Discover today what will matter tomorrow, and then bring what matters most to life.— Ron Shaich, Panera Bread Founder

Ron Shaich is the founder of Panera and arguably created the quality-driven fast casual food category as we know it today. His recent book “Know What Matters” is filled with wisdom and insights for building distinctive brands with clear vision and sustaining competitive advantage.

Shaich has intuitively arrived at many ideas that now are best practices for company and brand builders. After taking Au Bon Pain from a debt-ridden revenue sinkhole to successful market innovator and IPO, Ron built the unique concept of Panera to meet key market opportunities he observed around “quality food made quickly,” and “cozy places to gather and work.” Panera pioneered much of what has now become industry standard in the fast-casual restaurant world — free high-speed wifi, app-based ordering, comfortable group-friendly seating, and convenient charging outlets — while maintaining consistently profitable stores and continually creating new offerings with healthy margins. 

Ron has made a career in building brands that have unique vision and that operate with tremendous agility to meet shifting consumer needs. His book is a worthy read for anyone interested in building cherished, enduring brands that are differentiated from their peers and consistently command advantage in their market.

In this article, I’ve compiled some of my favorite ideas and insights from the book that business leaders in B2B and other highly competitive environments can apply to lead and succeed in their chosen market. Direct quotes from the book are marked with italics and personal commentary is non-italic.

On Building Value-based Brands

“Concept Essence” as a brand building strategy 

“Concept essence” is an exercise and term Ron uses to define a brand’s go-to-market strategy. It's a strategy document that answers:

• What makes us special?

• What makes us a better competitive alternative?

• From where do we derive our authority?

• Why do we stand out in the marketplace?

As Ron describes it, a Concept Essence serves as a brand north star that defines and guides the experience the company is building and offers a defensible argument for why it’s a better alternative to competing brands. A concept essence describes with precision and clarity what it is that this business is going to do, written in simple language that anyone in the company or outside of it should be able to understand. 

While I had not heard the term “concept essence” prior to reading this book, this idea resonates strongly with me, and aligns to the competitive positioning strategy document that we create for clients for their companies and brands. 

In my own experience creating these types of strategy documents for companies, leaders are often surprised and how this kind of exercise can galvanize and empower their teams. To simply define and document a clear and compelling vision that everyone in the organization can rally around has a powerful and undeniable effect. This is because it enables the entire business to accelerate good strategic decision making, and makes effective collaboration, clarity, and consensus across functions much easier.

The “concept essence” exercise also highlights keys questions that many leaders don’t ask themselves often enough to discover and keep in-focus the things that matter most to their business, like:

• Who are our customers? How do we understand the structure and niches of our market?

• What matters to the target consumers in each niche? What do they want?

• What jobs do they need us to complete?

• What do we have to do better than our competitors to win their loyalty?

On Marketing for Growth

“Ron’s Rules for Marketing” are pulled directly from the book, since the content is succinct and salient enough on its own. 

Note his emphasis on the importance that a brand’s authority, personality and credibility plays for sustained sales growth — he attributes 90%+ of sales growth to these factors! 

This should be a huge relief for business operators, as these are factors that can be influenced tremendously — if the vision and value of the brand has been made clear and compelling to target audiences. 

Ron's Rules for Marketing

1. Know what marketing can and cannot do. One of the biggest fallacies in business is that marketing can build sustained sales growth. What actually builds sustained sales growth? In Shaich’s estimation, sales growth can be correlated with:

• The brand's authority and personality (this accounts for 60%).

• The brand's credibility in the specific categories in which it competes (this accounts for 30%).

• Traditional tools of marketing: price, promotion, advertising, etc. (this accounts for only 10%).

2. Imprint your brand in the minds of customers. The most powerful role of marketing is to build long-term brand credibility. The focus of each marketing campaign should be to amplify the reality of the concept and the brand's long-term point of differentiation.

3. Focus your marketing on the long term. Marketing programs that build long-term authority and credibility will have a long-term pay-out and a higher ROI. Marketing programs that build short-term traffic growth only (such as limited time offerings) will have a short-term payout and generate a very modest ROI.

4. Mix up the way you drive sales. Sales can be built by driving transaction growth or increasing the average penny profit per transaction. Have a plan and the organizational capabilities to manage both.

5. Remember, marketing requires the soul of a merchant rather than simply the skills of a tactician.

On Creating Sustainable Competitive Advantage

Panera’s technology focus has allowed the company to proactively innovate for convenience and experience before others, and enabled them to pivot fastest to contactless mobile ordering during COVID.

Long before it was in-vogue for companies to think about proactively creating customer delight or innovating through customer insights, Ron took an obsessive and visionary approach to brand building and kept an unwavering focus on creating competitive advantage with his chosen niche.

This often resulted in making strategic choices that, at first, seemed poor for profitability to investors, but ended up improving the customers' experience so much that it brought in more regular guests to the stores and increased the average visit price.

As an example, Panera was the first mover to invest in and give away fast, free wifi in all its stores in the early 2000’s, when most households in the US did not have high-speed internet connection and while Starbucks charged for it. The brand also went against the grain of the industry and updated the design of its stores with cozy furniture and layouts that encouraged guests to linger, not leave. Investors initially squawked about the cost of these changes, but the free wifi ended up being a huge draw for professional guests seeking a change of scenery to work, and the new store layouts served the needs of many community groups who met regularly to gather and plan.

