Accidental CEO with David Novak

Now with me today is David Novak, former CEO and co-founder of Yum! Brands which includes Taco Bell, Pizza Hut, and my personal favorite, KFC, author of several books including Taking People With You and his biography The Education of an Accidental CEO, and co-founder of oGoLead, a digital leadership training platform. Welcome to the show, David.

Oh, it’s great to be with you, Mark. I look forward to our conversation.

So, let’s get straight into this. Let’s start with the title of your biography, The Education of an Accidental CEO. What was accidental about your career?

Well, I think it’s the basic background, you know? I have a very unique background for someone who rises up to be a CEO of a Fortune 500 company. I was actually born in a little town, Beeville, Texas, and my father was a government surveyor. I lived in twenty-three states by the time I was in 7th grade. We moved every three months and my mom would say ‘Hey, David, we’re moving’ and when she’d check me into the school she’d say, ‘You better make friends because we’re out of here.’ So, it really was a very interesting background. I went to the University of Missouri. I didn’t get a business degree, I got a journalism degree. I actually started out as an advertising copywriter then I realized I wanted to be on the business side, so I got into account work as an agency person and then I realized that I really wanted to get in to the big time but rather than going to New York, I went to Dallas and worked on the Frito Lay account and ended up running that account and got to be associated with all the senior leaders of PepsiCo, and they lured me away from the advertising agency business to PepsiCo to be the Chief Marketing Officer for Pizza Hut and I was actually the first person from the agency side ever to be hired at that kind of senior level within PepsiCo. Well, we doubled the business in four years and then I got the opportunity to run marketing sales for Pepsi-Cola company, then I ran operations for Pepsi, and my big goal was to be a Division President of PepsiCo and I got that shot at KFC, and I ended up running KFC and Pizza Hut, and then I had a really big break that was accidental. I got offered the opportunity to be the CEO of Frito Lay, which was a part of PepsiCo. I turned it down because I loved the restaurant business so much. I didn’t even know that PepsiCo was thinking about spinning off the restaurant brands and so I was in the right place at the right time and I became CEO of the restaurant company and was able to do that from 1997 to 2016, and we had an amazing run so, you know, I think that I’m a classic example of a person who basically comes from a very humble background, their mom and dad want them to live the American dream and no-one would have ever expected me to be the CEO of Yum! Brands and to be now really focused on leadership and writing books and all those kinds of things. So, that’s the accident.

Absolutely. A great story. One of the things that struck me reading the bio was you were also very, very planful when you co-founded Yum! You put together a remarkable and extraordinary board of people from very, very diverse industries, Jamie Dimon, Massimo Ferragamo, Ken Langone in from Home Depot and I’m curious, how important was this diverse board to the success of Yum! Brands?

Well, Mark, I was very blessed because our original chairman of the company was Andy Pearson and he knew everybody in business and he was able to track a fantastic board and I helped him do it, and we really said ‘OK, we just need to have a new finance somebody, new retail, we need to have diversity and style.’ We had Jeanette Wagner who was fantastic who was from Estee Lauder, we brought in Bob Holland who was an African-American who ran Ben and Jerry’s so we got good diversity from the very beginning and then we built on that and we had a tremendous background of experience and we also wanted to have not only a great experience, we wanted to have young people coming up, and at that point in time Jamie Dimon and Massimo Ferragamo were the young whipper snappers that came on to the board, and I ultimately ended up being on Jamie’s board at JPMorgan Chase which I enjoy.

And he’s on one of your podcasts which we’ll put the link in the show, we’ll come back to that in a minute, but I guess, there’s a lot of talk about diversity and often the conversation is around biography diversity, i.e. their gender, their ethnicity, but what struck me as you put together the culture for Yum!, it seems to me you were leveraging cognitive diversity, you wanted to learn from Southwest, from Walmart, from Mary Kay, from General Electric. What was behind the thinking because it was a very sort of innovative way of building a culture and a business back then, wasn’t it?

