Leaders fail.
Failure gets a bad rap. Failure is a good thing. Or at least it can be.
Recently, Cindy and I stumbled on a show on the History Channel that documents the history of various food and food-related businesses. One episode of "The Food That Built America Snack Sized" caught my attention. "Special Delivery" documents the story of how Domino's came to dominate the pizza business.
Domino's has grown from a fledgling single store in 1960 to more than 17,000 stores worldwide today. In 2019, Domino's sold more than $7 billion in pizza and other prepared food. Domino's seizing of the top spot has also caused investors and franchisees of rival Pizza Hut to begin to question the Hut's viability.
Perhaps more relevant to most of us is that Domino's is chiefly responsible for making it possible for us to order a pizza or any other food and have it delivered to our door. Regardless of what chain or local restaurant from which we buy it, Domino’s demonstrated that food delivery can be profitable.
However, one fascinating aspect of Domino's history is the season when their prospects looked pretty bleak. In 1998, founder Tom Monaghan sold a 93% interest in Domino's to Bain Capital, a private equity firm.
As private equity firms often do, Bain Capital set out to cut costs to increase profits. They eliminated corporate jobs in the Ann Arbor, MI headquarters. They also began buying cheaper ingredients to make their pizza.
The result of all that cost-cutting, however, was not more profits. The result was reduced sales. Soon after Bain Capital acquired the pizza chain, Domino's saw its first decline in sales in decades.
Six years after buying Domino's, Bain Capital took the company public. After selling initially at $14 per share, the market indicated its loss of confidence in Domino's in late 2008. Several days in November of that year, the stock was trading below $3 per share. Its total market capitalization at the time was $220 million. That may sound like a lot, but it was only 20% of what Bain paid for the company.
By any measure, Domino's was failing. Of course, you know they didn't just close the door.
In late 2009, Domino's took responsibility for their failure. The pizza chain began airing commercials that offered very candid customer assessments of their product. The crust, numerous customers complained, "tastes like cardboard." "Totally void of flavor," was the way another summarized Domino's pizza.
Of course, Domino's didn't just flaunt their failure. They wanted their customers, including those they had lost to other brands, to know that they recognized their failure and were doing something about it.
Domino's set out to reinvent every aspect of their product. New dough, different cheese, a fresh sauce with a bold flavor were all part of their commitment to producing a better product that people would want.
By owning their failure and learning from it, Domino's now dominates. Consumers returned. Sales began to climb again. The stock market has also given its approval. That stock price that was below $3 closed at more than $403 yesterday. Domino's current market capitalization is over $15 billion.
Domino's experience, and their response, teach us a great deal about leadership. Leaders don't wallow in failure. Leaders don't hide their failure. Leaders are not destroyed, deterred, nor discouraged by failure. Leaders learn from failure. Leaders grow from failure.
What about you? How have you responded when you have failed? Perhaps it was an event that didn't go as planned. Maybe you didn’t handle some matter of conflict as well as you could or should have. Did you learn from it? Did you make adjustments? Were you willing to hear the message that others were sending?
If you struggle with responding well to failure, find someone from whom you can learn. Who made wise adjustments as a result of their failure and began to see fruit? Who can help you think through the lessons you can learn from your failure? Who can help you start to appreciate failure?
Hoping you fail well in the days ahead!
Enjoy your weekend.
https://www.youtube.com/watch?v=AH5R56jILag
https://play.history.com/shows/the-food-that-built-america-snack-sized/season-1/episode-2