1: “Excuse me, sir, would you like to try a cookie?”
The year was 1980. Future Panera Bread CEO Ron Shaich, then 26 years old, was standing on the sidewalk of a busy street in downtown Boston.
“I held out a tray of chocolate-chip cookies to a square-jawed gentleman,” Ron recalls in his excellent book Know What Matters.
The man hesitated, then he took a cookie.
“We’re testing a new recipe. What do you think?” Ron asked.
“Tastes like Toll House.”
Which wasn’t what Ron was hoping to hear. He was preparing to launch a new business called the Cookie Jar.
“If my freshly baked cookies were indistinguishable from the mass-produced dough found in every American supermarket,” he remembers, “I wasn’t achieving much of a competitive advantage.
In time, the cookie recipe improved, and the Cookie Jar began to attract customers. Ron then merged with another at-the-time fledgling concept, Au Bon Pain, which sold French bread, pastries, and coffee.
“That was better than selling just cookies,” he recalls, “but the sales volumes were still modest. And we were competing in a market in which customers had a plethora of choices.”
Ron knew he and his team had to come up with a better concept.
2: One day, a young woman in a business suit entered one of the Au Bon Stores and asked Ron to cut the bread she was buying.
As he put the baguette into the slicer, she stopped him.
“No, don’t cut it in slices. Cut it from top to bottom—lengthwise.”
Ron was surprised, but he did what she requested, cutting the bread end-to-end. She then sat down at a table, took out some items from a grocery bag, and made a sandwich with the fresh, crusty baguette she had just purchased, along with Boursin cheese and roast beef from the supermarket deli counter.
Not only did the sandwich look delicious, but it was also an epiphany for Ron.
“This customer didn’t want a loaf of bread,” he writes. “She wanted lunch. I sensed, right there, that this might be important, but I couldn’t quite say how.
“Then it happened again with another customer,” he remembers.
“And again. Soon, the message was clear. For a significant number of the people who walked through the doors of Au Bon Pain in the early eighties, the bread we sold was not the end; it was the platform for creating the sandwich they desired.
“It didn’t take a Harvard MBA or a marketing degree to see the opportunity,” he recalls.
The advantage he was looking for was right in front of his eyes: “Sell sandwiches.”
3: The lesson Ron learned that day was that opportunity grows out of observation. He realized that Au Bon Pain could fill a customer need—something that customers themselves hadn’t articulated.
“I’m a naturally curious guy,” he writes. “I like people, and I love figuring things out. And given the fact that I was always interacting with customers, I was in a good position to discover that innate, unspoken customer need. When it came, it took me by surprise—as true opportunities often do.”
Ron had discovered the one thing that all successful entrepreneurs hunt for: “An opportunity to create a better alternative,” he writes. “Or, as the late Harvard Business School professor Clay Christensen put it, to do a better job for someone.”
Understanding the “job” a customer is trying to get done and figuring out how to help them get it done better is the essence of successful innovation.
“People aren’t just buying our products or services; they’re ‘hiring’ us to solve a problem,” Ron notes.
As another Harvard Business School professor, Theodore Levitt, once said: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
“Customers were telling us that we could take on a far bigger job for them,” Ron writes. “They weren’t telling us in words. No one was walking in and saying, ‘Damn, I wish you sold sandwiches.’ They were telling us with their behavior.”
This realization changed Au Bon Pain’s trajectory. Their new business was to sell sandwiches.
“And not just any sandwiches,” he explains. “We could differentiate ourselves from the standard American ham-and-cheese-on-white-bread model by offering a different class of sandwich. We could be the place of choice for customers who appreciated artisan, handcrafted breads and croissants and wanted to pair them with ingredients like smoked turkey, Brie or Boursin, and Dijon mustard.
“This was how Au Bon Pain transformed itself from a bakery into the American version of a bakery café,” Ron notes. “We would compete with fast food, but we weren’t fast food. We were ‘good food served quickly.’
“In fact, we became one of the country’s first restaurant concepts to carve out a middle ground between fast food and fine dining,” he writes. “Faced with a choice between Wendy’s and nothing, many would choose nothing. We offered a compelling alternative.”
Ron and his team realized they solved a problem for their target customer, the shopper or white-collar office worker.
“They were in a hurry, and they wanted a tastier, healthier alternative to a burger and fries,” he shares. “Our cafés had an upscale look and feel, with brass fixtures, black-and-white ceramic tile, white marble tabletops, classical music, and backlit, oversized photographs of our new line of sandwiches.
“You’ve seen these tropes repeated since in cafés, but at the time, I promise you, Au Bon Pain looked different from other restaurants.
“All those cues aimed to deliver one subliminal message,” he writes: “Au Bon Pain may be fast, but it’s the antithesis of fast food.”
More tomorrow.
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Reflection: Am I watching for customer behaviors and unmet needs, ready to pivot and create something better—or am I only seeing what I expect to see?
Action: Engage more directly with our customers or team this week; look for a small pattern or need that could spark a new, creative solution or opportunity.
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