Going for the Gold in Dough

By Tom Peters

The most recent Olympic event was not in Los Angeles; it was in Dearborn, Mich., on May 13, 1986. As usual, the games did not begin until the torch was ignited. But the flame bearers were no ordinary athletes: parent company President Tom Monaghan, a rags-to-riches entrepreneur, and Anthony Scales, a double amputee who is “fast, does his job as a tray scraper and dough maker extremely well,” according to his boss. Another hint that this is no ordinary Olympics is the torch, which rested in a bowl shaped like a pizza.

So began the second annual Distribution Olympics held by Domino’s Pizza Distribution Company.

Parent company Domino’s Pizza, Inc., of Ann Arbor, Mich., is a home-delivery pizza operation that has staked its reputation on a 30-minute delivery promise. It just streaked by the 3,000-store mark in January.

Distribution, as its subsidiary is commonly called, is now a $315 million independent business unit that supplies things like dough, toppings, mechanical equipment, and promotional items for the pizza franchisees. Compound annual growth over the last eight years has been 75 percent. Employment has soared to well over 1,700 people at 27 commissaries across the U.S., Canada, and West Germany. How does Domino’s manage such extraordinary growth, especially with its unusually young work force, with an average
age of 28? The Olympics, brainchild of Distribution President Don Vlcek, is part of the answer.

First, some background. Distribution must deal with several forces in apparent conflict. It has no guaranteed sales because by law, it cannot require franchisees to buy from its commissaries. Yet Distribution’s “market share” is 95 percent, up from about 75 percent a few years ago. Distribution’s worst fear—franchisee store closings—are required if and when a store runs out of any pizza ingredient. So speedy delivery is at a premium. However, quality is equally important, especially with new competitors on the rise—headed by a move to home delivery by PepsiCo’s giant and well-managed Pizza Hut.

Distribution finds that the Olympics are helping it stay on its toes to keep pace with its almost doubling in size and its fast-moving competitors. How? For one thing, the Olympics provide a showcase for the skills that underpin Distribution’s success. Management obsessively measures and regularly rewards good job performance and customer satisfaction—customers in this case are not hungry pizza eaters, but Domino’s franchisees. But the games may be even more memorable than Distribution’s monthly bonus compensation. Moreover, it helps maintain focus and small business-like cohesiveness in the face of incredible growing pains.

Competition for the May Olympics started last September. The first round took place in each of the commissaries. About 650 local winners proceeded to the three regional rounds at the beginning of this year, which spawned 78 regional winners.

Finally, the regional winners and their spouses moved on to Dearborn for the “national games,” which covers 14 areas of competition. The “veggie slicing” contest emphasizes quantity and quality of vegetables, individual appearance, and sanitation. “Traffic management” measures skills at routing and coordinating team members and their delivery vehicles. Other categories include “dough making and catching,” “store delivery,” “driving,” “loading” and “maintenance.”

Less predictable contests involve even the accountants, testing their speed and accuracy in bookkeeping and reporting as well as their interpersonal skills. For instance, in one contest, the accountant must handle a simulated phone call from a franchisee who is very late in paying his bill. Phone skills are also tested in contests among customer service reps and receptionists. Other contests rate team leadership.

The stakes in Dearborn were high. Sixteen winners in 14 main categories chose to take home top prizes of either $4,000 each or a lavish vacation for two.

One particularly nice touch is the involvement of Distribution’s franchisee customers, who comprise most of the judge panels. Most significant, the lead-up to the event has become a year-long process, not just a one-shot-a-year deal that is quickly forgotten. The first year’s pizza athletes, especially the runners up, went home to their commissaries determined to “go for the gold” the next year, by working all year to become faster and better veggie slicers, drivers, or whatever—in the hopes of making the trip to Dearborn.

The Olympics add up to a serious commitment by management, as evidenced by the $800,000 Distribution spends on the regional and final games—and that excludes unrecorded costs for local competitions. But the investment has an unmeasurable return—honed skills plus a powerful sense of camaraderie and overall excitement that propels inexperienced people during the year through a system brimming with great stress.

All businesspeople can learn from the Distribution Olympics, especially those looking for ways to deal with fast growth that normally leads to de-personalization and a loss of focus. They represent an act of bold imagination, which uses fun and excitement to deal with very practical strategic business issues.