Domino’s Pizza, originating in Michigan, USA since 1960, has grown into a global pizza brand with over 19,500 franchise restaurants after decades of stable development. The brand is famous for its efficient delivery services, earning the reputation of “top delivery service in the pizza industry.” Over the past several decades, Domino’s has not only solidified its market position with delicious pizzas but also undergone a revolutionary transformation by integrating advanced technology, successfully becoming an e-commerce giant with pizza sales at its core.
Following the stock market crash after the 2008 financial crisis, Domino’s Pizza decided to embark on a path of reform, fully implementing innovative strategies. In terms of product reform, they introduced a new menu, and regarding service models, they deepened the use of digital technology with the goal of increasing business flexibility and enhancing customer experience. The launch of Domino’s Tracker, a delivery tracking technology, has significantly improved customer service experience by allowing customers to monitor the status of their orders in real-time online.
Today, Domino’s employs AnyWare technology that allows customers to place orders through a variety of devices in multiple ways, enhancing the convenience of the user interface. The company continuously optimizes its products and services by utilizing artificial intelligence and machine learning, and these technologies also foster the parallel development of Domino’s physical stores and online business. In the field of logistics and delivery, Domino’s has not stopped innovating, continuously exploring cutting-edge technologies such as autonomous vehicle and drone delivery, leading the innovation breakthrough in digital delivery.
As technological innovation continues to advance, the competition between traditional businesses and internet firms is becoming increasingly fierce. In the global economic competition, how traditional businesses can adapt to the digital revolution, counter the disruptors, and regain vitality is a significant challenge that every business leader must face. Against this backdrop, the authors of the book “Goliath’s Revenge: The Six New Rules for Old-School Enterprises to Strike Back at Digital Disruptors” analyze the competition between traditional firms and digital upstarts for industry leadership by comparing their “battle” to the biblical showdown between Goliath and David.
To achieve the so-called “Goliath’s Revenge,” those companies with a long history and their teams must adhere to the six rules proposed by the authors in terms of vision, strategy, and execution. In the era of digitalization and intelligence, how these enterprises will position themselves in the mindset and market share will depend on how they respond to these new rules.
Now, for any individual or company seeking a competitive edge, deciding which strategy to adopt for digital transformation is an urgent matter. As you read the following six rules, carefully consider which ongoing changes comply with these rules and which should be stopped immediately or require a shift in focus.
Rule One: Deliver transformative customer value. As Jim Collins and Jerry Porras suggested in their 1994 work “Built to Last” with the concept of “BHAG” — Big Hairy Audacious Goals. For example, Microsoft’s early goal was to promote the widespread use of personal computers, achieving the grand vision of “a personal computer on every desk and in every home.”
This transformative customer outcome made Microsoft the Robin Hood of the tech industry—all its innovative efforts focused on making computer technology not a rare privilege for the few, but rather a resource easily accessible to everyone. Through this, Microsoft led the wave of technological democratization.
Google’s early BHAG was “to organize the world’s information,” a goal that pursued a transformative customer outcome, intending to leverage the power of the Internet and spread a wealth of information through its search engine, assisting humanity in effectively understanding and dealing with the deluge of data.
Tesla has an even more audacious BHAG than any other car company: “To accelerate the world’s transition to sustainable energy.” This goal has spurred Tesla to innovate across multiple fields, creating numerous disruptive products, including cost-effective battery storage systems, rooftop solar panels, electric vehicles, and supercharger stations, aiding the world in hastening towards a green energy future.
Though these goals set by Microsoft, Google, and Tesla seemed unattainable when they were first established, with persistent effort and concrete actions, these goals have become a reality or at least partially so, within 7 to 10 years.
Hitachi’s innovation is also notable. Hitachi, headquartered in Japan, focuses its transformative customer outcomes on “providing digital solutions for social innovation.” Committed to enhancing its capabilities in big data and artificial intelligence, Hitachi has built a collaborative global network of thinkers and doers, dedicated to finding innovative solutions to society’s complex problems. These social issues range across multiple aspects, including but not limited to accelerating the development of renewable energy, ensuring product quality and safety in the increasingly decentralized global supply chain, and taking responsibility for societal demands in urban development.
