the very top of the organization that prevented the identification of the problem and the action needed to solve it. The policies and practices inhibited innovation or didn’t bring out the best in people so that they would discover problems and fix them.

Permanent change in management

What Domino’s needs is a permanent way of managing the company that combines continuous innovation and disciplined innovation.  What does this mean?

• It means establishing the organizational goal of doing whatever is needed to go on delighting their customers, not just making money. The fact that Domino’s has pleased some customers today is no guarantee that it will do so tomorrow.  Domino’s needs to be permanently focused on generation positive customer outcomes, not merely generating outputs.

• Managers have to become enablers of the people doing the work, rather than controllers, Control and bureaucracy are what dispirits workers. Unless Domino’s managers are enabling their employees, the openness that Domino’s has embraced will quickly reveal the low level of engagement of the employees.

• Domino’s needs to coordinate its work through dynamic linking, rather than through hierarchical bureaucracy. If it doesn’t the dreaded pall of bureaucracy will descend and infect everything that Domino’s does.

• Domino’s needs to run their organization with radical transparency so if that employees become aware of a problem, like cardboard tasting pizza, that problem gets communicated openly and quickly solved, rather than festering in the background for years.
• Communications need to be conducted in horizontal adult-to-adult conversations, rather than command and control. If not, this too will dispirit employees, not something that will look pretty when it becomes visible in a youTube video watched by millions.

The problem for Domino’s is that now that they have embraced openness, they have to learn to live with it, not just for the duration of a few marketing campaigns. They have live with continuous innovation and embrace it as a way of life forever.

This is not about campaigns or initiatives. It’s a different way of thinking, speaking and acting in the workplace.

To learn more

To learn what is involved in permanent management change that creates continuous innovation and inspired employees, you can read recent books like Enchantment, by Guy Kawasaki, The New Capitalist Manifesto by Umair Haque, The Power of Pull by John Hagel, John Seely Brown and Lang Davison, Reorganize for Resilience by Professor Ranjay Gulati, or Leadership in a Wiki World by Rod Collins.

Or my book, The Leader’s Guide to Radical Management (Jossey-Bass, 2010) which provides a comprehensive overview of the principles and practices involved.

If you would like to get together with others who are intent on mastering what’s involved in creating a workplace of continuous innovation and customer delight, please join me, Rod Collins (author of Leadership in a Wiki World, Seth Kahan (author of Getting Change Right) and others for two days on May 12-13 in Washington DC. Cool, innovative and serious fun. More details here.

Comments

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