Innovation and Business Model: A Case Study of Dominos Australia

The article emphasizes the importance of adopting a disruptive business model for companies like Dominos Australia. It also analyzes the opportunities and threats posed by advances in smart-connected products to the existing business model of Dominos Australia. The article also applies the Business Model Framework by Osterwalder and Pigneur to analyze the business model of Dominos Australia.

Assignment 1: Innovation

1. Business Model and Disruption
Lindgardt et al., (2009) has opined that a business organization without a disruptive focus are
building their business model on a “me too” platform of mediocrity. A disruptive business
model tend to focus on semi-intermediating, reengineering, refining or optimizing its product
or service, role or function or practice, category, market, sector of industry. In this context,
Massa & Tucci, (2013) advocated that a most successful organization incorporate disruptive
thinking into all its business and management practices to achieve distinctive competitive
value proposition. Thus, it raises a question, why some well established and well managed
companies struggle with disruptive innovation? Answering the above question, Markides,
(2013) proposed that it is mainly because companies are involved in doing the same thing in
the same ways for the same reason for such a long time that they struggle with the concept of
change. So, it becomes important that the organizations should not adopt an attitude of
complacency since it kills companies. In this context, an example of Folgers can be stated
that failed in recognizing the retail consumer demand for coffee and thus failed in developing
a Starbucks type business model (Lambert & Davidson, 2013). The main reason for failure of
Folgers can be linked to the fact that Folgers focused more on making incremental gains
through process improvement and was satisfied with its business models and thus failed in
visualizing the innovator coming until it was too late. Their focus was shifted from managing
the opportunities to managing risk and this in turn resulted in brand decline.
Thus, it can be said that with continued rapid technological developments taking the concept
of globalization is making the businesses of all size face the emerging need for adopting a
disruptive business model. So, the executives and entrepreneurs should examine their current
business models from a disruptive perspective. For example, Dominos Pizza experienced an
all time low in its share price and was ranked last in 2009 survey of consumer tastes and
preferences (Mcorpcx, 2018). Just after a few years later, it recaptured its customers’ hearts
and its investors and at present is the second largest pizza chain in the world (Mcorpcx,
2018). This was possible because it embraced the disruptive technological innovations for
optimizing every aspect of its business, especially online ordering and delivery transactions
that can be referred to as its lifeblood.
1 | P a g e

2. Analyzing the Opportunities and Threats caused by Advances in Smart-
Connected-Products to the Existing Business Model for Dominos Australia
Smart-Connected-Products offer exponentially expanding opportunities for business
organizations like Dominos Pizza for new functionality, greater reliability, and higher
product utilization and develop capabilities that cut across and go beyond the traditional
product boundaries (Porter & Heppelmann, 2014). However, the changing nature of the
products disrupts the value chains thereby force business organizations to rethink and retool
everything that they do internally to adopt the change.
Smart-Connected-Products also later the industry structure together with the nature of
competition that exposes the business organizations like Dominos Pizza to new competitive
opportunities and threats (Porter & Heppelmann, 2015).
Smart-Connected-Products gives rise to a new set of strategic choices that are related to how
value is created and captured, how the prodigious amount of new and sensitive data that is
generated can be managed and utilized and how businesses can maintain their relationship
with traditional business partners since the channels are redefined (Heppelmann & Porter,
2015).
Thus, the opportunities and threats posed by Smart-Connected-Products for business
organizations like Dominos can be listed as follows:
Opportunities
 Gain competitive advantage through product differentiation.
 Enhance customer satisfaction.
 Achieve operational efficiency.
 By gaining knowledge of how customers actually use the products can enhance the
ability to segment customers.
 Set effective prices to better capture value
 Extend value added services
 Tailor product offerings to specific market segments.
Threats
 Complete business reengineering.
 Huge investments.
2 | P a g e

 Inability to maintain relationship with traditional business partners since the channels
are redefined.
 Demand for highly skilled and experienced tech professionals.
 Confusion related to what data to capture, secure and analyze for maximizing the
value of offerings.
3. Application of Business Model Framework by osterwalder and Pigneur
(2010)
According to Business Model Framework by osterwalder and Pigneur (2010), there are nine
elements of the business model canvas framework that belong to four pillars like product,
infrastructure management, customer interface and financial aspects (Luoma, 2014). This can
be illustrated with the help of the following figure:
Table 1: [Source: Al-Debei & Avison, 2010]
Pillar Business Model
Elements
Description
3 | P a g e

