In Business, Does Honesty Really Pay?

In 2010, the executives at Domino’s Pizza had a hard conversation with themselves after facing three consecutive years of declining sales and a slumping stock price. In consumer surveys, customers were reporting that their pizza tasted like cardboard and the sauce was like ketchup.  Domino’s had to do something drastic. They had to reinvent the way they were doing business, create a better product, and tell the world how they were better for it. How they decided to re-market their new product was surprising – they told the world their product sucked.

C-Suite with Jeffrey Hayzlett visited the c-suite boardroom at Domino’s to learn from this radical idea and to answer the old adage: does honesty really pay?

Reinventing The Brand Promise

For years Domino’s worked under the core promise of speed of delivery. They were committed to bringing your pizza to your door in 30 minutes or less. That played well for them, but they rode that horse into the ground and their pizza quality suffered over time. They over-delivered on service yet were in last place on product equity. Focus groups reported that Domino’s pizza actually tasted better if they didn’t know if was from Domino’s.  It was affecting the loyalty of their customers and it reflected in their stock price.

Reinventing their pizza recipe was one of the first initiatives Domino’s undertook to turn the company around and one of the last to announce internally because it was a massive overhaul. Head Chef Brandon Solano was tasked with inventing a new taste. They did everything from evaluating competitors, hiring consultants, and even pouring through grandmothers’ recipes to get it right. They needed a new taste that was bold and dramatically different, and they did it. They were finally ready to launch the new and inspired pizza.

So they came clean to the customer in a bold marketing campaign and shifted their focus to a new brand promise – to provide the best pizza possible to their customers. In a worldwide campaign they stood naked and shared everything they were hearing about their product from “worst excuse for pizza ever,” to “totally void of flavor,” and committed to fixing the problem by announcing their new pizza, with new crust, new cheese, and a brand new sauce.

Does Honesty Pay?

After sales declining for three consecutive years, they turned around overnight. Domino’s sales increased double digits the first week of the launch. They came within 2 days of running out of pepperoni, and sales were up 14% for the first quarter. They were tracking sales on the wall in the corporate office and reverted to drawing year-end sales on the ceiling they had grown so high!

It took a lot of guts for the executives from Domino’s to address the product quality problem they faced. One wrong move and it could have ruined careers and sent investors running. But change isn’t easy and the c-suite knows that better than anyone. The c-suite at Domino’s knew they had a hard road ahead of them to get their franchisees on board with the overhaul and their customer’s back with this new brand promise. They were relentless in their mission and it continues to pay off for Domino’s Pizza. Domino’s reset their operating structure, and when they launched their campaign they had people asking: did Domino’s really just do that? And the answer is oh yes they did. This is now their benchmark for their success.

What we learned from Domino’s is that c-suite leadership work best when it’s honest. It makes better decisions faster. Domino’s shows other c-suite leaders that we are in an age of radical transparency.

You can learn more about Domino’s story by visiting their corporate website or watching the full episode.

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Jeffrey Hayzlett is a global business celebrity and speaker, bestselling author, Contributing Editor and Host of C-Suite with Jeffrey Hayzlett on Bloomberg Television. He is the CEO of The Hayzlett Group, an international strategic business consulting company focused on leading change and developing high growth companies. Connect with Hayzlett on Twitter, Facebook, LinkedIn or email.