Bill Taylor’s Article How Domino’s Pizza Reinvented Itself

Bill Taylor’s article “How Domino’s Pizza Reinvented Itself” in The Harvard Business Review discusses the remarkable turnaround that the company’s CEO Patrick Doyle helped create when he was hired in 2009. At that time, Domino’s Pizza was languishing; its pizza was routinely panned as tasting like cardboard and being flavorless, and its stock price was also in the pits at around $8/share. According to the article, “today, Domino’s is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and a share price approaching $160. It has moved from being the butt of late-night jokes to becoming a favorite of the stock pickers on CNBC.”

So what happened? The answers might lay in the title of a talk that Doyle delivered: “How to Transform a Legacy Company into a Technology-Enabled, Nimble, Category-Disrupting Machine.” One of the first things Doyle realized was that Domino’s was at heart a technology company as much as it was a pizza company. He began to reinvest heavily in the technology side, redesigning the app that was used to order pizzas, using heavy online advertising, and the most up-to-date app features, such as allowing a customer to simply text or tweet a pizza emoji to Domino’s at any time of day to receive their favorite pizza. Doyle pointed out in his talk that of the nearly 800 people working at the company’s corporate headquarters, nearly half of them worked in technology-related fields, such as software and analytics.

Secondly, Doyle also did something else fairly radical; he embraced the company’s past failures. Instead of shirking from the negative reviews that the pizza had engendered, he made them part of a new advertising campaign. He also helped update and modernize the image of the pizza company by having Domino’s appeal more to the younger generation such as millennials. According to the article, Doyle “also worked with crowd-sourced auto designers to create a Domino’s delivery car, the DXP, a colorful, cool-looking, modified Chevrolet Spark (an article called it a “cheese lover’s Batmobile”) with just one seat, and a warming oven with room for 80 pizzas.” Domino’s is also experimenting with different forms of transportation, and has taken the initiative in testing self-driving pizza delivery cars and drone delivery systems. These futuristic details have helped a new generation of pizza lovers find out more about the company.

Finally, the article introduces two concepts from behavioral economics, “omission bias” and “loss aversion.” Omission bias refers to the psychological tendency that people have to worry about the effects of their actions, rather than their inactions, while loss aversion has to do with the strategy of playing it safe, rather than taking a risk. Both strategies can be very harmful in a business setting as they allow fear to be the operative principle, rather than the risk