Friday, March 30, 2007

A pizza story with a lesson in business agility

Johanna Rothman recently blogged about a restaurant experience - reminding me of a pizza story that teaches a lesson in small business agility.

In the early '90s I was working at a consulting company in North Kingstown, RI. We were small enough that the whole company took a working lunch once a week at a local pizza place to catch up on what was going on. The pizza was good, but ordinary. Pepperoni, mushrooms, and green peppers were the usual toppings. Black olives were about as exotic as we got. One time I was selected for jury duty and had to spend a few days at the court house in Providence. For lunch, I walked to Wickenden Street on the East Side which has an eclectic reputation, and this is was how I learned about some amazing Pizza toppings. Sliced fresh tomatoes instead of puree, pesto and feta cheese blended with mozzarella or spinach with garlic and feta. When I got back to work, and our pizza lunch the next week, I said we should try something different. Our usual place served Greek salads and spinach pies, so they had all the ingredients. When we asked for pizzas with toppings that weren't on the menu, the proprietor protested, "That won't come out right - you won't like it and you’ll blame me!" "It's OK," I insisted, "try making one, and don't worry about how it comes out." I assured him, " You are a talented cook, you can do it. Remember, we are engineers, you know we'll eat anything.."

When the pies were served, the “specials” disappeared quickly, and the usual pizzas were only touched after the new choices were gone.

The next week all of our pizzas were “special.” Other customers saw the new toppings and started asking for them. The owner started experimenting and soon introduced other “gourmet” toppings like sun dried tomatoes and imported Greek sausage. Within a short time these new toppings appeared on the menu and became some of his most popular selections selling for a premium (read - higher profit margin) over the conventional pizzas and drawing in a different clientele (read - expanding to a new market segment).

The owner had the culinary skill to pull this off successfully, but it took some convincing to overcome his initial resistance. Trying something new was an opportunity to differentiate what was essentially a commodity product from the competition. The agile owner-operated business quickly took advantage of this opportunity while the nearby national pizza franchises, being constrained by their parent companies, took much longer to adopt gourmet toppings.


1 comment:

Pamela Slim said...

I love the analogy Chuck!

But now I am mad at you because I have a craving for a pizza like you described, and all we have in the nearest 50-mile radius is Dominos and Pizza Hut, who always treat me like a crazy person when I ask if they have Feta Cheese and Spinach pizzas.

Never get a pregnant woman on a craving she can't fulfill! :)