Whether your business targets the consumer market or B2B markets, when setting a corporate mission designed to create new revenue and profit, you should cast aside conventional, top-down strategic thinking and adopt a customer-centric mindset. You need to define a BHAG of no more than 10 words, which will be the starting point of your “David-versus-Goliath” journey. This goal will guide your innovation investment direction for the next decade, so it’s wise to invest time and energy to ensure you have set the right goal. Importantly, this goal should not be “slightly better than last year” or “the latest improved version,” but rather a transformative customer outcome that can redefine the rules of the game in your industry—just as those digital innovators have done.
Pursuing disruptive and incremental innovation is key to a company’s continuous advancement. No company desiring to enact a “David’s revenge” can completely rid itself of limitations. It would be much easier to achieve this goal if one could focus solely on the future or solely on the present. But that is not the case in reality. For large companies, shareholders want to see exemplary short-term performance of the core business, as well as the expectation of long-term and profitable growth outside the core markets. For small companies, shareholders (probably yourself) also hope for both immediate effectiveness and long-term development. To meet both needs, it’s necessary to find a balance between broad disruptive innovation and subtle incremental innovation, and to identify a point of coordination between the two. Disruptive innovation means changing the rules of the game for the whole industry, whereas incremental innovation ensures you are in a more advantageous position in the game.
In the second development phase of The Weather Channel, the focus shifted to precise market strategies for customer segmentation in the digital domain. Entering the third development phase, The Weather Channel opened its data-rich platform to an environment composed of a broad ecosystem of members interested in weather-related algorithms and applications. Excitingly, many innovators are extremely enthusiastic about entering the weather field, believing it to be not only a cutting-edge investment direction but also a great motivation capable of impacting the lives of hundreds of millions of people worldwide.
The Weather Channel has demonstrated the comprehensive returns that can be brought by a data-centric approach. This business area has now become a vibrant rising star within the IBM Watson Group, unparalleled in weather data analytics. It can provide accurate weather forecasts for over 150,000 flights, plan energy demand forecasts for public service industries, offer critical insights for global insurance companies, and assist billions of people worldwide in adjusting their daily lives according to the weather. Other companies, such as Walmart, are following suit, creating data cafés that make vast 40-terabyte retail datasets available to business innovators.
By combining over 200 types of internal and external data streams, the Data Café has been able to significantly reduce the solution production cycle from the original 3 weeks to just 20 minutes. A series of innovations incubated in the Data Café, such as the Social Genome Project (predicting sales using social media data), the Shopping Cat Project (analyzing the influence of friends on shopping habits), and the Polaris Project (analyzing website search keywords) have been successively launched.
For traditional businesses, the “we know everything” attitude is often a barrier to success, stemming from self-assurance and the flattery of others around them. To shift towards an open innovation strategy, the first step is to engage in honest discussions to identify prevalent biases within the company:
- The gravity of the existing business model: Immediate rejection of external innovations that may challenge or erode the current business model.
- Research and development hubris: Internal innovators staunchly regard themselves as superior and expect praise, overlooking that external innovations might never “meet our standards”.
- Risk aversion: Skeptical about the potential unacceptable financial, security, regulatory, compliance, or brand risks that external innovations might introduce.
- Misaligned incentives: Evaluators of innovation chase short-term gains, ignoring potential long-term rewards.
- Talent shortage: A lack of talent capable of identifying skills, connecting different innovation points, and leading solutions.
- Limited imagination: External innovations are often considered far-fetched, especially when they originate outside the industry, pushing beyond the comfort zone of the business.
- Disharmony of pace: The business operates at a pace too slow to integrate with the fast rhythms of prospective collaborating companies.
- Process standards: The company’s fixed procedures for handling issues such as intellectual property and data rights do not match those of startups.
