Thread by @RomeenSheth

0/ The Domino’s pizza turnaround is one for the ages:

1960: Founded
2004: IPO
2008: Hits record low $2.83/share
2020: Current stock at $367/share (130,000% gain)

The 100x+ growth story is filled with a bunch of lessons for startups today.

Let's dig in.

1/ Domino’s was started by 23 year old Tom Monaghan in 1960.

Tom was maniacally focused on fast delivery and great service from Day 1. He spent the early days taking every action required to:

- Reduce delivery time
- Reduce cooking time
- Increase distribution

2/ Tom's emphasis on speed and service led to groundbreaking moves that competitors found difficult to compete with:

A catchy slogan with some skin in the game (“A Half Hour or Half Dollar Off”) escalated to a full blown guarantee:

“30 Minutes or It’s Free”

3/ By 2008, Domino’s scaled to a multi-billion dollar business, but had dim prospects:

- Growth completely stalled
- Competitive threats from Pizza Hut (and others) loomed
- $1B of debt sat on its balance sheet

New customers just weren’t coming in the doors.

4/ So what happened?

It turns out Domino’s was excellent at everything, BUT the pizza.

When they did focus groups in 2007-2008, the feedback was alarming:

- “Domino’s tastes like cardboard.”
- “Totally devoid of flavor”
- “Sauce tastes like ketchup”

Yikes.

5/ A number of tradeoffs were made in the name of speed: Ingredients were frozen, canned and pre-made.

“We realized that everyone in the world who wanted fast pizza was already buying from us, and the people who wanted a great pie simply were not.” - Patrick Doyle (CEO), 2009

6/ Doyle leaned in hard to the feedback and launched a legendary ad campaign: "Our Pizza Sucks"

Focus groups shared harsh comments, Doyle sat front and center and took it. He accepted the criticism and promised to "work days, nights and weekends" to get better.

7/ It’s hard to understate how bold this was.

Doyle just committed that a $5B+ global pizza company was going to radically reinvent its…. Pizza.

Supply Chain. Logistics. Marketing. Culinary. Partnerships. Franchisees. IT.

You name it. Everyone was in the saddle.

8/ The culinary team began the project to rebuild the recipe from the ground up.

They tested 7,500+ combinations:

Crust (10) * Sauce (15) * Cheese (50)

And this doesn’t include re-testing / calibrating every individual ingredient.

9/ Many on the Exec team were fearful that this would lead to a new and (even) bigger problem than what they had set out to solve.

What if our pizza didn't improve AND we lost our speed advantage?

Doyle had 2 mental barriers he had to break through with his team:

10/ Barrier #1: Omission Bias

Omission bias = worrying more about doing something than not doing something.

Why? Because everyone sees the results of a move gone bad, and few see the costs of moves not made.

11/ Barrier #2: Loss Aversion

Loss aversion = playing not to lose rather than playing to win.

“The pain of loss is double the pleasure of winning,” Doyle would say.

The implication is a natural inclination to be cautious, even in situations that demand creativity.

12/ Simply put, leaders who want to shake things up have to be comfortable with the idea that failure is an option.

In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all.

13/ Domino’s reinvention was a huge success.

Customers loved the new recipe and each additional new product they rolled out was met with similar satisfaction.

(e.g. in 2012 Domino’s introduced a pan pizza)

14/ Doyle’s move was transformational enough, but it created 2 other shockwaves that will have much longer lasting effects:

1. Internally - broke the false dilemma (speed OR quality)

2. Externally - showed customers they cared. They responded to feedback and built in public.

15/ After the product reinvention, Domino’s went back to focusing on their core strength and has since fired on all cylinders:

⬆️distribution channels (all online platforms / smart devices)

⬇️order friction

⬆️delivery technology

16/ So what are the lessons here?

1. Leadership is about showing up

2. Don't lose sight of the core product

3. Find mental barriers and break them

4. Compounding advantages/disadvantages are slow to accumulate and then fast to impact

5. Show (don't tell) customers you care

17/ Domino’s is in a strong position to continue to excel over the next decade.

If you need to look any further - go visit my friend @APompliano - he’s almost as big of a Domino’s hypeman as he is #Bitcoin

:)