Executive Summary
Domino’s pizza undertook a digital transformation of letting customers place their orders through their app. The impact on the individuals of this is that the customers have more than one way to interact with the company. The company has more ways to interact with the customers as well. The same digital transformation can be done by other businesses in the free market, like KFC and McDonalds. The impact on the society of this digital transformation is that overall we as humans are becoming too reliant on technology. Instead of interacting with a human, we seem ok to interact with the company through an app. In conclusion, this digital transformation by Dominos was successful as it was well received by its customers.
The Company
Domino’s Pizza Inc. was established in 1965 and is a well-known name of the fast food industry throughout the world. It has more than 5,700 branches in America and 58 other countries; thus, it qualifies as the largest pizza delivery company of the world. The basis of Domino’s commencement was to offer home delivery to pizza lovers. In other words, they wanted to offer convenience at a time home delivery of fast food items was not a common practice. The menu of Domino’s was limited for a long period. The menu of the pizza chain consisted of only two pizza sizes, eleven topping choices, and only one beverage. However, as competition increased and Domino’s faced direct competition from Pizza Hut and Little Caesar’s so Domino’s had to increase their menu. Consequently, non-pizza items, salads, and breadsticks were added to the menu card of Dominos. The company was able to survive and continue to prosper regardless of increased competition because they were able to maintain quality and deliver the promise which they had made to its customers (Reference for Business).
Over the years, Domino’s has evolved and incorporated different practices within its business units. In 2012, the company signed an Out of Home Calorie Labeling Pledge as part of the Government’s Responsibility Deal. Through the pledge the company must provide a calorie count on its website through which customers now order. Dominos has also signed the Hospitality and Food Service Agreement that is managed by Waste and Resources Action Program. Through this agreement made with the government funded organization the company is actively involved in waste reduction and recycling. In order to expand its customer base further, in 2012 Domino’s introduced the gluten free pizza in UK.
Digital Transformation
The changing ways in which digital technology is used may be described as the digital transformation. All aspects of human society have had an effect of changing technology and businesses are no exception. The third stage of incorporating technology within businesses is defined as digital transformation. In other words, the first stage is digital competence, followed by digital literacy, and lastly comes in digital transformation. Therefore, this suggests that with the advent of digital transformation there is greater innovation and creativity within organizations. Technology simply supports the business units, but transformation actually revises the concept and brings about more efficient ways of using technology. Transformation does not occur in isolation and there are forces that drive organizations towards the transformation. The three key forces behind transformation include; changing customer needs, improved technology, and changing nature of competition. These three forces may be considered as the ecosystem of transformation; thus, digital transformation becomes a need for organizations (King, 2013).
Digitization is an old concept of the 21st century; however, the meaning of digitization is constantly changing and provides newer threats to management and CEO of companies. The method of working has also changed because of the advanced tools that are available to complete a particular task. The efficiency levels and productivity levels have increased, and if digitization is correctly installed it may also provide an increase in profits of a company (Bonnet).
Impact on Individuals
The main category that is impacted through this digital transformation are the customers. According to the Task – technology fit model, the use of apps to order Dominos should grow in the future, as there is a clear fit between the task and technology that leads to better performance (e.g. customers are able to track their pizza) and utilization. Furthermore, the diffusion of innovation model suggests that Dominos model still needs to reach the early majority, implying that there is still a lot of penetration left in the market.
The implication for individuals is that in the future there will be more ways to connect the customers with the company. For instance, one future transformation iteration could be that the individual can make the pizza himself. He will be able to directly see the ingredients that are being put in his pizza and would be able to influence its quantity. Another future iteration could be that the Dominos automatically knows the taste preference of the consumers when they order a pizza.
Domino’s pizza prides itself over having an efficient system for customer’s to place their orders. However, the company is also well-equipped and trained to deliver the customers on-time; therefore, it has been able to secure a positive position in the food industry over the years. Evan Russack of CP+B has provided Domino’s with the online ordering service (AdWeek, 2014). This online delivery is part of digital transformation at Domino’s. Online ordering is categorized under digital transformation because it included training of employees to use this new system effectively. It may have reduced costs for the company significantly over the years because the need for manual orders had reduced with the online ordering service availability. The need to train workers to use this system was critical otherwise the company’s image was at stake. If customers were unable to receive their correct orders on time then Domino’s would have had to face resentment of customers and probably a loss of loyal customers. As there are several other eateries offering pizza as their specialty across the world, Domino’s may very easily lose out on customers if they are dissatisfied with their food.
Splunk Inc. helped the company to revamp the way it interacts with customers in 2013. The introduction of new ways of customer interaction has helped Domino’s improve its way of customer relationship management (Splunk, 2013). Even though, CRM is common in today’s world, but the applicability of CRM is very critical. Domino’s with the professional help of Splunk Inc. have ensured that they are in touch with their customers, who comprise the core of the company’s existence.
Impact on Business
According to the theory, Domino operates in the free market, where everything is dictated by demand and supply. Other businesses, like in the fast food industry, that operate in the free market, can make the same digital transformation work. KFC, for instance, can also start taking orders from an app rather than the phone. One of the reasons the company may choose to undertake the digital transformation is to gain competitive advantage by offering faster delivery service by becoming a leaner organization. Another reason to undertake the digital transformation is to increase the customer touch points with the company.
