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"I believe that great leadership is about making the right decision for the business or the budding business or the company that you’re in – the right decision, not the popular one."
Did you manage to catch Tom Potter, Founder of Eagle Boys Pizza, at DEPOTnext on 9 February at Brisbane Powerhouse? Check out the video below to hear Tom's story, his take on leadership and what great leadership can do for a great culture for your business. Take your business to the next level!
"I’ll start off with a story about leadership, and I believe that great leadership is about making the right decision for the business or the budding business or the company that you’re in – the right decision, not the popular one.
In 1989, I just opened my second shop in Wagga, in Country New South Wales. And it had been opened about a year and it was trading well. We started out as a regionally based home delivery pizza business. I sat down and I thought how can I build this company and how can I grow it? We had to entirely change what we are, we have to go out of being in the pizza business, we need to get into the people business – we need to franchise. And the first guy to buy the franchise or come in to buy the franchise, was a fellow who had been working in retails for some years and he started working beside me. His job over the next three weeks was to learn how to run the franchise. My job was to teach him. And after about a week, I found that he started coming up and asking constantly dumb, stupid questions. And it was like having 15 yr. old apprentice that just couldn’t get the grasp of making common sense decisions. So I pulled him aside and told him it’s simple. A customer walks in the door, you look him in the eye, you acknowledge that they’re there, you walk over, you ask them what they want, you tell them how much more you can give them, you smack them on the ass and send them on their way. Just take ownership. So he was nodding his head. Every time you get to a crossroad in the next few days and you’re not quite sure about what to do, just think, I’m not here. Unless you’re going to poison the whole town tonight, I want you to take ownership. It’s okay to make a mistake. I don’t want you to poison the town. You take ownership.
Two or three days later, he came in and then he puffed his chest out and started getting upset about something and I said, “What is it?” and he said “Look I know it’s all about well taking ownership but I was reading the operations manual last night and I noticed there’s nothing in there about bomb scares.” And I looked around the shop and said, “Well there’s 85 sq. metres and there’s a door in the front and a door in the back, you might want to take a wild guess about what we’re going to do if we got a bomb scare.” And from there I said to him, “Don’t ask me one more stupid question. Take ownership no matter what.”
So the night before I was about to hand the business to him and it’s my first ever franchise. I’m very excited. And it’s the night before he buys his first ever business and its freezing cold. It’s foggy and you couldn’t see anything in the car park as it was midnight. As I walked out the back of the shop I had two bags of rubbish. I was walking towards the dumpster outside, a guy stepped out with a 12-gauge shotgun and poked it at my chest and he said, “Step back in the store.” He had a spider-man mask and a large trench coat. And he tied the three of us up on the floor and he went over to the safe and he tried to open the safe. He bashing and bashing and bashing the safe with the shotgun. He couldn’t get it open. He walks over to the three of us and holds the gun over us and he says he can’t open it. He says, “I need the combination now! Which one of you guys is the store owner?” I had my arms tied up right up behind my back and looked across to this guy lying beside me, he was about to buy our first ever franchise. And I gave him a look and thought that it was really a good time for him to take ownership right there. Anyway, he didn’t. I got up, I opened the safe, and off we went.
Some years later, when the business started gaining some momentum and we have 50-60 stores, we got smacked in a really bad price war and I came to the second crossroad in the business. The first one was we were going to be the biggest in Australia and off we went and we started achieving that. I remember getting to the stage where the product that we sold which say was about $12 a unit had been dropped down to $6 a unit inside seven months. So imagine whatever you sell, whether it’s a service or a product and half the price of it over the next seven months but your challenge is to go and remake your business model actually work. And I was the sole owner of the company. I didn’t have any directors or mentors around me. We had a business model that actually worked very well. Within seven months, it didn’t work. Pizza Hut had come in and slashed the prices. Things were going nasty. I did not know what to do. But everybody’s looking to me for leadership.
I called in a friend of mine who eventually became a director in the company. He was a marketing guy and I told him I did not know what to do. He said let’s get out in the stores and have a bit of a look. And we walked out to our first store on a Friday night. People were lined up. The shop was full of people. It was busy. It was clattering. People were jumping around. The staff were flat out. The ovens were full. The first thing I thought was maybe, we did not have a problem at all. The first thing my friend said to me was “You’ve got a huge problem.” And I said “What is it?” He said, “You’ve decided in your business, to be all things to all people. Have a look around your shop. It’s full of unprofitable customers. You’ve bastardized your marketing.” And I said, “I don’t understand.” And he said, “Look, your target market is young families. Over here, is third generation unemployed. These guys over here are just drug dealers. And these people right in the middle, your target market, they look terrified surrounded by these people who are not normally in your business.” And he says to me, “You got a shop full of unprofitable customers.” I started arguing with him because there’s no such thing as an unprofitable customer. But what we are doing is we are matching all deals at all levels at all prices. And in the middle of his argument on what is a non-profitable customer, a guy walks in the front counter and he’s standing there for a couple of moments and I thought I better jump in and serve him. As I walked toward him, I looked at him like any good retailer does and I sum him up because I want to have a chat with him, and he smiles at me as I look at him and three teeth are missing over at the front. He’s got his hat on sideways, shirts all buckled up, tattoos all over one side of his neck and his pants are hanging halfway down his backside and he’s got one thong on. I was walking towards this guy, I started getting into that horrible moment where I looked down at his thong and I said, “Mate, did you lose a thong?” and he was like “No, I found one.” And Billy, my friend, says to me, “This is serious.”
