The Rules of Innovation and Chipotle

ORG 530: Business Ethics and Sustainability

Colorado State University-Global Campus

Dr. Robert Vega

April 19, 2014

The Rules of Innovation and Chipotle

It’s common to see a restaurant open one year and the next year they are closing their doors. In the restaurant business, a place will either sink or swim. So, what factors lead to profit and growth and what factors can be contributed to a failed or stagnant restaurant? Staying above the curve and always looking to improving a product or offering something new, is an important aspect to keeping a company in the green. Generally speaking a company needs to be innovative, which is exactly what Chipotle has done.

Rules of Innovation

According to CSU-Global, “innovation not only provides an opportunity for businesses to grow, it also offers the opportunity to influence the direction of an industry, “ (CSU-Global, 2014). Not only does innovation help in these aspects, it also can help create a better process that positively impacts the customer experience and a company’s profits.

In 1993, Steve Ells opened his first Chipotle restaurant near the University of Denver campus in Denver, Colorado. His main goal when opening the restaurant’s doors was to provide healthy, fresh food. Normally, offering food that meets these qualities results in a high bill and a long wait time. This was the opposite of what Ells desired for his restaurant, he aimed to provide quality food without the long wait and high price. Instead of using processed and frozen food, Ells chose to make everything fresh. (Schlanger & Bhasin, 2012).

Ells used the first rule of the seven innovation rules set in the book, Make Innovation Work by Davila, T., Epstein, M., and Shelton, R. The first rule of innovation is to exemplify strong leadership and provide clear expectations of how a company should run.

Soon, Chipotle restaurants began opening up all over the United States and even around the world. Since Ells also incorporated the second rule of innovation, integrating innovation into a company’s basic business mentality, he was able to ensure that each restaurant provides the same high quality food. While most places were adding more and more options to their menus, Ells knew that left room for poorly made food. Instead of following that business model, he stuck to only having a few items on his menu. This was done so each Chipotle’s main goal is to focus on the quality and freshness of the food, ensuring each branch serves high quality food. This means that each Chipotle employee can focus on creating quality food instead of having to learn how to make numerous items.

Additionally, Chipotle not only creates a simple menu for employees to create the company recognizes the importance of rewarding hard workers. This aspect of the company fits into the seventh rule of innovation set in Making Innovation Work, giving employee rewards for hard work and dedication to Chipotle. Chipotle has set up a restaurateur program. This program sets employees up on the right path to become managers. Managers at Chipotle earn over $100,000 a year, (Nisen, M., 2014). The way to word up the Chipotle ladder is clearly set. This makes sure each employee knows exactly what is expected of him or her in order to advance.

Overall, Chipotle first opened it’s doors with the intent of giving customers something they weren’t finding elsewhere, fresh, inexpensive food on the go. Ells took this innovative idea and grew a prosperous restaurant company. He did this by continuing to make innovation work for his restaurants.

References

Colorado State University-Global Campus. (2014). Module 1: Introduction and framework for innovation. [Blackboard Course]. In ORG 530 – Business Ethics and Sustainability (pg. 1). Greenwood Village, CO: Author.

Davila, T., & Epstein, M. J. (2013). Making innovation work: how to manage it, measure it, and profit from it (Updated ed.). Upper Saddle River, N.J.: FT Press.

Nisen, M. (2014, March 20). How Chipotle transformed itself by upending its approach to management. Quartz, Retrieved from http://qz.com/183224/how-chipotle- transformed-itself-by-upending-its-approach-to-management/

Schlanger, D., & Bhasin, K. (2012, June 26). How Chipotle changed fast food forever. Business Insider, Retrieved from http://www.businessinsider.com/steve-ells-and- the-rise-of-chipotle-2012-6?op=1