So, have you ever introspected if your team, department, or company is affected by the typical barriers to innovation? If you’ve identified just one or two such factors, it means you’re in an advantageous position to move forward on your journey of expanding the innovation ecosystem, effectively overcoming these obstacles. However, if there are three or more such factors at play in your organization, before pursuing open innovation, you need to address these issues first.
Open innovation isn’t just about competing for market share, but also ensuring we have the capacity to share in the fruits of victory. Undoubtedly, you desire to bring as much innovation as possible to your team, group, department, or company in the shortest time. At the same time, you need to maintain your position by achieving operational and financial goals in the short term. Indeed, it’s possible to achieve both objectives by allocating some innovation activities to partners who will assist you by using ‘disruptive’ and ‘incremental’ innovation processes to increase returns while reducing risks. This is because external innovators bring a sense of urgency, a capacity to take on risk, and the courage to challenge conventions to some degree, brightening the dawn of your innovation opportunities.
But many traditional businesses encounter difficulties in expanding their innovation ecosystems, failing to achieve significant results. Their focus can easily shift to the next major innovation project. Especially when it comes to collaborating with startups, established companies often fail to overcome obstacles such as misaligned objectives, resource mismatches, lack of long-term support, and avoidance of corporate risks. Cooperation between companies is like an ensemble aiming to create a harmonious melody, which ends up sounding like a performance of AC/DC and the New York Philharmonic on the same stage.
If you wish to achieve results through open innovation, you may need to follow eight best practices, including: showing commitment, setting clear goals, investing necessary resources, empowering investment committees, adopting lean processes, minimizing legal barriers, creating innovation sandboxes, and establishing an exploratory corporate culture.
Rule Five: Talent trumps technology. When most people hear about the acceleration of digital disruption, the rise of artificial intelligence, or the advancements in robotics technology, the first thought is often: “I need to deploy this technology in my company as soon as possible.” While this is a natural thought, the transformation through technology is not just about technology issues that can be easily accessed through various channels, but more importantly, it’s about how to convert these digital innovation technologies into concrete business results. This requires a faultless approach to find, nurture, integrate, and retain talent resources. Having the right amount of talent, with the right skills at the right time, might be the key to ensuring that the company successfully steps through the door of digital transformation.
The giants of successful digital transformation have adopted six measures to ensure that talent truly becomes the core of the digital innovation strategy: valuing institutional knowledge, going beyond 3D digital skills, committing to early skill development, focusing on venture capital managing directors, seeking the optimal balance between artificial intelligence and human intelligence, and increasing digital agility.
Rule Six: Reinventing the corporate purpose. In today’s rapidly changing world, there are times when you may not be keen to spend time thinking about redefining the corporate purpose.
We are often attracted to those visions that are full of passion and grandeur, which are exciting moments. However, such “pie in the sky” is usually illusory, and cannot have any substantial impact on the company, but rather can cause disaffection. Truly reinventing the corporate purpose requires us to open our hearts, bravely explore development paths we have not ventured before, and means we need to step out of our current industry status, business models, and product supply chains to re-examine the issues at hand. Therefore, this can enable our companies and other peers to capture the market opportunities brought by the digital revolution that are close at hand.
This change also means that we have to learn how to attract a new generation of talent. During the study of “Revenge Against Goliath,” we interviewed many Millennials to deeply understand their decision-making process regarding choosing companies to work for. A key finding of the study was that this generation is seeking work experiences that serve a higher purpose, rather than simply settling for growth in market share or an increase in stock prices. If these young people make up the core of your company’s future workforce, then redefining the company’s purpose becomes particularly important.
To achieve this goal, six major actions are required of businesses: The first is to raise their vision, followed closely by an in-depth investigation into the “five whys” behind behaviors, to embrace the competition strategy, to strive to attract the next generation of employees, to realize a unity of purpose at all levels, and to lead by example. These steps will guide businesses towards a broader path of development and represent a challenge and renewal of past conventional ideas.
