Smith and his top managers take half a dozen workers to dinner at one of the area’s best

restaurants each week. What better way to tap into the rumor mill, pick up ideas, and share a little bit of the company’s DNA with the team?

It was thrilling to see what was possible. One afternoon, Hani flagged one of my reports—he’d noticed that food costs at a particular restaurant were way up, and for the second month in a row. He pulled another of my reports from the pile; the restaurant was selling a lot of lobster. Yet another report: lobster prices had skyrocketed. A quick call to Ken to confirm: yup—demand had outpaced supply, and prices had gone through the roof. A call to the chef: Were we undercharging for the dish? Definitely, given what we were paying for the ingredient, but he couldn’t raise the price high enough to get costs in line without sticker-shocking our guests. So the path forward was clear: the dish, popular as it was, had to come off the menu, at least until lobster prices dropped. Luckily, the chef had been playing with a scallop dish he could replace it with. Meanwhile, in our office: “Will! Figure out who else in the company is selling lobster.” Another series of phone calls. . . . Lobster season at Restaurant Associates was over.

I’d managed 95 percent of my budget aggressively, leveraging MoMA’s brand to get excellent gelato at a steep discount, and the beautiful cart for free. I’d earned the right to splurge on those spoons, the one small detail I believed would dramatically transform the experience of getting an ice cream at the cart. This is what I would later call the Rule of 95/5: Manage 95 percent of your business down to the penny; spend the last 5 percent “foolishly.” It sounds irresponsible; in fact, it’s anything but. Because that last 5 percent has an outsize impact on the guest experience, it’s some of the smartest money you’ll ever spend.

First, not all of your employees are superheroes. Most companies have a continuum on the payroll, from the exceptionally talented to the should-definitely-be-doing-something-else- with-their-lives. This isn't easy to acknowledge. Any number of things can get in the way of doing so, from the role you played in hiring someone to good, old-fashioned conflict aversion. Here's a safe assumption: unless you have the resources and capacity to systematically attract, reward, and unleash the very best in your industry, some of the people now reporting to you cannot be objectively characterized as outstanding. Second, you're probably making your employees' job harder. The hunt for new sources of revenue within organizations often leads to an increase in operational complexity. New products and services — or even new variations on old ones — lead to new processes, policies, and regulations; new organizational structures and technologies; new customers with new needs being channeled toward new touch points. In one quick-service restaurant we studied, the menu had grown from twenty-five items to more than a hundred in just a few years.

First, not all of your employees are superheroes. Most companies have a continuum on the payroll, from the exceptionally talented to the should-definitely-be-doing-something-else- with-their-lives. This isn't easy to acknowledge. Any number of things can get in the way of doing so, from the role you played in hiring someone to good, old-fashioned conflict aversion. Here's a safe assumption: unless you have the resources and capacity to systematically attract, reward, and unleash the very best in your industry, some of the people now reporting to you cannot be objectively characterized as outstanding. Second, you're probably making your employees' job harder. The hunt for new sources of revenue within organizations often leads to an increase in operational complexity. New products and services — or even new variations on old ones — lead to new processes, policies, and regulations; new organizational structures and technologies; new customers with new needs being channeled toward new touch points. In one quick-service restaurant we studied, the menu had grown from twenty-five items to more than a hundred in just a few years.