Know What Matters

Know What Matters Plot Summary

Introduction

Have you ever walked into a room and completely forgotten why you came there? In business, this happens constantly but on a much grander scale. Leaders charge forward with initiatives, frantically reacting to yesterday's problems while failing to anticipate tomorrow's opportunities. By the time they realize they've lost sight of what truly matters, it's often too late - the market has moved on, competitors have seized the advantage, and customers have walked away. Ron Shaich knows this pattern intimately. Through four transformative journeys – from converting a struggling French bakery into Au Bon Pain, discovering the fast-casual dining concept, betting everything on the fledgling Panera brand, and completely reinventing Panera's digital experience – Shaich has mastered the art of seeing beyond the horizon. His future-back approach enables leaders to imagine their desired destination with clarity, then work backward to identify the steps needed to arrive there. This book reveals how to cultivate the muscle of knowing what truly matters, how to build barriers to entry through embracing challenges others avoid, and how to maintain competitive advantage through constant transformation. The wisdom shared isn't just theory – it's the battle-tested methodology that created billions in shareholder value and transformed how America eats.

Chapter 1: The Pre-Mortem: Working From the Future Back

"I learned the most important lesson of my life as my father's life came to its end." With these words, Ron Shaich begins a deeply personal story about watching his father confront his final days. In January 1998, Joseph Shaich moved into Ron's apartment in Cambridge, Massachusetts, to receive treatment at the nearby Dana-Farber Cancer Institute. As lung cancer claimed his father's health, Ron became witness to something profound – his father's painful reckoning with the life he had lived. "I cannot tell you whether there is a judgment day 'up there,'" Shaich writes, "But after watching my father during his last few months, I can tell you this: there is one down here, if we have time to face it." Joseph Shaich, a certified public accountant who had provided well for his family, found himself confronting the choices he'd made throughout his life. Though successful by conventional measures, he hadn't lived with intention. He had zigzagged through life, reacting to whatever felt right in the moment. In his final days, Joseph reached a difficult conclusion, telling his son in his own words: "I screwed up. And I can't fix it now." This stark contrast with Ron's mother Pearl, who had died six years earlier with a sense of peace about her life choices, became a turning point. The morning after his father's death, sitting alone in a coffee shop as the sun rose, Ron contemplated this painful lesson. He realized that waiting until the end to evaluate one's life was too late – the runway for change would be gone. Instead, he committed to regularly engaging in what he calls a "pre-mortem" – a visualization exercise where he projects himself into old age, imagining looking back on his life, and then asks: "What am I going to do now to ensure that when I reach that ultimate destination, I've done what I need to do?" This technique of working from the future back became the foundation of Shaich's approach to both life and business. Rather than merely reacting to yesterday's problems or today's urgencies, he learned to envision a clear destination and then work backward to identify the steps needed to reach it. "You can't rewrite your past," he notes, "But if you have the courage to challenge yourself now, you can write your future." In business, this means starting with a desired outcome and then determining what must be accomplished to achieve it. The pre-mortem process is essentially about accountability to your future self. By regularly asking what will truly matter when you look back on your life or business, you gain clarity about where to invest your limited time, talent, and resources today. This perspective shift enables you to make better choices now – choices you'll respect later. As Shaich discovered through both personal loss and business triumph, the ability to know what matters is like a muscle that must be exercised. When practiced consistently, this future-back approach becomes a powerful tool for creating a life and business of enduring value.