These counterintuitive offerings filled the stores during the dead hours between meals, and even allowed Panera to have the technology infrastructure in-place that enabled them to be first-movers on other innovations like fast credit card processing and app-driven mobile ordering.

This relentless focus on finding footholds for advantage and moving first on offering today what customers would want tomorrow enabled Panera to successfully build and scale a prescient and pioneering concept that ushered in the era of fast casual dining and gathering-focused eateries we know today.

Ron's Rules for Gaining and Maintaining Competitive Advantage

• Recognize that you can't please all people all the time. Understand who your target customer is and what job they are hiring you to do. Develop a concept that's the singular best choice for some target customers on some days rather than the second-best choice for everyone, every day.

• Define what competitive authority means within your understanding of your concept and know how you will build it.

• Make sure the niche you focus on is big enough to sustain you, but not so easily duplicated that you simply become an R&D lab for larger competitors.

• Search for the good ideas that really matter. Otherwise, you could expend a lot of energy with a modest return.

• Build barriers to entry. Don't be afraid of the tough stuff. If it's worth doing, then do it and use it to build barriers to entry.

• Get it done. Execution is everything. If you can't actually deliver on your promises, you'll lose customers to competitors who can.

• Accept that maintaining competitive advantage is really difficult. One day you're the most attractive alternative on the block. The next day your target customer is walking past your door to a "new and better place" down the street.

• Be willing to do it all over again. Competitive advantage is fleeting. Don't wait for your competitors to pass you before seeking out a new opportunity.

Panera is experimenting with AI-driven tech in their drive through to make pickup and ordering even easier for customers, allowing them to capture more dinnertime sales for busy working households.

On Making Bold Moves that Increase Advantage 

Ron on Making Smart Bets, Versus Taking Gambles

Making smart bets requires that you be nimble and fast in your decision-making. A good decision-making lens is focused on what matters and has several carefully prioritized filters.

To focus your lens, start with the fundamental question: What matters most to the organization and its stakeholders? In most enterprises, the answer should be some variation of maintaining competitive advantage.

Competitive advantage is the end; everything else is the means. Good decisions are those that lead to greater competitive advantage.

To define the filters on your lens, you need to consider your key points of authority and differentiation: the ways in which you've decided to compete. For example, perhaps what differentiates you is the customer experience. Or perhaps you're competing on value. Or you might set yourself apart with a focus on quality. Your decision-making lens should reflect the concept's points of differentiation and core personality, placed in a distinct order of importance. For example, if the customer experience is your key point of differentiation, you should filter decisions through the question, "How will this affect our customers?" before you filter it through questions about cost. That doesn't mean you avoid the financial perspective, but that a filter is less important than the customer-experience perspective. The order of filters is driven by clear understanding of who you are, as a brand and as a business.

Here's an example of the four prioritized filters used for decision-making at Panera:

1. How will this decision affect the experience of our customers?

2. How will this decision fit with or enhance our brand personality and authority?

3. How will this decision impact our operators?

4. How much will this decision cost?

Everyone, no matter what their functional perspective, should know how to make decisions. Every decision must be subjected to the process, and every team member, no matter what their job title, needs to understand the whole process. Of course, this doesn't mean that decisions become easy. Every choice comes with trade-offs. The point is to make the right ones for your particular company, so that you stay aligned with what matters.

On Measuring True Success

Too often, metrics aren’t connected to the ends people are working toward. Tracking the wrong metrics makes people feel like they are succeeding and focusing on the right thing when, in reality, they are not.

There’s no roadmap when you’re blazing new trails. There’s no easy way to measure what’s never been done before. But if your goal is to have a good vacation in Florida, your metrics should measure whether you had a good time — not track miles traveled or the total time spent in Florida.

I liked this section of the book about meaningful metrics, because it’s so practical and refreshing compared to the extreme advice that many business books have on this topic. Ron recognizes that complex initiatives and new ventures need to be tracked and managed appropriately, and stresses the importance of a company defining appropriate ways to measure what matters for the brand, its unique goals, and the stakeholders it serves. He provides helpful guidance for developing meaningful metrics that evaluate progress and gauge the perceptions of the people that matter most.

Here’s his principles for finding or creating the right KPIs for helping your business improve.

Ron's Rules for Meaningful Metrics

How do you know you're achieving what matters? How do you define "done"? By creating metrics that represent, in a concrete sense, what success looks and feels like. These don't necessarily have to be numbers. 

To create a meaningful metric, ask yourself:

• How will we judge ourselves? What can we point to as direct evidence that we are making progress on what matters?

• Who will judge us? Often, this is the more important question. How would our key stakeholders consider our progress?

This might lead you to create a metric that is not a number, but a question, with a rating scale attached. "In the eyes of ______ what degree have we achieved ______ ?"

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For decades, Panera has remained a relevant powerhouse brand in a notoriously tough industry, and been tremendously innovative in creating value and maintaining competitive advantage in difficult market times.

Regardless of industry, this book offers a wealth of insight and wisdom for brand builders who seek to bring their own visionary concepts to bear — and succeed in creating value and advantage in their chosen market. 

Did you read the book? If so, what parts resonated most with you?