Well, yeah. Well, my view back then and has always been that leaders need to make themselves and their organization whole-brained. You can’t do that with just one perspective, you need a number of different perspectives, and when we were spun off from PepsiCo, we were spun off for a reason. Our performance was terrible under PepsiCo, and they were shedding what they thought was bad assets. So, I told everybody in our organization this was a tremendous opportunity to do a do-over. We could take these three great brands, Pizza Hut, Taco Bell and KFC, and do them over again and present them to the world in a much better, a more powerful way, take a company that was 20% outside the United States at that point and turn it into a real global powerhouse which we did. Now, it’s 80%, but I knew that to become a great company we had to learn. So, we went to the top ten to fifteen companies in the world or in the United States at that time, because it was easier for us to visit United States companies, and we visited them and we wanted to really learn what were the key drivers of their success, and then we came back and we codified those success factors by going to Southwest, GE at the time, Target, Coca-Cola, Home Depot, Walmart. We went to all these companies that had very consistent performance over an extended period of time because we wanted to be a great company and greatness comes only when you get sustainability and consistency. So, we codified what these great companies had, and we called them our ‘Yum! Dynasty Drivers’. These were the five things that we were going to focus on, that were going to get us outstanding success as we go into the future, and the first one was that you create a culture where everyone counts, then you have competitive brand differentiation in everything you do, you have continuity in people and process, you have a consistent approach towards financial results and you’re maniacally focused on your customers. Those were the five things that we picked up from these great companies and we said, ‘This is what they do now. Now let’s do it the way how we know we should do it that’s right for our brands as we go forward’, and I think the Yum! Dynasty Drivers really laid the foundation for us becoming a great company. One of the things that I’m really proud of is that we drove 13% or greater earnings per share growth for thirteen straight years in a row. 

Extraordinary. The thing that strikes me about the story is how you were able to take the model and take it into very, very unique markets such as China and Russia, and localize and listen to the customers but also, I presume, in order to get the financial performance, you had to have the back office, the platforms in place which were totally standardized?

Yes. Yes, we really called it ‘freedom within a framework’. We had a framework that we knew our brands needed to stay within, but we wanted to have the localization that would make our brands even more relevant in the countries that they operated and I always believed, Mark, that, show me a good leader and I’ll show you a good business, and when we were first spun off from PepsiCo, we did not have local leaders. We had people from the US running France and Germany, and India, you know we didn’t have great local general managers, so I made that the major priority, to get people who really understood the countries, could understand what the differences were, put them in charge, and then give them the support they needed to really build the brands, and that formula really worked well for us because we have great local leaders all around the globe now.

Yeah, and I guess, let’s get into the program which you developed and ran for a number of years, I think it was the Taking People With You program which you taught to many thousands of employees over the years. I think there were fifteen elements, but you start with mindset. Can you just give a quick Cliff Notes version of one of the key elements? Let me put it differently; what was unique about that program versus more traditional leadership programs?

Yeah, well, I wrote a book called Taking People With You that basically captures the process of leadership and that is what makes it unique. A lot of people talk in principle about what you ought to do to be a leader. What this does is really give you a terrific game plan for how to get the single biggest thing that you’re working on that can impact your business, how you really get it done, because the reason why I called the book Taking People With You is nobody can get anything big done by themselves, you have to take people with you. So, the way I organized the book was it’s basically a step by step process for how you get your big initiative done, and I start out with the mindset. What kind of mindset do you have? You’ve got to get your head screwed on right to go to work every day so that you can bring the best out of people, and the first thing I talked about was the need for extraordinary authenticity. Nobody will follow a phony. You only follow the people who are the real deal and are authentic and I call it extraordinary authenticity, especially when you keep true to yourself even in the more challenging times. So, the first part of the book is all about the mindset and unleashing the power of people, and believing in people, that they want to go to work every day to do good not bad, so there’s basically a lot of great know-how in that section. Then I say, once you get your mindset right, you’ve got to get together, and you’ve got to have a plan. So, I really talk about the importance of leaders defining reality and creating hope and then putting a strategy, structure and culture together that will get done what needs to get done. And then the last part of the book is all about following up to get results because the change is never over, and you can’t really start something and get tired of it. A lot of times, leaders start something, they get tired of it, and move on to the next thing before what they really started is done. So, what makes it different, it’s a step by step process, and it’s also based on one other principle. My basic thesis is that you need to really put on your marketing hat when you lead people and you want to get a big change initiative done. You have to get inside the minds of the people you have to lead just like a marketer gets inside the minds of a customer. You have to know what perceptions, habits, beliefs that they have, and then you’ve got to figure out, ‘OK, if I want to change this or reinforce that or build that, I better understand that, and then I develop my action plan around that.’ Too many times people start as leaders saying, ‘This is what I want to get done’ but they don’t understand what’s inside the mind of the people they have to take with them to really make that happen, and that’s a very, very key point and the fundamental starting point from how to really lead.

