Interface: Yum! Brands� CEO David Novak

Yum! Brands� CEO reflects on what he has learned about building a business and tells what he looks forward to achieving in the future.

By Scott Hume, Editor-in-Chief -- Restaurants & Institutions, 10/15/2007

David Novak is the 54-year-old chairman, chief executive officer and president of Louisville, Ky.-based Yum! Brands. He also is the author of “The Education of an Accidental CEO: Lessons Learned from the Trailer Park to the Corner Office,” published this month by Crown Business. His proceeds from the book will be donated to hunger-relief programs.

Q. If I am a young executive reading your book, what one lesson would you want to take away from it?

A. The biggest lesson is that the key to growing is to be an eager learner. One cutting-edge difference in the best leaders I’ve been around is that they truly are avid learners. I hope that would be one of the take-aways.

Q. You credit several mentors you say you have learned from. What are the most important lessons that you had to learn for yourself?

A. One thing I had to teach myself was just the power of knowing your stuff, which comes with time and grade. There’s no way you can achieve success without knowing your stuff. I’m pretty much a self-taught leader in that business was something I had to learn by doing. Learning the skills of the trade were basically things I had to teach myself.

The biggest technical skill I had to teach myself was to get over the fear of speaking. Early on I was pretty nervous when I had to speak, but I’ve learned over time to actually look forward to it, and it’s one of the most enjoyable things I do now.

The basic knowledge you need to develop and grow a business is something I’ve learned by seeking it out. You can have great teachers, but if you don’t listen to them or take advantage of them, it doesn’t do you a lot of good.

Q. You write often about the power of listening. Why is that so crucial?

A. I’ve often said—and I probably read it somewhere—that the most powerful way to motivate someone is to listen to them. I really believe that. The power of listening unleashes the power in people. If you listen to people, you get them involved and you get their input. And if you act on their input, then you get real commitment. The only way you can do that as a leader is to listen and to create an environment where your people or your franchisees know that [you listen] and feel it and it’s genuine.

I teach that in my “Taking People With You” program [for high-potential leaders]. I’ve done that for 10 years and with nearly 3,000 people. Listening and seeing all sides of an issue are parts of that program.

Q. You cover 15 key lessons in the “Taking People With You” program. Is there one that you believe is a particularly underutilized leadership skill?

A. One of the foundations of success is just being yourself. It’s so obvious, but people often try to be what they think other people think they should be rather than leveraging their unique talents and being themselves.

I always talk about that when I start the leadership program. I say that this isn’t to create another 50 David Novaks; this is for you to see the power in yourself and to leverage what you are by being authentic.

But I really stress the importance of being yourself. That’s the first lesson. You’ve got to have the right mindset. Being yourself, listening to others and getting them engaged in solving a problem rather than just trying to solve it yourself is an important mindset.

Q. You write that one of your successes has been in creating a strong corporate culture at Yum! Why do you think you’ve succeeded at that?

A. There are two things that I think have made me successful at that. One is a deep belief that [creating a culture] was essential to creating a great company. To me it was the ultimate blue chip. All the great companies I visited to learn from when Yum! was spun off from Pepsico talked about their cultures as being the single most important thing that differentiated them.

And for all of them, in the center of their cultures there was a belief that every individual matters. It was clear that the culture was what made the company great. I believed that the work environment was central to making us a great company. This was something I made my top priority, and keeping it alive continues to be my top priority.

The second thing is that if you say it, you also have to do it. And you not only have to do it, you have to get everyone else engaged in it. The biggest thing I think we did in making our company come alive was to train people on our How We Work Together Leadership Principles [customer focus, belief in people, recognition, coaching and support, accountability, excellence, positive energy and teamwork]. We developed a comprehensive training program that we rolled out around the world. We put process and discipline around culture.

We’re not all the way where we need to be, but I think that we’ve made a lot of progress. We’ve known culture is important; everyone values it; and then we’ve trained people on it.

Q. How do you keep the momentum going?

A. This morning I came from a Yum! Experience two-day training class. We had 100 people come in, and I just spoke for an hour on building the Yum! Dynasty—which is what we’re trying to do—and answered questions for 30 minutes. I’ve never missed one of those sessions.

I’ve started an internal blog. When we do our earnings release, after the earnings call, I have a quarterly “Talk to David and His Team” session [for employees]. We just keep reinforcing the message. The relentless drumbeat around something that’s important is what makes the difference.

Q. What can kill a culture?

A. It’s people saying one thing and doing something different. That’s what’s death. In the book, I talk about going in businesses where people say, “I remember when …” You create a culture and keep it going [so that] people never say, “I remember when …” Instead, you create new memories every day.

When people are talking about the past instead of the future, that’s when you have problems.

Q. You talk in the book about how the power of innovation—such as KFC Famous Bowls—has energized Yum! How does an executive create a culture that fosters innovation?

A. The most important thing is to create an environment where you suspend judgment and don’t immediately rule out options. You need to build know-how around it.

In October we’re having an innovation summit with senior executives. We’re going to try to share all the learning we have on how to innovate. You create a culture that loves innovation, and then you match that with know-how.

Q. How do you keep current with consumers and what they want from Yum! concepts?

A. We do a lot of research, and I certainly go through it, but there’s no substitute for going into the restaurants and talking to consumers and team members. I’ll go visit stores without people knowing that I’m coming. You have to be out there and see what’s going on.

Q. Do you keep your eye on competitors as well?

A. Well, the other night I was going home and I stopped at an Arby’s and tried their new shake. I talked a bit to the manager about how his customers like it.

We had a Global Competitive Day when every senior [executive] went out for a day and looked at our competition.

Q. What do you see as Yum!’s biggest opportunity?

A. That we have over 20,000 assets in the ground with three category-leading brands and we haven’t done a good enough job broadening their appeal and leveraging the assets throughout the day. We’re going to focus on nutrition and more-balanced meals; we’ll focus on multiple proteins, new dayparts, destination desserts and beverages and upgrading our assets.

We think these are things we can put into 5,000 KFCs, 5,000 Taco Bells and 7,000 Pizza Huts [domestically]. We’re very excited about the U.S. business. The proof is in the pudding. We’ve got to demonstrate that this is possible. But five years ago everybody thought McDonald’s was dead, and they’ve done a great job doing everything I just talked about. What we need to do as a company is to do the same thing [McDonald’s has].

Q. You sound optimistic about Yum!’s chances for continued success.

A. I feel this is a great business. Your future’s in your own hands. There always are winners and losers, but in our category we’re always convenient and always affordable, and we have great-tasting food. So the real question is how do we present that to our customers in ways that are more exciting than anyone else’s? When we do it and do it well, we win. When we get off our game, we lose.

In a competitive environment like we’re in, you just have to be better today. It’s up to us.