Chapter 2: Discovering Your Competitive Advantage

"Screw them. We could run a better convenience store than these folks!" These words burst from a young Ron Shaich, freshly ejected from a Store 24 across from Clark University. Security had marched Shaich and his friends out, suspecting them of shoplifting as they browsed the ice cream freezer. The humiliation of being treated with such disrespect sparked more than just indignation – it ignited an entrepreneurial vision. Standing outside on the street, Shaich proposed creating a nonprofit convenience store right on campus, for students and by students. Though he had no business experience and had grown up in a politically progressive household with little affinity for corporate life, this moment of injustice revealed something powerful: an opportunity to create a better alternative. As Shaich would later understand, this is the essence of successful innovation – recognizing the "job" that customers need done and finding a way to do it better than anyone else. Driven by this insight, Shaich convinced the student council to fund what would become The General Store through a tax on the student body. He spent the summer fitting out a space previously occupied by the Faculty Wives Thrift Store. With no wholesaler willing to do business with students, Shaich and his team would wake early on Saturdays, drive to a local discount grocer, and fill ten shopping carts with goods to resell. When the store opened, it became an immediate success, generating $60,000 in profit its first year – money that eventually went to the scholarship fund rather than Shaich's dream of hosting a Grateful Dead concert on the college green. What Shaich discovered through this experience was the fundamental principle that would guide his entire career: competitive advantage is everything. "Being a better alternative ain't complicated," he explains. "It's just really hard to do." The world doesn't reward businesses for doing what everyone else is doing; it rewards those who figure out where the world is headed and get there first. While most businesses focus on cost-cutting or avoiding short-term risks, they ignore the much greater risk that comes from losing competitive advantage. The General Store showed Shaich that business could be profoundly creative – "for a kid from New Jersey who couldn't dance or sing, this was the closest I'd ever come to being an artist." But it also taught him that success comes from understanding customers deeply enough to meet their needs better than competitors. It's about being the best choice for someone, not a mediocre choice for everyone. As Shaich puts it, "A pizza joint doesn't have to be the best among local restaurants, but it does need to be the best pizza place in the neighborhood." This lesson in competitive advantage would become the foundation of Shaich's approach to business for decades to come. Through The General Store, he discovered his own competitive advantage – his ability to see opportunities and deliver better solutions. The experience revealed that building a business could be intellectually and emotionally challenging in the best way, a creative endeavor that would sustain and satisfy him for the rest of his life.

Chapter 3: Making Smart Bets That Create Barriers to Entry

"Free? You want to give it away for free?" The executive's face reflected the disbelief shared by many at Panera when Shaich proposed offering high-speed Wi-Fi to customers at no charge. It was 2001, just a few years after Wi-Fi technology had been invented, when most people still relied on dial-up internet connections. The few establishments that offered Wi-Fi, like hotels and Starbucks, charged for the privilege. The objections came fast and furious: slackers would camp out all day playing video games; laptop users would occupy tables while families without seats would leave; college students would treat cafés like libraries for the price of a coffee; franchisees would revolt over costs; lawyers would worry about liability. Every catastrophe seemed inevitable if Panera pursued this "ludicrous strategy." But Shaich saw something others missed. He recognized that free Wi-Fi wasn't about giving something away – it was about enhancing Panera's core competitive advantage. The cafés were designed to be gathering places with abundant seating, unlike Starbucks with its limited capacity. Wi-Fi would fill those seats during off-peak hours, bringing energy to the cafés while creating a competitive advantage against Starbucks, which charged for the service. "It was a way to fulfill our Concept Essence and build energy in our cafés—and execute a jujitsu move on our competitors in the process," Shaich explains. Despite resistance, Shaich pushed forward. The rollout was challenging and expensive. They had to pull T1 lines into cafés, franchisees bristled at the costs, and the IT department scrambled to build what became the largest industrial-strength Wi-Fi network in the country. But the gamble paid off spectacularly. Free Wi-Fi filled the cafés with energy and new customers. Pharma reps conducted interviews, remote workers set up shop, and soon "Panera" became synonymous with "free Wi-Fi" – exactly the differentiation Shaich had sought. The results exceeded even Shaich's expectations. His back-of-napkin calculation of $5 profit per logged-in hour proved conservative – eventually, non-peak business driven by Wi-Fi grew to approximately 30% of sales. Even more valuable was an unexpected by-product: the broadband infrastructure installed for Wi-Fi enabled faster credit card processing, which increased check sizes as customers found it easier to pay with cards. This illustrates the essence of what Shaich calls "smart bets" – strategic moves that build competitive advantage by tackling challenges competitors avoid. "If it's easy, it's not worth doing," he explains. "Easy doesn't give you any sustained competitive advantage." By creating barriers to entry – doing the tough stuff that others can't or won't do – a company builds a moat around its business, buying time to discover the next growth opportunity. Smart bets aren't gambles; they're calculated risks based on deep observation and pattern recognition. They increase the odds of success by leveraging existing strengths. The Wi-Fi decision exemplifies how Shaich approaches business: looking beyond immediate costs to long-term competitive positioning, creating barriers to entry that competitors struggle to overcome, and seeing around corners to where the market is heading. As he puts it, "Through empathy, careful observation, trend analysis, and the utilization of generalizations from one industry to another, we can improve our judgment and sharpen our powers of prediction—enough to give us a serious competitive edge."

