‘Taking People With You' concept has worked: David C Novak, Chairman & CEO of Yum! Brands

Once a year, David C Novak, Chairman & CEO of Yum! Brands, makes a pilgrimage to meet the Oracle of Omaha, Warren Buffet, to get wisdom for a lifetime. But this year, the meeting was all about the US economy. The sage of investments clearly made a case for an American rebound. For 15 years, Novak has been at the helm of the American quick service restaurant giant that owns the iconic brands Pizza Hut, KFC and Taco Bell. And while he’s been consistently delivering a 13% EPS to all Yum! shareholders over the last decade, Buffet’s clairvoyance only makes him more upbeat about ‘recognising’ people, a philosophy he borrowed from Jack Welch of GE and improvised to such an extent that today, he has developed an in-house course called ‘Taking People With You’. He’s even authored an eponymous book for the 1.4 million Yum! employees. On a hot summer evening, Novak in his trademark blue-collar Yum! shirt, is the picture of calm at a Gurgaon hotel. But ask him about TPWY and he speaks with barely contained enthusiasm. Excerpts from the interview:

How did you come up with the idea of ‘Taking People With You’?

When our company was spun off from PepsiCo in 1997, I had the opportunity to visit Jack Welch, Chairman and CEO of GE, on a roadshow. I asked him what were he to do if he had to restart his tenure as CEO at GE. He said if he were to go back, he would talk to people, show them his vision for the company, what opportunities there were and share his leadership philosophy. Just before we spun off, Roger Enrico, the Chairman of PepsiCo, asked me to develop a leadership program for PepsiCo. I was to give that first seminar to Pepsi executives. But we were spun off into a restaurant company.

So I took the presentation of the seminar and put them in the files. But after I met with Welch, he brought up his recommendation to me. Then I realised how it would be to share my vision of leadership with my people at Yum! Brands, how to take people along to give results.

How has the ride been from the genesis of the TPWY concept until now?

I gave my first TPWY presentation in London with eight general managers. They loved it. At that time, we had around 750,000 people in our company. But now we have 1.4 million people. So I started doing this program and scaled it up. I started with 50 people over 2.5-3 days. I did this as many as eight times a year. Over the last 15 years, I’ve reached out to over 4,000 people in our company. Now we have about 40,000 restaurant managers across the world. I wrote the book (Taking People With You) so that I can share my learnings with the restaurant general managers. Every restaurant GM across the world is receiving the book. We also have training guides that we developed in eight different languages.

Is that how you decided to customise recognition regionally?

Yes, one of the basic values we built our company on was this belief that recognition is a very powerful and universal trait. I lead people just as a marketer thinks about his target audience. I came up from the marketing background. So I put my head inside the heads of people I have to lead, understand what their perceptions, habits and beliefs are. And then when I know how people are thinking, I develop initiatives and approaches that’ll do what I call ‘shock the system’, so that I can break through the clutter and really draw attention to what I think is really important. For instance, one of the things I knew was that recognition has universal value. It doesn’t matter if you’re from India, United States, China or the UK. Everybody likes to be recognised all around the world. So I wanted to make that very high value in our company.

So how did you shock the system and cascade it Yum-wide?

When I was President of KFC, I gave away rubber chicken, not just a plaque or a watch because everybody might do those kinds of things. But I wanted to break through the clutter and shock the system and so I gave away rubber chicken. When I was in Pizza Hut, I gave away cheeseheads, then I have these talking teeth that I give away from time to time. The good thing is that all our leaders across the world have recognised the value of recognition. Niren (Niren Chaudhary, President, Yum! Brands, India) has theses snake charmer awards that he gives away for mesmerising performance. The president of Taco Bell has an award where he gives away a sauce packet. When I was talking to somebody who runs our development function, I learnt that he gives away Eskimo awards where he shows an Eskimo taking a spear and breaking the ice for breakthrough performance. When you lead people, you need to cast the shadow of leadership that others follow. Because I took a very innovative approach towards recognition and used that to differentiate culture and have fun, it basically shocked the system.
Recognition can be both positive and negative. You’ve played up the positive. How do you deal with negative recognition?

Recognition is one of the most powerful ways to acknowledge the kind of behaviour you want. It’s a lot of fun to celebrate the achievements of others and the things that are going right within organisations. But I think as a leader, you also have to recognise the bad things too. If people are demonstrating behaviour that is not consistent with your values, you have to take action. Absolutely, we also recognise the bad behaviour. We rack and stack performance in our organisation. So if we have 150 stores in India, every store is ranked in terms of its ability to drive operational excellence. If you’re in the top tier, you can recognise people. In fact, the top 15% restaurant GMs in India get the opportunity to do an MBA. So if they really perform, we’ll give them additional education. We also recognise the two highest performing restaurant GMs in India by giving them cars. That’s a very powerful thing to do, something that all restaurant GMs aspire to have. So it shocks the system. At the same time, if you’re at the bottom and you stay there for a long time despite the right culture and the right work environment and the right opportunities that convey you can grow in this company, you ask those people to work somewhere else. That’s how you continually upgrade your organisation.

So what’s the churn like in your organisation?

It’s about 10% annually. So we have a good balance between recognising the good behaviour and the bad behaviour. One of the things I know is that people want to be in the A-Team.

What did Warren Buffet tell you when you met him this year?

The thing that he keeps telling me is that the United States will bounce back much stronger and he is buoyantly optimistic about the power of our country.