Yeah, yeah. And a quick sort of side note, I’m curious, how has your leadership style evolved over that period, because obviously there was enormous growth in the business, in the complexity of what you were being called to deliver as CEO? I’m just curious, how do you characterize how your leadership changed over that period?

You know, I would say I’m like everybody, I have things I need to work on, but I think great businesses change iteratively every year. Continuous improvement, stay on top of your customers, and then just evolve and get better, and I try to do the same thing with my leadership. I really believe self-awareness is key, so I always got lots of feedback through 360s and just asking my top three-hundred people for feedback on what they would do if they were me, and then what I would do is I would publish every year what I call my 3×5 card – ‘These are the strengths that I see that I have as a leader and these are the things I’m working on to get better based on the feedback you’ve given me, and help me, and help me make sure that I do what I say I’m trying to do.’ So, later on in my career, for example, I came up as a traditional marketing person, I mean, I was really good at consumer behavior, consumer insights, TV advertising, but I was losing track of what was going on and social media and digital, it was changing so fast, I wasn’t staying up with it. So, I got Tressie Lieberman who ran digital marketing at Taco Bell to reverse mentor me. I said, ‘Hey, Tressie, you know all about this. I want you to teach me what you know, and I’ll teach you everything I know about leadership’ and it was a fair trade at least from my perspective. I probably got a better deal because she taught me more than I taught her.

And then you went to two of the most iconic leaders, I won’t say on the planet maybe that’s too big, but you spent time with John Wooden and you spent time with Warren Buffett and that helped you uncover the next stage of your career, right, which is where you are today? Is that-

Well, I think, I wouldn’t say that’s necessarily true. It was just part of my process. Like, I went to Warren Buffett. Why did I go see Warren Buffett? Well, in 1998 I’m running a company, I’m dealing with Wall Street, I’ve never done that before. So, I go to Warren Buffett, I actually got him to answer the phone call, I said, ‘I’d like to come see it you’ and I went to see him every year for fifteen, sixteen years, and we’ve become friends, but he was so nice, and he gave me so much advice. John Wooden, why did I go to John Wooden? Well, I believe people should be great coaches. He is the best coach of all time. And I taught my leadership program, I had Taking People With You, which is a program I taught. I also taught a program on Building the Yum! Dynasty, and so when I taught that program, I went to him because he built a dynasty at UCLA for all the national championships that he won continuously. So, to me, my growth was always very targeted. If I had something that I needed to learn about, I would go to the source where I thought I could get the most learning, and then through it all, I think I evolved as a leader in continually trying to get better.

So, can we now go into the new venture? What’s behind it? oGoLead, perhaps you could just tell the story of what you’re – having listened to a couple of podcasts, you talk about wanting to change the world by creating better leaders, maybe you can just tell us a little bit more about that?