Chapter 4: Managing the Desire-Friction Ratio

"Is this sandwich worth the pain of getting it?" This question haunted Ron Shaich as he stood outside a Panera café in 2010, contemplating whether to go in for his favorite Bacon Turkey Bravo sandwich. Despite having "retired" as CEO just months earlier, Shaich couldn't help but see Panera through a customer's eyes – and what he saw troubled him deeply. The experience at Panera had become unnecessarily difficult. Customers had to find parking, stand in long lines, place their order with a cashier who might or might not enter it correctly, then navigate what Shaich called the "mosh pit" – a chaotic area where people milled around waiting for buzzers to sound, trying to figure out where to find their food, condiments, utensils, and drinks. Even as the creator of this system, Shaich found himself avoiding his own restaurants because of the hassle. One day, while watching a delivery person from Jimmy John's sandwich shop enter Panera's corporate offices, Shaich followed him to discover who had ordered from a competitor. The delivery was for an IT help desk technician who explained, "I'm on help desk. Don't you get it? I can't leave." This interaction crystallized something Shaich had been feeling himself – Panera was missing opportunities to serve customers simply because its system created too much friction. From these observations, Shaich developed a powerful concept he called the "desire-friction ratio" – how much a customer wants something relative to how hard it is to obtain. "Desire is simple to understand—it means the customer wants what you're offering," he explains. "Friction is more complex...but essentially, it's anything that makes it more difficult for your customers to fulfill their desire." When friction outweighs desire, customers go elsewhere. This insight led Shaich to envision a transformed Panera – one where customers could seamlessly order what they wanted, when they wanted it, in the way most convenient for them. He imagined rapid pickup, delivery to the table, home delivery, and office delivery, all enabled by technology that would optimize the experience for each guest's particular needs. Late one night, he opened his laptop and typed the question that would define the next decade of his life: "How would I compete with Panera if I wasn't Panera?" The resulting ten-page transformation memo outlined a vision that would position Panera as "the Amazon of the food industry." Though Shaich had previously viewed technology as a cost to be minimized, he now saw its potential to transform the guest experience. This vision would require rebuilding Panera from the ground up – integrating digital ordering systems, overhauling production processes, and creating new delivery models – at a cost of hundreds of millions of dollars. Despite having officially "retired," Shaich couldn't walk away from this opportunity. He returned to Panera as co-CEO alongside Bill Moreton, determined to lead this massive transformation. "I felt some regret about the roads not taken, the unfulfilled political ambitions, the set-aside 'retirement' projects," he reflects. "But the choice wasn't that hard, and the reason can be summed up in one word: impact." In Panera, Shaich had a platform to directly improve the lives of millions of customers by dramatically reducing the friction between them and the food they craved.