Product Value Proposition Domino's mainly offers pizza but also
offers pasta, salads and other dishes
together with die rage of deserts to
choose from (Dominos, 2018).
Customer Segments Domino’s emphasizes on offering
value to customers of all age groups
and especially to younger generations
in the age group of 20-40 years.
Customer
Integface
Channels Online ordering, ordering through
Twitter, Voice ordering, easy order
button, delivering products through
high-tech and efficient pizza oven
delivery car, robots to deliver pizza,
drone delivery, Xbox ordering,
partnership between Domino's and
Ford for in car fast food app for simple
hands free pizza ordering
Customer
relationships
real time customer reviews, partnering
with third party platforms to offer
rewards to customers, the iconic logo is
the main focus of new pizza delivery
boxes, Domino's also sponsors the X-
factor's app that offers users rewards at
the pizza chain (Lin et al., 2010)
Infrastructure
Management
Key Resources Digitalization of pizza ordering and
delivery transactions, tech savvy
employees, app and ways ways to order
pizza that include via text message,
voice recognition, emojis, and Sync
system of Ford, drone delivery and
robot deliveries (Buss, 2018).
Key Activities Listening carefully to the customers,
rewarding the customers, embracing
the power of social influence,
4 | P a g e

recognizing the value of transparency
in whatever they do through Pizza
turnaround ad campaign, Pizza tracker
app, improving the existing and
designing new experiences on the basis
of the customers' needs (Dominos,
2018).
Key partners Australia Schweppes, VISY,
KAGOME, MAURI anz, INGHAM,
LEPRINO FOODS, JBS, PRIMO,
TIBALDI, COMGROUP, local
communities through Giving for Good
program, partnership with Rural and
Regional Renewal and The Smith
Family, Monash University, Australian
Volunteer Coast Guard, Youth on the
Air, Australian Centre for Rural
Entrepreneurship and Drought Angels
(Dominos, 2018)
Financial
Aspects
revenue Streams making sales through 670 Domino's
Pizza restaurants in Australia,
franchising fees (Statista, 2018)
Cost Structure Food production costs, labour costs,
occupancy costs, salary to employees,
development of infrastructure, costs
involved in adopting new technologies,
costs involved in partnering with third
parties.
5 | P a g e

4. Business Model Perspectives
Business Model as Value Proposition
Figure 1 : [Source: Osterwalder et al., 2014]
Business Model as a set of resources and capabilities
Resources and capabilities are important for the business organizations to deliver the
Customer Value proposition. So, the resources include the equipments, financing, people,
skills, facilities that needed to manufacture products and the deliver the services. Thus, in this
context the resources on the part of Domino’s have been presented in the table below:
Resources Description
Financial The share price of Domino’s has soared from the bottom of the
barrel price $8 in the year 2009 to $160 in 2016 (Mcorpcx,
2018). The firm has a market capitalization of $10254.22
million (Mcorpcx, 2018).
Physical Domino’s has been successful in enhancing its presence in the
global market and it operates through franchise model. In
Australia, Domino’s has 670 restaurants and this proves to be
beneficial to reach the customers (Statista, 2018).
6 | P a g e

