Think Outside the Bun

I know it probably sounds a little silly at first, but I think that one of the most innovative companies in the world is Taco Bell. And before you get all upset - yes I know that Taco Bell is a privately held subsidiary of Yum! Brands. But that doesn’t change the fact that the company notorious for hard-to-digest food has some critical innovation practices nailed better than almost anybody else.

So first, let’s define what innovation really means for a corporation. I most frequently hear the word used as a convenient buzzword for corporate leaders to slap onto a slide deck, but I think it actually has a more rigid, legitimate definition. Innovation is about the process of changing - not just changing, but the actual process of making change happen. Innovation is not taking a company down a different path and completely reinventing the wheel. It’s about adjusting a company’s strategy to meet customer needs. But not just existing customer needs, but also predicting customer needs that are going to pop up in the near future. Innovation, at the end of the day, is all about fulfilling a customer’s needs before they even know they need something new.

So how does Taco Bell fit this description? First, they have impressive track record developing product innovations and taking them to market successfully. There are unique products that probably come to mind when thinking of Taco Bell, such as the Doritos Locos Tacos, The AM Crunchwrap Supreme, Nacho Fries, or a million other items that you have seen on a commercial during an NFL game. But how does TBell seem to always have a new product rollout right around every corner? The Company is always testing out new products and they make a habit of constantly trying to improve their menu. They have an innovation center at their corporate headquarters in California set up like a traditional Taco Bell kitchen that constantly serves up new dishes to test subjects and employees. The test kitchen is no-frills because the team creating new products wants to make sure that what they are creating is actually repeatable at all of their restaurants. That assists them with coming up with creative ideas and testing constantly. TBell is able to constantly iterate on their product because they are constantly getting feedback from all sorts of customers. Taco Bell’s tight feedback loop is one of the reasons for their success - they are able to really understand what a consumer wants through iterative processes and constant reassessment. They are constantly finding and understanding new product-market fit.

Second, the Company has an inherent innovation culture, that they work towards every day. You probably remember their old catch phrase, “think outside the bun”, but it goes so much deeper than that. A fast food / quick service restaurant selling tacos, when all of their competitors are selling sandwiches, hamburgers, chicken nuggets, french fries, and the like, is forced to be a little creative. They are already going to have a unique product set and marketing vision considering who they are competing with, so they might as well own it, instead of hide from it. They are not afraid to try out new things and they have invested heavily in their innovation practices. What’s so critical to their innovation is the fact that every member of the Taco Bell team is on board. Marketing communicates with R&D, operations, and the executive team to make sure that everyone is moving in the same direction, even if it isn’t necessarily on the exact same path. Having more than just an insular innovation practice allows a company like Taco Bell to move faster and make bolder moves.

One of the most impressive successes T-Bell has had in the past couple of years regarding product rollouts was their Crunchwrap Supreme. They claim that it came from a simple request from a customer asking if they could make their tacos more portable. In retrospect, this might seem so obvious, but consider what that request might have sounded like at the time. Tacos were already made to be portable, after all (they are basically sandwiches, but that’s another debate). So how to make them more portable? That was a question that the Taco Bell team set out to solve, and they came up with the CW-Supreme, a massive success that still exists, in many variations on the Company’s menu today. The customer didn’t just want a portable taco, they wanted something on the menu that had the taste-profile of a taco that they could eat on a road-trip. That was not obvious from the initial question, but Taco Bell is great at deciphering feedback. That’s one of the most important things a Company can do - actually understand the feedback that they are getting and turn it into a real product.

One of Taco Bell’s strengths for years has been their ability to get their message across. As you are reading this right now, I bet you can probably come up with a couple of Taco Bell catchphrases off the top of your head. That’s definitely no accident. Taco Bell, like most successful consumer product businesses in the QSR game, really knows how to market. They stay on message and keep their branding relevant. It’s very rare that a customer doesn’t understand their intent. This is pretty obvious from the outside looking in, but so many companies do a terrible job in this department.

When Taco Bell launched their breakfast menu, they didn’t come out of the gates super hot. In fact, they had six separate large breakfast rollouts that failed pretty quickly. It wasn’t until their seventh try that they achieved fairly massive success. To understand that failure will likely happen is critical when trying to innovate. As long as a company has a plan in place to accept failure, digest failure, and build off of failure, they should be able to move forward boldly. Failure is one of the most important feedback mechanisms in industry and a Company cannot be afraid to fail at times.

To summarize, here are the main lessons we can learn from Taco Bell:

  1. Always be iterating your product and testing those new iterations. And try to make sure that your iteration / testing process is in an environment that is as close to the real world as possible.

  2. Go out of your way to foster an innovation culture that permeates throughout the entire organization. Just having an innovation unit is not enough.

  3. Listen to your customers, and be able to decipher even their most vague requests.

  4. Get your message across and maintain continuity.

  5. Accept failure and move on.

Peter G Schmidt