By Ben Thompson Senior Editor Business Management Magazine

Domino’s Pizza CEO Patrick Doyle believes every company has an “uncomfortable truth” lurking beneath its glossy corporate veneer that must be confronted. Doing so, he insists, can take your firm to the next level of success.

In a period of sustained economic downturn, we all have to make some pretty tough calls. Tighter margins, greater competition and an evolving operating environment: each requires management to step up and make difficult decisions on a daily basis about how the company is going to move forward.

In a sense, however, such decisions are an executive’s bread and butter. These are business-as-usual problems; tactical issues that must be dealt with, for sure, but not ones that require the CEO to look him or herself in the eye and question the very fabric of the company’s business model. In short, they are not “uncomfortable truths.” Yet very often, it is only when these essential, but unpalatable, truths have been recognized and confronted that a company can realize its true potential.

Take for example U.S.-based pizza chain Domino’s. Despite the pizza giant’s dominance over the past half-a-century, recent years have seen the company struggle in one key area: customer perception. Indeed, flashback two years and Domino’s had a serious problem with its image. Criticisms were coming in thick and fast: “Domino’s tastes like cardboard,” wrote one disgruntled customer on Twitter; “Mass produced, boring and bland,” argued another. Worse still, in a 2009 survey of consumer taste preferences among national chains by Brand Keys, Domino's placed last.

Domino’s didn’t take the issue lying down; in fact, it took one of the bravest (or craziest, or dumbest, depending on whose opinion you read) decisions in the history of fast food retail: it agreed. For one thing, it was clear that it would not be enough to start serving a new product in the hope that customers would take notice and change their minds about the brand. Instead, the company announced the development of a totally new recipe that would reinvent the brand “from the dough up,” and began a self-flogging ad campaign in which consumers were filmed criticizing the pizza's quality, and chefs were shown developing the new product. “We went out and showed our employees and customers the harshest criticisms and immediately got everybody’s attention,” explains CEO Patrick Doyle.

“We knew there was no way we were going back to where we had come.” The $75 million campaign became known as The Pizza Turnaround, with Domino’s taking to YouTube, admitting mistakes, recognizing the need for change and kicking off one of the edgiest marketing moves in recent years.

Doyle believes that what really captured people’s attention with the campaign was the honesty of it: the fact that it addressed customer concerns in a frank and open way. “There are so many companies out there trying to spin things; they make this slight change to a product and announce to the world that it’s revolutionary. But consumers filter that out,” he says. “Consumers are smart, they know when companies are doing that to them. So instead we went out and showed them the criticism that we’d received from consumers, and immediately got everybody’s attention. People said, ‘My god, something is very different at this company; they’re coming out and they’re saying it and recognizing it.’ We got their attention; it was honest and transparent, and it gave us the opportunity to then show people what we’d done. Then, we were credible when we told them about it.”

It was a brave (many said suicidal) strategy: defying traditional marketing logic, Domino’s trashed its old pizzas, acknowledged customer complaints and openly described its former range of products as tasting like cardboard. “Plan B was probably that the next CEO would figure out how to fix it,” says Doyle with a wry smile. “But seriously, there was no Plan B. There couldn’t be. By going out with this strategy and admitting there was a problem with our old pizza, there was no way we could go back to the old formulation. So we were absolutely committed that we were going to go forward.” In fact, he feels that the lack of an escape route ultimately proved to be the key driver in the campaign’s huge success. “The wonderful thing about being that committed is that everybody figures out how to do it right first time,” he says.

It’s now been a year since Domino’s launched its new pizzas, and by and large – against all the odds and contrary to conventional marketing thinking – the move has been viewed as a huge success, resulting in higher sales, operating income and cash flows. And Doyle has no doubt that recent wins can be put down to sustained positive consumer response to Domino’s improved pizza and the effectiveness of its advertising campaign.

The lesson, he believes, is to face your fears. “I think most companies know what their big issue is; they know the hill that they’ve chosen not to take in the past, but it’s there – the management knows it, and the vast majority of the people in the company know it too,” he says. “We were just blessed with a team that finally decided, ‘You know what? It’s time to take that hill.’ We knew we needed to deal with perceptions around the taste and quality of the pizza. We knew it wasn’t going to be easy. But we also knew that if we got it right, the upside would be fantastic for the business. We did, and it was.”

Individuals, teams and organizations need much more of this sort of open, honest and direct communication. The fear of speaking candidly cripples many business relationships and too often, people are scared of pointing out basic truths – just witness the way some firms still shoot the messenger or punish whistleblowers. However, it is only by confronting our concerns, fears or unpalatable realities that we can truly grow into our potential. Indeed, those organizations that make it comfortable to voice uncomfortable truths will learn much faster than those who try to suppress them, and will gain a considerable competitive edge in the process.

About the author:

Ben Thompson has been writing about management issues for the past decade. In his current role as Senior Editor of Business Management magazine, he leads the editorial direction for one of America’s fastest growing business strategy publications. For more information, please visit: www.busmanagement.com