Technological The company has completely digitalized its business model by
employing digital technology to optimize every aspect of the
business especially the online ordering and delivery
transactions (Mcorpcx, 2018). It also has an app and other easy
ways to order pizza that include text messaging, voice
recognition, emojis and Sync system of a Ford. Domino’s also
turned to global franchises to assist with tech focused delivery
methods. Domino’s in New Zealand first tested the drone and
robot deliveries (Buss, 2018).
Organizational Domino’s is characterized with multilevel organizational
structure where the directors and the CEO are regulatory
authorities. It has adopted a people culture and also promotes
teamwork and effective communication for smooth operations
(Yukl, 2013).
Human resource Domino’s emphasizes on recruiting tech savvy employees to
support its disruptive business model (Buss, 2018).
Innovation The company has completely digitalized its business model by
employing digital technology to optimize every aspect of the
business especially the online ordering and delivery
transactions. It also has an app and other easy ways to order
pizza that include text messaging, voice recognition, emojis
and Sync system of a Ford (Buss, 2018). Domino’s also turned
to global franchises to assist with tech focused delivery
methods. Domino’s in New Zealand first tested the drone and
robot deliveries.
Reputation Domino’s possesses huge reputation in terms of enhanced
quality of products and services. It emphasizes on maintaining
uniform service and product quality across all its locations.
This has made it a favourite brand across the globe (Mcorpcx,
2018).
Organizational Capabilities
Domino’s possesses the ability to combine both its tangible and intangible resources to
conduct its business operations smoothly and has emerged as a disruptive tech savvy fast
pizza company leaving behind its competitors to occupy the second position in the market.
7 | P a g e

The business has efficiently utilized its capital and human resources through its effective
leadership skills to cater to understand its customers and cater to their specific needs.
5. Conclusion
Thus, it can be concluded that in the recent times, it is important to embrace change as per the
changing trends and market situations. So, it is suggested that Domino’s should keep
operating through its disruptive business model to remain competitive and should prevent
being self-contained since complacency can kill a business.
8 | P a g e

References
Lindgardt, Z., Reeves, M., Stalk Jr, G., & Deimler, M. (2009). Business model innovation:
When the game gets tough, change the game. Own the future: 50 ways to win from
The Boston Consulting Group, 291-298.
Massa, L., & Tucci, C. L. (2013). Business model innovation. The Oxford Handbook of
Innovation Management, Oxford University Press, Oxford, 420-441.
Markides, C. C. (2013). Business model innovation: What can the ambidexterity literature
teach us?. The Academy of Management Perspectives, 27(4), 313-323.
Lambert, S. C., & Davidson, R. A. (2013). Applications of the business model in studies of
enterprise success, innovation and classification: An analysis of empirical research
from 1996 to 2010. European Management Journal, 31(6), 668-681.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), 64-88.
Heppelmann, J., & Porter, M. (2015). How smart, connected products are transforming
companies,“. Harvard Business Review”, October.
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming
companies. Harvard Business Review, 93(10), 96-114.
Luoma, O. (2014). A Contextual Business Model Framework: Business Model Development
in a Product-Service Systems Context.
Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business
model concept. European Journal of Information Systems, 19(3), 359-376.
Lin, R. J., Chen, R. H., & Kuan-Shun Chiu, K. (2010). Customer relationship management
and innovation capability: an empirical study. Industrial Management & Data
Systems, 110(1), 111-133.
Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value proposition design:
How to create products and services customers want. John Wiley & Sons.
Yukl, G. A. (2013). Leadership in organizations. Pearson Education India.
9 | P a g e

Buss, D. (2018). Domino’s vs. Ford: Two Tales of Integrating Disruptive Tech. [online]
ChiefExecutive.net. Available at: https://chiefexecutive.net/dominos-vs-ford-two-
tales-integrating-disruptive-tech/ [Accessed 18 Apr. 2018].
Dominos. (2018). Business Partners - Domino's Pizza. [online] Available at:
https://www.dominos.com.au/inside-dominos/corporate/business-partners [Accessed
18 Apr. 2018].
Dominos. (2018). Community Initiatives - Domino's Pizza. [online] Available at:
https://www.dominos.com.au/inside-dominos/corporate/give-for-good [Accessed 18
Apr. 2018].
Mcorpcx. (2018). Lessons from the Upper Crust: How Domino’s Pizza Disrupted the
Delivery Game and Became a Leader in Customer Delight. [online] Available at:
https://www.mcorpcx.com/articles/lessons-upper-crust-dominos-pizza-disrupted-
delivery-game-became-leader-customer-delight [Accessed 18 Apr. 2018].
Statista. (2018). Domino's Pizza: number of stores Australia 2017 | Statistic. [online]
Available at: https://www.statista.com/statistics/277408/number-of-dominos-pizza-
stores-australia/ [Accessed 18 Apr. 2018].
10 | P a g e