David Brandon, Chairman & CEO of Domino’s Pizza
Making Strategy Work-Straight Talk from the World’s Top Business Leaders (p. 20-22), Harvard Business School Publishing, 2008

For many years as a private company, Domino’s really benchmarked against itself, without looking at the outside world. We were proud of the fact that for many years we had positive same-store sales, which is a big financial indicator of growth and success in the retail world. Well, that was the good news.

The bad news was that during those same years our competitors were growing at a faster rate. We were actually giving up market share. At the same time, we were hosting internal celebrations of the fact that against our own internal matrix we were doing well. We not only had to look at what had been our past results and reconcile how we were performing against that benchmark, but also we needed to look at the world around us, look at our competitors, and in many instances I really wanted us to look at the very best in class. Who is out there doing the best possible job in this particular area of business? We need to find out what their results are and start to hold ourselves accountable for that particular level of performance.

We accept mediocrity because we can choose a lot of people around us who are just as mediocre as we are. I want to find the very, very best, and I want to benchmark against them, and I want to get as good or better. I think if I lead that expectation and I get my team and my organization to embrace it, that’s how we’re going to become world-class performers.

Romans 3:23
The New International Version

…for all have sinned and fall short of the glory of God…

Their 10 Reasons to Design a Better Corporate Culture stirred a series of questions worth asking about our own companies:

Do our leaders embody the values of our culture?

Leadership is critical in codifying and maintaining an organizational purpose, values, and vision. Leaders must set the example by living the elements of culture: values, behaviors, measures, and actions. Values are meaningless without the other elements.

Do we regularly go beyond slogans to invest tangibly in our culture?

Like anything worthwhile, culture is something in which you invest. An organization’s norms and values aren’t formed through speeches but through actions and team learning. Strong cultures have teeth.

Do our employees embody the values of our culture?

Employees at all levels in an organization notice and validate the elements of culture. As owners, they judge every management decision to hire, reward, promote, and fire colleagues.

Does our culture yield identifiable labor cost advantages?

Organizations with clearly codified cultures enjoy labor cost advantages for the following reasons:
– They often become better places to work.
– They become well known among prospective employees.
– The level of ownership—referral rates and ideas for improving the business of existing employees—is often high.
– The screening process is simplified, because employees tend to refer acquaintances who behave like them.
– The pool of prospective employees grows.
– The cost of selecting among many applicants is offset by cost savings as prospective employees sort themselves into and out of consideration for jobs.
– This self-selection process reduces the number of mismatches among new hires.

Do we retain employees who embody our culture and disengage from employees who do not?

Organizations with clearly codified and enforced cultures enjoy great employee and customer loyalty, in large part because they are effective in either altering ineffective behaviors or disengaging from values-challenged employees in a timely manner.

Do we retain customers who share our values and disengage from customers who do not?

An operating strategy based on a strong, effective culture is selective of prospective customers. It also requires the periodic “firing” of customers… This strategy is especially important when customers “abuse” employees or make unreasonable demands on them.

Do we have tangible evidence that our organization is “the best serving the best?”

The result of all this is “the best serving the best,” or as Ritz-Carlton’s mission states, “Ladies and gentlemen serving ladies and gentlemen.”

Do we actively guard against becoming a business cult by engaging outside voices, and benchmarking best practices inside and outside our organization?

High-performing organizations periodically revisit and reaffirm their core values and associated behaviors. Further, they often subscribe to some kind of initiative that requires constant benchmarking and searching for best practices both inside and outside the organization.

Are we taking tangible steps to nurture the next generation of leaders within our company?

Organizations with strong and adaptive cultures foster effective succession in the leadership ranks. In large part, the culture both prepares successors and eases the transition.

Are our leaders curious? Do we value improvement? Is our performance as strong as our culture?

Cultures can sour. Among the reasons for this are success itself, the loss of curiosity and interest in change, the triumph of culture over performance, the failure of leaders to reinforce desired behaviors, the breakdown of consistent communication, and leaders who are overcome by their own sense of importance.

Here’s a question The Ownership Quotient doesn’t address:

Is there anything about our culture that might lead people to believe we are attempting to do business spiritually engaged?

Business fundamentals don’t vary widely from one successful company to another. Strategic insight and discipline, tactical execution, product quality, customer service, employee and vendor trust, robust financials…these are table stakes in the gamble that any company will produce a return on investment. There’s nothing distinctly spiritual about that.

So…what are we talking about here?

In 2009, we’ll do our best to unpack what we mean when we talk about business spiritually engaged. Don’t look for it in the form of religious art (crosses and fishes and such) or sweeping values statements (as professor Heskett and friends remind us, values are meaningless unless they are expressed as behaviors, measures, and actions). Look for what we mean in the stories we cover and the angles we take on matters large and small; look at the questions we ask and the things we don’t take for granted. Press us for detail as eM did yesterday — expect us to be plain where plainness is called for…and borderline mystical — or at least realistically humble — when we try to say something about the God we think revealed himself uniquely in Jesus Christ.

Whatever you’re up to at the turning of the year, we are with you — greeting every day with the Bible in one hand the Financial Times in the other; looking for ways to add value to the stakeholders in and around our companies and communities; determined to do business in the world not as we wish it were but as it really is — business spiritually engaged.

Happy New Year.

I once interviewed American footballer Steve Largent who retired from the NFL with pretty much every record in the book: most receptions in a career (819), most receiving yards in a career (13,089), and most touchdown receptions (100).

I told Mr. Largent everything I knew about catching footballs, which consisted of hearing a high school coach say over and over, “Watch it in, watch it in.” I asked if he “watched it in” and he said, yes, he was advised early on to focus on the laces on the ball as it spiraled in. I thought that sounded pretty good but Largent said he found the practice a little loose for his purposes.

