Case Study Details
In the 1980s and 1990s, Bill Freeman had enjoyed a successful career launching start-ups such as United Telecom in Silicon Valley. In 2004 Freeman made a small investment in a pizza restaurant owned by a childhood friend, Francisco "Paxti" Aspiroz, in Berkeley, California. At that time, pizza, long a proletarian staple, had begun to go up-market, emphasizing artisanal values and offering a broad range of novel ingredients beyond the traditional pepperoni-onions-and-mushrooms. Aspiroz's restaurant made deep-dish pizza using a state-of-the-art electric oven imported from Italy that cooked the pies at 800 degrees, hotter than the wood-or-coal-fired ovens at other newly up-scaled pizzerias.
The company took off quickly, thanks to the pies' crisp crust and the burgeoning fame of a regular patron, Mark Zuckerberg, who had launched a soon-to-be famous social media business next door. Like many young techies, the Facebook co-founder lived on pizza and had no time to spare - a perfect marketing recipe for Paxti's Pizza. (In the movie The Social Network, pizza boxes bearing the company's name are evident in the mise en scene.)
In 2013, looking to build a single pizzeria into a casual but upscale restaurant chain, Freeman, now Paxti's Pizza's CEO, retained Lapin International to help clarify its strategy, develop a cohesive workforce culture, and build its leadership capabilities.
"We started by identifying our purpose," Freeman said. "Most people would think it would be `making the best pizza possible,' which we sincerely believe we do. But Lapin International got us thinking more deeply about our authentic identity, the reason for our existence, and what truly differentiated our tangible and intangible contributions."
Paxti's Pizza defines its purpose as,
To invite guests who are starved for time and diverted by distraction into the exciting, entertaining and authentic world of Paxti's Pizza, where they can converse with people who matter to them, and are served caringly with hand-crafted pizza of uncompromising quality and flavor. Here they can experience a cherished moment that bridges generations.
Freeman said the purpose statement gave employees a single focus and put them on a shared adventure. "We thought we were putting our employees first and foremost, but we weren't really," he noted. "They needed to know the importance of what they were providing, which then energized them to fulfill it. This, in turn, made them feel they were part of something more meaningful than just collecting a paycheck."
In the past, Freeman acknowledges that employees inadvertently were treated "less than favorably" by management. "We used to scour Yelp reviews to see how our customers responded to the food and service. If we received a complaint at a particular location, we'd send notice to that store's manager to respond to the diner and apologize for our mistakes. The manager would then seek out the employee or the cooks who served that person and admonish them. This was highly de-motivational and made everyone feel insecure," Freeman said.
The solution was to send negative and positive reviews to each store's employees and not just the manager. "They all review the comments together, congratulating each other on the wins and figuring out the reasons for the losses," said Freeman. "Everyone now is rowing their oars in the same direction, and held accountable by their peers for achieving the shared purpose."
After working with Lapin International, Freeman became enthused over the possibility of finding other ways for employees to find personal meaning in their work. Several employees talked openly about the challenges confronting their local communities, which struck a chord with their peers living and working in those neighborhoods.
"We branded a charitable organization called `52 Weeks of Giving,' where all of us pitch in and run fundraisers benefitting local children's organizations, schools and hospitals," Freeman noted.
"We've also donated more than $450,000 over the past two-and-a-half years to local charities, and are committed to donating $300,000 next year," he said. "Employees are able to say that 10 percent of their particular restaurant's revenue goes to this organization or that one, and their employer is giving up one percent of its profit per year to charity."
Over time, the combination of a high-quality product, superior customer service, a generous and caring view of its communities, and the hospitality of a committed, high-energy staff motivated by a shared purpose coalesced into Paxti's Pizza's strategic distinction. The company now tallies 16 restaurants in California and opened its first restaurant outside the state in Seattle, Washington in autumn 2014. The engagement also has helped Paxti's Pizzas lower its annual turnover rate to just 10 percent. (In 2013, the turnover rate in the restaurants-and-hospitality segment was just over 62 percent; in casual dining establishments, the rate was around 40 percent.) And customer satisfaction has increased more than five percent, according to Freeman.