Domino’s has not only changed the way it interacts with customers but the increase in menu is also a result of digital transformation. It is not necessary that digital transformation brings about positive consequences every time. If it is not managed well or introduced at the wrong time digital transformation may actually prove damaging to the company as a whole. Domino’s specialized in pizza and over the years the variety of pizzas was their competency. However, because Domino’s faced a challenge from local chains where they were located as well as other fast food restaurants they wanted to introduce non-pizza items as well. The non-pizza items included baked sandwiches that were introduced in 2008 (Oches, 2010). However, to prepare these sandwiches different types of machines were required along with a different skill set of the employees. Therefore, investment was made in the new machinery and the training of employees along with the recruitment of chefs. As customer’s preferred Domino’s for the pizza’s it made; therefore, the baked sandwiches did not prove successful in UK. The investments made proved as damaging for the firm; thus, providing a prime example when digital transformation can go wrong.
The traditional way of ordering became increasingly unpopular in many countries and customers lost the personal touch of interacting with the operator over the phone. Therefore, any queries which had to be made became difficult through the online ordering service. Those operators responsible for answering telephone calls became inefficient in areas where Domino’s introduced the online system. Therefore, company image started to deteriorate and many customers shifted to other pizza chains. Customers have become very conscientious and while ordering food they want an experience rather than just good quality food. Domino’s was able to maintain its quality, but because the service system became inefficient in certain areas it lost its charm over the years. However, it can be argues in favor of Domino’s that they implemented the theory of absorptive capacity by introducing a new system and a varied menu. On the other hand, according to the theory the company was able to stay competitive with the external environment as they were able to recognize challenges and companies most often learn from their mistakes (Beer).
Impact on Society
The ethical implication for the rest of the society is that how technology is taking over the customer experience. Instead of interacting with a person, customers are now ok to interact with artificial user experiences. According to the social construction of technology, this digital transformation will be impactful as it is directly incorporated into the lives of the consumers.
Digital transformation has an impact upon society as a whole. As Domino’s digitized its business practices and the like they created unemployment for people. Because the machines are considered as better able to do the tasks at a lower long-term cost; therefore, certain employees were not needed and had to be asked to leave. On the contrary, digital transformation created jobs in the technology sector. The increase in students studying technology and similar subjects through school and university means that these students would find jobs in businesses that have been digitally transformed. Moreover, digital transformation provides a direct threat to the social skills of people. Employees may not interact as much; thus, the social esteem needs as identified in Maslow’s hierarchy of needs may remain unfulfilled. Making pizza over and over again may become monotonous; therefore, employers need to devise ways to keep the workforce motivated (Shelton, 2013).
On the other hand, social media has provided an ideal platform for Domino’s to interact with customers along with providing a common ground for customers to interact with each other. This serves as a basis for the company to get feedback from happy and unhappy customers. Through the social media the company may get free publicity if customers post a positive review; however, since the company is unable to control this activity there may be sentiments in the market that may not coincide with the company’s aim. This interaction between customers and Domino’s is helpful and had only been possible because of digital transformation (SiliconRepublic).
Evaluation
Domino’s pizza has been successful overall with its digital transformation strategy. The company has been able to sustain itself through the change and during the process they have gained several milestones. Customers may have been disappointed at times but at the time of change things do become chaotic. Employees adapted well to the concept of digital transformation; therefore, Domino’s was able to bring about the relevant change in its business practice. Furthermore, digital transformation has become the need of today’s business environment and if it is implemented at the correct time it would bring about an exponential benefit to the company. In this case, Domino’s was able to overcome the difficulties through either training or understanding its core competency.
Conclusion
Domino’s is a well established name in the fast food industry; therefore, a company may not find it very difficult to implement change if it is operating on such a large scale. The best strategy of Domino’s was that they made an attempt to understand their customers and their customer relationship management is a proof of this commitment towards their customers. The step of Domino’s diversifying towards other non-pizza items proved to be a negative decision because customers only wanted pizza from Domino’s. Consequently, the company did not receive sufficient demand from its customers of the new products it launched. Domino’s serves as a relevant example to study digital transformation because they experienced good and bad times both, but were able to recognize what they were capable of doing.
References
Beer, J. (n.d.). How Domino's Became A Tech Company. Co.Create. Retrieved May 31, 2014, from http://www.fastcocreate.com/3030869/behind-the-brand/how-dominos-became-a-tech-company#
Crispin Porter + Bogusky Expands Its Digital Leadership. (2014, April 11). AdWeek. Retrieved May 31, 2014, from http://www.adweek.com/news/advertising-branding/crispin-porter-bogusky-expands-its-digital-leadership-156968
Digital Transformation | Article. (n.d.). Capgemini Capgemini Consulting Worldwide. Retrieved May 31, 2014, from http://www.capgemini-consulting.com/digital-transformation
Digital Transformation: Engage Customers Through Social Media. (n.d.). Silicon Republic. Retrieved May 31, 2014, from http://www.siliconrepublic.com/reports/partner/92-/report/240-digital-transformation-eng/
Domino's Pizza Transforms E-Commerce With Splunk. (2013, October 22). Domino's Pizza Transforms E-Commerce With Splunk. Retrieved May 31, 2014, from http://www.splunk.com/view/dominos-pizza-transforms-e-commerce-with-splunk/SP-CAAAH92
King, H. (2013, November 21). What is digital transformation?. theguardian.com. Retrieved May 31, 2014, from http://www.theguardian.com/media-network/media-network-blog/2013/nov/21/digital-transformation
Oches, S. (n.d.). The Many Acts of Domino's Pizza. QSR. Retrieved May 30, 2014, from http://www.qsrmagazine.com/menu-innovations/many-acts-domino-s-pizza
Reference for Business. (n.d.). Domino's Pizza, Inc.. Retrieved May 31, 2014, from http://www.referenceforbusiness.com/history2/60/Domino-s-Pizza-Inc.html
Shelton, T. (2013, December 9). Enterprise Transformation and the Role of Social. RSS. Retrieved May 31, 2014, from http://socialmediatoday.com/tedshelton/1978986/enterprise-transformation
