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ANN ARBOR, Mich. — J. Patrick Doyle, president and chief executive officer of Domino's Pizza Inc. (NYSE: DPZ), speaks with Blue MauMau on the art of leading franchise owners. No stranger to accolades, Mr. Doyle was recently awarded the best CEO of 2011 by television's CNBC. In a tough economic slowdown, the new CEO quickly set about completely changing the brand's pizza recipe in 2010. Under his leadership same-store sales and gross margins have increased, and since 2007 company debt has gone down $200 million.
The results? In 2011, shareholders loved him. Company stock prices rose by 110 percent.
It's not just CNBC that thinks Domino's is exceptional. With the help of publisher Robert Bond of Bond's Franchising Guides, Forbes named Domino's its number one pick of having the most bang for the buck for potential franchisees. Doyle finds himself the focus of many conversations, being the ninth-most-buzzed-about CEO on the Internet, according to Zeta Interactive. The company and franchisees have community good will going for them too. In the United States and Australia, they are known for their charity: donating money, providing food and organizing help in disaster-hit communities.
The system is unusual in its collaboration with its franchisees. Consider this: Domino's not only recognizes but also invites representatives of independent Domino's Franchisee Association, which focuses on the self-interests of its franchised members, to attend and be involved in decisions at all major brand meetings. That's unusual. Most franchisors are hard-pressed to even recognize that an independent association exists among their franchisees, let alone open the doors to its representatives. Doyle tells Blue MauMau that he thinks the pushback from the independent group is a good thing for the system. In citing the reasons for his success in an interview with CNBC, Doyle emphasized over and over that the secret of the brand's success was its franchisees [independent business owners], who own some 90 percent of the chain's units in the United States.
Mr. Doyle rose through the senior ranks of Domino's before becoming CEO in March 2010 of the now 9,500 unit restaurant chain. He joined as senior vice president of marketing in 1997. A year later, when founder Tom Monaghan ceased being involved with the operations of the company, Domino's was sold to private equity firm Bain Capital Inc for $1.1 billion. Bain took the company public in 2004. Doyle served as president of Domino's U.S.A. from 2007 to 2010 just prior to becoming CEO.
Domino's CEO spent a half an hour with this journal to give his insights into the topic of leadership. This is the first of a three-part series.
BMM: How does one gain leadership acceptance from franchisees on major initiatives?
Summary: Domino's CEO thinks leadership skills developed over a broad array of company functions is important in not only gaining a feel for important operations but also in developing alliances.
Doyle: I have been with Domino's for fourteen and a half years. I've run our marketing department. I've run our international business for five years and our company-owned stores in the U.S. for three. Then I was president of the United States overall, which included responsibility for U.S. franchisees at that point. I became CEO two years ago. Part of the answer is that I've done a lot of different jobs at the company. I understand the perspectives of all the different groups.
How you get buy-in from everybody in the system starts with understanding their perspective at Domino's and how value is created for them at Domino's.
Start by finding the best people around. That includes not only our team members, but employees as well as our franchisees. The key people in each group are the most important to find, excite and motivate. That is the starting point for taking care of the other three constituents, which is fundamentally the customers, franchisees and the company — and that is ultimately company shareholders. You have to create value for all three of those groups. It has to work for customers, for franchisees and ultimately for the company. If value for any one of those groups is not working, then ultimately the other two will fail.
You have to start with the point that the value creation must be for all three of those groups. Once you have that as the underpinning of how you look at really any activity that you are doing, whether it be a new marketing program, a new product, a new computer system, a point of sales, an online ordering system or whatever it may be, you have to look at all three groups and say, "Okay, how is this creating value to the consumer? How is it creating value for the franchisee? And how is it creating value at the company level?
BMM: What sort of actions have you taken in order to create support from them?
Part of being a leader is that those working with you trust when you make a decision, even if it isn't what they suggested, because you have listened and understand their viewpoint
Doyle: I think what our system knows, although they may not agree with all the decisions that we make, is that we understand those perspectives and that we are thinking about them even as we are making the decisions. Even if they don't agree on every decision that we make, even though you can't get that large a group to agree on all things, they understand that we are considering everybody when we are making our decisions.
That's the fundamental starting point for getting buy-in. We are not going out and presenting a new program or new initiative without having very thoroughly thought through how it is going to affect everybody. If you do that, then it starts to get a lot easier as you go out each time: they are going to understand that you have done that work. Often you have done that work with some group of not only consumers, but with franchisees. You've included them in the process. Now you have at least a good basis for the conversation.
BMM: Help me to see that in practice. You just revamped your product lines. For example, you put more cheese in the products.
Changing the pizzas was the biggest jolt the Domino's system has had in years.
Doyle: That was clearly the biggest thing we have done here, maybe ever since the founding of the company. Completely redoing our pizza was a very big deal within the system. Through the process there was a group of franchisees who were aware that we were redoing the pizza. But it was a relatively small group. We needed to keep it quiet from our competitors as long as we could. Once we had something that we thought met our internal goals…
BMM: How did you know which franchisees to let into the select test group?
Communicating with franchisee committees, selecting test franchises, sharing all results with franchisees at the right time, launching a nationwide roadshow and having internal pizza tastings were key in getting buy-in.
Doyle: We have two groups that we involve in something like this. We have the Franchise Innovation Council that gets involved directly with new products that we are working on in a revamp of products. And we have the Marketing Advising Committee, which is more involved in the launching of these products. Those were the two groups that were primarily aware early on of what we were doing and what we were working on.
Related reading in this leadership series: