“Any darn fool can make something complex; it takes a genius to make something simple.” ― Pete Seeger
Growth doesn’t always mean “adding more.” Sometimes simplifying the business and doing it really, really well is the way to go. CNN Business writer Paul R. La Monica gives a great example of how this can happen, and how one company turned it around - with better wine and fewer breadsticks..
Five years ago, assessments of Olive Garden – the primary contributor to the overall Darden Restaurant portfolio - were brutal. “Too many breadsticks. An abundance of items on the menu that weren't Italian dishes -- like tapas and hamburgers. Gloopy sauce. And perhaps the worst culinary sin of all -- failure to salt the boiling water for the pasta."
That’s when the investment group Starboard Value stepped in, took control, and implemented a “back-to-basics” strategy:
As La Monica reports: “The company reduced the menu size…which made it easier for the staff. That boosted productivity and profit margins…It pared back the breadsticks and the non-Italian menu items, fine-tuned existing recipes, added more expensive wine and alcoholic beverages and concentrated on service.”
Analysts covering the stock agreed that those were the right priorities and over the past 5 years Darden’s stock is up over 140%. As the article points out, Olive Garden went back to its roots. It’s not the cheapest option but it provides good value.
Complexity is a problem for companies of all sizes but it’s particularly true for growth-stage companies. With resources tight, the need to shift from the experimentation and pivots that are important as a start-up to streamlining operations and increasing productivity is at a premium. When growth has happened fast and unchecked, and systems (and people) are straining at the seams to keep up, growth momentum will likely derail and erode the top as well as bottom lines.
Sometimes the market changes and sometimes, as in the case of Olive Garden, it stays the same but the company becomes too cumbersome to meet its needs. This is the time to step back, reassess, and simplify.
If you are wondering if your organization might need “better wine and fewer breadsticks” and have questions, you can choose to ask us here or schedule a conversation.