We got to get back to our business, focus on our target market, what product we sell and get very clear on what we are doing going forward. We need to know why we exist and what is our major point of difference. I said I know the way forward and they all got excited. The first thing we got to do is lose customers. Let’s make that clear. Can you imagine how motivating that is? But it worked. We got the customers that looked after us back and we drove them back in the door. You can’t be all things to all people. If you want to be a leader, you’ve got to make the tough decisions.
Eagle Boys – 180 stores around Australia, 60 stores in New Zealand, a couple hundred million in sales. Business is doing pretty well. We’ve got a hundred staff working in our office in West End and probably five and half thousand people across the two countries including Fiji. And my chairman pulls me aside and asks me if I’m feeling pretty good about myself and I told him I was. He then says he’s worried about the company. I asked him what he meant. He then says he’s worried about the future and I asked him what he’s worried about. He took me into the office and pulled out a poster. He put it up and it was a whole bunch of horses standing in a paddock and in front of these horses was a zebra and the zebra was half the size of the horses. It had this big smile on its face and John, who sort of looks like a little zebra, he says, “Do you know what that is? That’s a zebra amongst horses.” And he got all excited and I say “Yeah I can see that.” And he says, “Can you?” and I go, “What do you mean?” and he says, “Can you see what a zebra amongst horses looks like?
“You were the first one in the market in Australia and everybody caught up to you and you had to reposition your brand. What are you going to do to evolve to become a zebra amongst horses?” I argued with him for a year and finally, we went for a drive one night. We looked around for all the lead competitors and agreed that we’re not different enough. We spent the next four years doing 5 mllion dollars in research and we came up with one idea to entirely standout like a zebra amongst horses and we went to the market and asked them a simple question, “What can we do that will make us better than everybody else?” and they said, “Speed. We don’t want to come in your shop to wait anymore.”
After all these years, and all this time and research, we invented, rolled out and expressly put the 2-minute pizza in the market place and started building drive thrus. So it was 2 minutes or it’s free! Can you imagine how the franchisees felt about that?
Sometimes, you got to ‘zig’ when everybody else is ‘zagging’ – that was the presentation we took to the franchisees and said, “Forget about everything that’s been done in the past.” – that is the way we’ve got to go.
Now, it was not the most popular decision amongst the group. But 50% of them cheered, 25% said they were going with it and the others tried to work against it. But the reality is you had to make the best decision for the business going forward.
As the business went forward, and I got to say, after ten years for me, I needed great leadership. I got the board of directors boarding the best people. You got to pick the right person for the right job.
So many times, I express this point by saying, “If you picking a football team, you got all the different position placed with the different skills.” It’s the same with your board and the same with your management. If you haven’t got the right people in place to take that plan forward, you’re buggered.
Strategy for us was clear. If we didn’t have a clear, precise point of difference, no matter what strategy you’ve got, if the market doesn’t like it, and no matter how many good people you’ve got, it’s not going to work.
As far as I’m concerned, if you have a budget, sit down and think about how you can make that work because I can tell you there is not one company in this world that will say, “Yes we got enough money to spend on marketing.” There isn’t. You have to be smart about how you’re going to spend that money about marketing. And I think t our peak, before I started the company in 2007, we were spending about $12M on marketing – sound like a lot but our competitors are spending twice as much. The point was we were getting much better return.
Surround yourself with the right people – I love the concept of mentoring, incubators and so forth. I’ve involved myself and done a couple and the concept of bringing in great power and skilled people who can help you stir you in that direction or save you from twenty years of pain. Pick the right team, make sure the strategy is there.
If you’re really relevant today and you’re really successful – that’s even more scary than possibly growing and catching up on a competitor and taking them by the knees.
The biggest thing that I got asked to talk about now is change and how companies get their mind around the fact that they’ve got to change and evolve.
I went and spoke in a conference ten years ago. After I’ve spoken and walked off the stage I wondered how these guys are going to do in the future. I wonder if they’re prepared for change. I wonder if they’re going to be affected. They were Australia’s maybe in the top 5 largest franchise businesses and now a retail company and now they’re gone."