“So, what did you watch?” I asked the man who caught more balls than anyone before him. He showed me a football, holding it out so I could see where the four segments of the ball came together at the end.  “I focused on that cross,” he said “all the way into my hands.”

That, as some of my pastor friends like to say, will preach. The highest performers I know in every category focus at a level of detail most everyone else considers too granular to matter. They’re the ones who catch what the rest of us miss and add margin no one else bothered to notice.

• What do you see that others miss?
• Who threatens to eat your lunch by seeing more than you?
• What benchmark can you exceed by refining it to a new level of detail?

Pfeffer and Sutton point out that executives often make decisions based on gut feel, what’s worked in the past, recommendations from others, and conventional wisdom. In fact, conventional wisdom is so powerful that executives have difficulty seeing the evidence to the contrary and continue to make decisions that do not enhance the performance of the company. This echoes the insight of Edwards W. Deming who noted that most management knowledge is based on superstition, not fact. As an antidote, the authors recommend evidence-based management.

“Why do executives do things without real knowledge or evidence that what they are doing is valid?”

In today’s ultra-fast, ultra-competitive, and ultra-confusing world, executives are constantly seeking anything that will provide a performance or competitive edge. And there are gurus, writers, consultants, and former executives who all have a plan or formula or template for that edge. The need and these so-called solutions come together in a seductive and sometimes lethal package called “best practices.”

But:

• Who says these are the best practices?
• What is the evidence that these are valid beyond their immediate context?
• What is the real cost and strategic impact of adopting the best practice?

Pfeffer and Sutton point out that executives often make decisions based on gut feel, what’s worked in the past, recommendations from others, and conventional wisdom. In fact, conventional wisdom is so powerful that executives have difficulty seeing the evidence to the contrary and continue to make decisions that do not enhance the performance of the company. This echoes the insight of Edwards W. Deming who noted that most management knowledge is based on superstition, not fact. As an antidote, the authors recommend evidence-based management.

In Part One: Setting the Stage, the book discusses why companies need evidence based management and how to practice it. These two chapters are the foundation of the book. The power of conventional wisdom to direct decision-making even after substantial evidence demonstrates the error is illustrated. For example, we see in the news merger after merger being touted as critical winning strategies for companies. However, the evidence shows that over 70% of mergers “fail to deliver their intended results and destroy economic value in the process.” There are very specific reasons why mergers succeed, but few take the time to figure out what those factors are and use them to guide their actions.

Poor decision practices are at the heart of why companies harm themselves. Three of the most common decision practices are:

1. Casual Benchmarking that leads to mindless imitation
2. Doing what seems to have worked in the past
3. Following deeply held yet unexamined ideologies.

This section is a challenge to leaders trying to operate their businesses from a Biblical worldview. Often I have observed very casual imitation behind the very thin rationale that people in the business world really know what they are doing. This behavior is fueled by an unexamined worldview that is more secular than it is Biblical. And it leads to mindless imitation of practices that may not align with a Biblical worldview.

The authors also provide suggestions on improving decision-making in situations where there may be no sound data available.

In Part Two: Dangerous Half-Truths About Managing People and Organizations, attention is turned to half-truths that are a powerful part of the conventional wisdom in business today. There are wrong and destructive ideas circulating, but the half-truths can be as dangerous. The authors challenge six of the most influential half-truths in the market today by posing each as a question and then looking at the real evidence behind the practices.

1. Is Work Fundamentally Different from the Rest of Life and Should It Be?
   The Biblical worldview says that people are an integrated whole. They do not live bifurcated lives divided between the work and their private lives, or between their work lives and their “spiritual” lives. The evidence demonstrates, in spite of many management practices, that people who are treated as whole people are more motivated and perform better.
2. Do the Best Organizations Have the Best People?
   Squarely in the cross hairs of this section is the so-called War for Talent. The methodology and the results of the original study are clearly debunked. Also in the cross hairs are the aggressive forced ranking systems of personnel. Again, the evidence shows everyone has talent that can be developed and that “crappy systems” account for more of the problem than “crappy people”. Moreover, the crucial talent to develop is wisdom!
3. Do Financial Incentives Drive Company Performance?
   What is it that incentives really do? Why is money used so much as an incentive? Money certainly motivates, but does it motivate the right behaviors? Money attracts talent, but does it attract the right kind?
4. Strategy is Destiny?
   Is strategy the source of success? If I’m in a declining industry is that my destiny, too. Why are some of the best companies in unattractive industries? Focus is great, but what are the dangers of being too focused? Does strategy matter? How do we balance the need for strategy and the need for effective execution?
5. Change or Die?
   The authors state, “Change and innovation are nasty double-edged swords.” What are the risks of pursuing change, when we know that most new changes may fail? And what are the risks of not changing? What are the questions we need to ask before we launch organizational change? Does change have to be difficult and take a long time?
6. Are Great Leaders in Control of Their Companies?
   The last decade has seen a staggering increase of interest on the subject of leadership. But do leaders really have the influence over their organizations that we think? What should leaders really do, recognizing that they do not have the control or influence that they might think they do?

In Part Three: From Evidence to Action, the authors outline nine steps for the implementation of evidence-based management. For example, “If all else fails, slow the spread of bad practices.” And “The best diagnostic question: What happens when people fail?”

The book also includes extensive supporting notes pointing the reader to the evidence behind their conclusions.

The goal of this book is not to make the job of the executive or manager more difficult, but to improve thinking and decision-making so that you understand what and why you are doing what you are doing. And in doing so, you reduce cost and risk while increasing the chances of improving competitive performance. At the least you’ll be a more careful consumer of business advice.