Well, I think you can tell, Mark, that leadership is my passion. I got more out of teaching my leadership programs at Yum! than anything that I did, I knew what was going on in the company because of it, and I got to know the people, I think you really have to know the people and keep the great people to be successful. So, now when I look at leadership today I go, ‘We’ve got a huge problem in the United States’ and obviously, I think around the world. I call it toxic leadership. There are way too many leaders out there that are in it for themselves. It’s top down, I’m the boss, it’s hierarchical, and as a result what’s happened is if you look at all the research, the Edelman research says the trust of CEOs and institution is lower now than it’s ever been. 70% of employees go to work on average, according to Gallup, disengaged. The millennial turnover rate is three times greater than previous generations. These are big, big problems. There’s a big problem with leadership, and leadership is the answer. So, what I want to do is do everything I can to help people take control of their life and their careers and their work environment to become better leaders so that they can enrich themselves and the people that they have the privilege of leading. So, I created this new company called oGoLead and you can go to www.ogolead.com and you can listen right now. I’ve done twenty-nine podcasts. The most recent one I did was with Larry Bossidy, but as you mentioned I’ve done them with Larry, with Jamie Dimon, and also leaders like Indra Nooyi and Dave Cote, you know, a wide variety of leaders, and I learned so much from doing it but more importantly, the listeners do. Then the second thing is I do weekly blogs and we also provide content like learning guides, like if you’re not good at recognition, you can learn how good you are at recognition, where your opportunities are, and then go to the learning guide and get some tools that will help you institute recognition as part of a tool in your repertoire. And then the thing that I’m really excited about now is we’ve launched an online digital leadership program. The first line supervisor, 70% of people, well, I think it’s more than that, excuse me, 90% people who become supervisors wish they had more training on how to be a leader, and so we created an online digital leadership program that we’re offering that teaches people how to lead yourself so you can lead others, and this is all about becoming ‘heartwired’, leading from your heart, showing people that you care about them, you’re committed to them, you recognize them, you get them involved, and then getting ‘hardwired’, putting process and structure in place to make sure that it really happens, and I think what makes the program really unique is that, and I say this humbly, it doesn’t sound that humble, but I teach it, and people who’ve actually done things, that have walked the talk on this stuff, they teach it. With me I’ve got Gregg Dedrick, who is my Chief People Officer and President of KFC, and then I have Tim Galbraith who’s got a PhD in Human Organizational Development, and the three of us teach the program, and it takes you fifteen to twenty hours to go through it but I guarantee you will walk away a better leader and there’s nothing like it on the marketplace, so I’m very, very excited about that. But my real goal is – look, I’ve had my success, I’ve been CEO, I’ve been blessed to be able to do almost anything I could ever imagine that I wanted to do, but what I can do now is really give back and share my learning and hopefully make the world a heck of a lot better place by showing people how to be great leaders. 

Yeah. Well, one of the things that came out of the book was it sounds like how much fun you’d had in your career and it sounds like, as you say, you’re enthusiastic, but it sounds like you’re having fun in this stage of the journey as well?

Yeah, I did, and you know the way I had the most fun, Mark, was for recognition. I had personal awards that I gave away. I gave away rubber chickens when I was President at KFC, cheeseheads when I was President of Pizza Hut, then I gave away these walk-the-talk teeth when I was the CEO of Yum! Brands and I would write on each one what that person did to get the recognition and take pictures and say to everybody, ‘Those pictures are going to be in my office’, and by the way, if you come to my office I have my walls covered with people I’ve recognized all around the world and I have pictures of those people even on the ceiling! So, I used it to really dramatize the fact that, all businesses, I don’t care which business you’re in, get around a formula for success, if you get your people right, your people capability right, then you’re going to satisfy more customers then you make money. Too many people just start out thinking about, ‘Oh, I want to make a lot of money’ and that’s not going to get you where you want to go with the satisfaction that you can have.

Yeah, yeah. And now recognition, it’s not a one-way street, you’re very clear that it needs to be earned, right?

Absolutely. Earned recognition is the key and you recognize good behavior and bad behavior. Good behavior is obviously the easiest to do and I always try to recognize those behaviors because I knew that if we did these things it would drive success in our business, like customer focus, bold thinking, so I really tried to recognize those kinds of things, but I tell you what, if you weren’t living by the law of the values and consistency of our company culture, you didn’t get to work there, and I don’t think you can walk by bad behavior or walk by bad performance and I think that I was very, very strong on performance management, but it’s a lot more fun to be recognized in all the great things that are going on around the company and what I found though, Mark, was hey, that’s how you get the performance! That’s the key because you show people that what they do is valued and recognized and appreciated and that they matter, and that’s how you really get an engaged workforce.

And I think you make the point in some of the materials I’ve read, recognition works anywhere all over the world and it works in any industry as well?

Absolutely. I’ve found that people say ‘Oh, it wouldn’t work in China’ because they’re very focused on the leader being the number one person. Well, let me tell you something, one of my favorite pictures is, I have two thousand restaurant managers doing the Yum! cheer on the Great Wall in China, and I gave away a Yum! award to one of our employees in China and she took it home and gave it to her parents, it’s locked up in their parents’ safe because it’s so valued.

Wonderful.

You know, people told me in England that they were very sophisticated, and they wouldn’t want to do any kind of fun recognition. That’s crazy! People want to have fun and be recognized all around the world. 

Yeah, absolutely, absolutely. So, David, I know time is a little bit tight so, I sent some questions across to you. First one – what have you changed your mind about recently?