Chapter 5: Telling the Truth and Getting What Matters Done

"Steve Jobs is reported to have said, 'If you define the problem correctly, you almost have the solution.'" With this reflection, Shaich introduces a critical turning point in Panera's digital transformation journey. By 2013, the company was making progress on its digital ordering systems and production capabilities, but a startling revelation emerged: one in seven Panera customers – over a million people every week – received incorrect orders. When Shaich learned that the executives responsible for accuracy were proud of their 88% success rate and had a modest plan to raise it to 88.5% over five years, he was appalled. "How would you feel if your pilot told you he was going to crash on one out of every seven of his landings?" he asked his team. While an incorrect sandwich isn't catastrophic like a plane crash, it represented a profound failure of integrity – the company wasn't delivering on its basic promise to customers. This harsh truth forced Shaich to expand the scope of Panera's transformation yet again. Beyond digital ordering, the company would need to completely reimagine its production systems to achieve what Shaich called "operational integrity" – the ability to deliver exactly what customers ordered, 100% of the time. "Operational integrity means, put most simply, that the company works," Shaich explains. "It works for its customers. They can count on it to deliver." To find a solution, Shaich did what great leaders do: he sought out excellence elsewhere. He discovered that K&N, a small nine-unit barbecue chain from Austin, Texas, had achieved 99.8% accuracy and won the prestigious Malcolm Baldrige National Quality Award. Shaich visited repeatedly, sent teams to work in their restaurants, and learned how to apply total quality management principles to food service. This led to patented video review systems, redesigned kitchen layouts, and integrated display systems that dramatically improved accuracy. Alongside operational integrity, Shaich recognized another uncomfortable truth: Panera needed new avenues for growth to sustain its $10 billion valuation. Even as the digital transformation was underway, he challenged his team to identify new revenue streams that could leverage Panera's competitive advantages. This led to major initiatives in catering, delivery, and consumer packaged goods – all billion-dollar opportunities that required their own transformations. By 2015, yet another difficult truth emerged: Panera's food itself needed to change. The company's identity had been built around artisan bread and quality ingredients, but customer expectations were evolving. "Even without these market pressures, the fact was our Concept Essence had become dated," Shaich admits. This led to a comprehensive commitment to "clean food" – removing all artificial colors, flavors, preservatives, and sweeteners from Panera's menu. The company published a "no-no list" of 96 ingredients to eliminate, requiring the reformulation of 27% of all ingredients. Throughout these cascading transformations, Shaich embodied his three-step philosophy: tell the truth, know what matters, get the job done. "That's what we did at Panera," he reflects. "We were active learners; we figured out how to be a better competitive alternative; and we had the discipline and commitment to see it through." By confronting uncomfortable realities rather than hiding from them, Shaich positioned Panera to address its weaknesses before they became existential threats. By 2016, the company had completed its transformation – digital orders accounted for 24% of sales, catering achieved double-digit growth, delivery was rolling out nationwide, and the stock price rose 24% that year. The willingness to tell difficult truths – especially to oneself – emerges as perhaps the most important leadership quality in Shaich's arsenal. As he puts it, "A system that is out of integrity is simply not working. And sooner or later, a company that lacks integrity will lose customers' trust and, with it, competitive advantage."

Chapter 6: Transforming While Leading a Large Enterprise

"Welcome to the new world, Ron," Shaich told himself, looking out over the city lights of St. Louis, framed by the iconic Gateway Arch. Having sold off the Au Bon Pain divisions to bet everything on the promising Panera Bread concept, he knew it would take years to fulfill the vision they'd created. The challenges ahead were daunting – especially for a public company where investors demanded quick returns. Shaich understood that growth in the restaurant business was extraordinarily difficult. As he liked to say, "the restaurant industry isn't hard; it's just hard as hell to do well." Few restaurant concepts survive, and those that do rarely thrive for more than a decade. Yet Shaich believed Panera could be one of the rare exceptions that got it right. He had a concept that worked – generating consistently high sales volumes and ROI across multiple geographies – and was worthy of being reproduced. The conventional wisdom in public companies was to nail down a successful model and reproduce it as quickly as possible to drive growth and raise the stock price. But Shaich saw this approach as a recipe for disaster. "Growth is a by-product, not a means," he insisted, challenging the prevailing business thinking. "The quickest way to destroy a promising concept is to put your foot down on that accelerator and remove your hands from the steering wheel." Instead, Shaich embraced a measured approach to growth. One guiding principle was, "Don't make a decision until you need to." Rather than committing to specific growth targets, he focused on ensuring they had enough prospective sites to fuel growth for three years ahead – enough to keep investors happy while learning and growing in a way that made sense. This careful balance allowed Panera to expand from a regional chain to a national powerhouse with thousands of locations. A key strategic choice was embracing franchising through an "area franchise" model, where each franchisee committed to opening a specific number of cafés in a market. This gave Panera access to local real estate knowledge and operating skills while maintaining quality control through a limited number of franchisees. "At Panera, we ultimately ended up with a balanced system: half franchise, half company, and it worked very well for us," Shaich explains. Another strategic choice was developing stores in concentric circles rather than hopping across the country. Moving slowly outward into adjacent markets allowed Panera to leverage its supply chain and people, increasing the probability of success. The company built sophisticated regression models to determine the likelihood of delivering the necessary sales to generate a 30% or higher return on investment for each new café. As Panera grew, Shaich faced an increasing challenge: maintaining the company's capacity for innovation and discovery. After visiting McDonald's headquarters and witnessing how disconnected its leadership had become from understanding what customers truly wanted, Shaich committed to protecting Panera's "discovery muscle" – the ability to understand customer needs and seize new opportunities – even as the company scaled its "delivery muscle" – the capacity to efficiently execute and replicate what worked. "When companies stop discovering, it's because their leaders stop discovering," Shaich argues. He embraced the role of "innovator in chief," refusing to delegate the company's future to others. "Too many CEOs are afraid of disruptive innovation and more comfortable in the safer role of glorified administrators," he observes. By personally leading innovation initiatives and protecting those engaged in discovery work, Shaich ensured that Panera maintained its ability to transform even as it grew to serve millions of customers each week. The challenges of leading a large enterprise while driving transformation are immense, but Shaich found that the rewards were equally significant. By resisting the pressure for reckless growth and maintaining the balance between discovery and delivery, Panera achieved what few restaurant concepts ever do: sustained competitive advantage and the ability to transform repeatedly as the market evolved. As Shaich puts it, "Growth is a by-product of achieving the true end that a business should aim for: competitive advantage."

Summary

Discovering today what will matter tomorrow isn't just a catchy phrase—it's the essence of enduring success in business and life. Through his journey building Au Bon Pain and Panera Bread, Shaich demonstrates that sustained value comes not from chasing short-term profits or copying competitors, but from the discipline of working backward from a clearly envisioned future. Implement the pre-mortem process in your own life and business, regularly imagining your desired end state and mapping the steps to get there. Embrace difficult challenges that others avoid—these create the barriers to entry that protect your competitive advantage. Remember that telling yourself the truth, even when painful, is the first step toward transformation. Focus relentlessly on reducing friction for your customers while increasing their desire for your offering. Most importantly, recognize that profits and growth are by-products, not ends in themselves—they follow naturally when you've discovered what truly matters to your stakeholders and delivered it with integrity.

About Author

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Ron Shaich

Ron Shaich is the founder and former Chairman & CEO of Panera Bread and Au Bon Pain and is today the Chairman and lead investor in Cava, Tatte, Life Alive and Level99. Shaich makes his investments through Act III Holdings, a $1 billion+ evergreen investment vehicle. In Shaich’s last two decades as CEO, Panera generated annualized shareholder returns of 25% and was the best performing stock in the restaurant industry. Shaich is often credited with defining the $80 billion fast casual segment and is known for continually disrupting industry paradigms to find new ways to build companies of value and with values. Shaich has twice been recognized as an Ernst & Young Entrepreneur of the Year, was selected as the 2018 Restaurant Leader of the Year and was presented the prestigious NRN Pioneer award as one of the most significant contributors in the history of the restaurant industry, joining the ranks of Col. Harland Sanders, Ray Kroc, Norman Brinker and J. Willard Marriott. Connect with Ron Shaich at ronshaich.com

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