You know, when I first retired from Yum! Brands I started a recognition company because I think I wanted to drive home the importance of recognition, and then I realized that recognition is critical and it’s a critical driver of success, but what I really wanted to do was focus on leadership. So, I pivoted from just recognition to leadership and then talking about the importance of recognition as you become a better leader, because I think that leadership and creating better leaders is a way how we can solve this problem of toxic leadership that’s out there, so that’s the biggest change that I’ve made.

Yeah. Second one – where do you go to get fresh perspectives to help you solve problems and make decisions? And in the book, you actually refer to the fact that sometimes, you are concerned that your enthusiasm gets you carried away and so, I’m just wondering how do you get fresh perspectives to sort of counter that if you like?

Well, first of all, I always have a lot of one-on-ones where I would ask people what they think of my leadership, what do I really need to do, and I didn’t just ask them that question once. You know, the first time you say, ‘What do you think of my leadership?’ people go ‘Oh, you’re great’ and I said ‘No, what do you really think about my leadership?’ ‘Oh, you’re really great!’ Then you go ‘What do you really think?’ and then finally, ‘Well, you know, you could do this, you could that’ and that’s when you really find out, so you’ve got to really want to find out what you can do to be better and open yourself to be vulnerable. Be confident yet vulnerable. The other thing I do to get a fresh perspective is, like, I’m doing these podcasts. I get so energized by all my podcasts with these great leaders because every time I do it, I learn something from that leader that I can apply. I’m a big believer in pattern thinking; you see what’s going on in one place in the world or with one leader and you can say ‘OK, I may be different, my brand may be different, my company may be different but how could I apply that same kind of thinking in my business and in my leadership?’

Yeah, and as you said the reverse mentoring is another way of accessing a very different view from a different demographic?

Right. Believe me, Tressie Lieberman made me a lot better leader.

And I’m sure you did the same even though you said earlier on that you didn’t think that was the case.

Oh, I hope so, I hope she got something. I actually did a podcast with her because she’s now the Chief Market Marketing Officer for a very hot, new digital company called Snap Kitchen and the podcast is fantastic, we had a lot of fun catching up. 

We’ll put that in the show notes as well. So, final question – what’s been your most significant failure or low? What have you learned from it and how did you apply that learning?

I think my biggest low probably happened a couple years ago. Unfortunately, I came down with cancer. I had to go through chemo and radiation and all that and, look, I’ve always been a grateful person, but I think when you get cancer and you have your mortality staring you more directly in the face, I think it’s made me feel extremely blessed for the life that I’ve lived. I never once worried about dying because I think I’m living in heaven on earth but I think what it did do is it, it did say ‘Hey, from every day forward I want to try to make the most out of every day’ and so one of the things I do every day is, literally, Mark, I get up every day, I start out and say ‘OK, what are three things that I’m grateful for?’ and I write them down and I start getting my mindset into a positive framework, and so that was a very key point where I think I was able to take a lot of what I have and put it into even a fresher, more valuable perspective for the long term.

Wonderful, wonderful. Well, David, been great to have you on the show. Where can people get in touch with you if they’re interested in learning more about you or connecting with you?

I think if you go to www.oGoLead.com, you can go on, learn all about the leadership program itself, the podcasts are there, the blogs are there, my bio and my partners bios are there, and we take questions we can answer, not all of them but some of them, but we do that, we have a Q&A part of our leadership program. So, we’re very excited about this. I was going to a school yesterday talking about it. You know, we really want to change the world by helping people become better leaders and I encourage your listeners, it’s never too late to get a higher self-awareness, it’s never too late to really understand how you can impact others, and I guarantee you can learn from people, whether it’s me or somebody else, you can definitely learn from people if you get outside of your little cocoon, and now you’ve got a chance I think with this program to get one of the most advanced best leadership programs that have been created. You can take advantage of that with your personal leadership and then hopefully share it with others.

Wonderful. Well, many thanks, David, for your time. I know you’ve got a lot on but really appreciate you taking time out to talk to us today and I very much look forward to keeping in touch and best of luck with the new initiatives. 

Yeah, thank you, Mark, very much. Your questions were great, and I enjoyed the conversation.

Very good. Thanks a lot. Bye.

 All right, bye.