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An Interview with Yum! Brands, Inc.’s David Novak

Q: 2012 includes the release of your new book, Taking People With You: The Only Way to Make Big Things Happen, and full-year EPS growth of 14 percent for Yum! Brands, Inc. What other major achievements do you expect in the coming months?

We’re very excited about 2012; we expect to continue to grow our presence around the world. Our goal is to achieve at least 10 percent earnings per share growth every year. We’ve done at least 13 percent for at least the last 10 years. The main goal that we have this year is to make 2012 the year for taking people with you for operational excellence. I’ve written a book and the exciting thing we’re doing in our company is we’re taking the book and we’ve created training guides that will go to all our franchisees and all of our restaurant managers around the world and it will be translated into 11 different languages. I think that the thing I’m most excited about is the cascade of the principles of taking people with you and training 37,000 restaurant managers and 3,000 franchisees on how to use the principles to get better results.

Q: You describe your new book as a workbook, how so?

Well, I think a lot of books deal with general leadership principles and this book is more than a book on principles, it’s a book on how to actually make it happen. It’s really a book on the core process of leadership and execution. Because no one can get anything done by themselves of any significance. And this book, when you read it, I actually say to the reader, “To read a chapter a day,” it’s self awareness and the reflection on your own leadership in your own particular business situation. And think it through and then read the next chapter and by the time you read the book, you’ll formulate an action plan that you can actually use in your business or in your personal life.

Q: For executives focusing on the bottom line, how do you explain the relationship between taking people with you and boosting the bottom line?

The problem with a lot of businesses is that people are so focused on the bottom line that they forget how you get there. And the reason why we talk about people first is that I’ve never seen a business that is good that doesn’t have a great leader. I would say, show me a great leader and I’ll show you a great business. Our formula for success is you build the people capability first, then if you have really capable people and outstanding leadership, you will satisfy more customers and then you make more money. And yes, of course, everyone wants to make more money, but you have to realize how you get there and the real formula for success in our business and I would argue in any business, is that you’ve got to make people capability your No. 1 priority.

Q: What is your definition of leadership and has it evolved over the years?

Leadership stems from the fact that leadership is a privilege. The job of the leader is to bring out the potential of every person that works on the team. That’s why I think teaching is the most important thing I do because it’s the best investment I’m making in the organizational capability of the company. That’s why I developed the taking people with you leadership program 15 years ago and I’ve personally trained 4,000 associates and franchisees and I use taking people with you and the lines from taking people with you, which is everything I believe in leadership, to drive home our culture and put focus on the single biggest thing people are working on to drive the business. At the same time, it reinforces my commitment and our company’s commitment to people. I think that leadership is all about taking your team, helping your team reach its potential and it’s all about leading people to victory.

Q: What are three of the most significant benefits Yum! Brands has derived from instilling the principles of taking people with you?

Taking people with you has really focused our organization on the biggest things that drive growth and unleashes the power of our people around the world so that we really achieve what we call building the defining global company that feeds the world. This has helped us transform Yum! into a global powerhouse. We’re a leader in emerging markets: China and more. Now 70 percent of our profits come from international versus 22 percent in 1998. I think the three big things that we’re driving home as we go after a defining global company that feeds the world is that we’re creating famous culture recognition where everyone counts, we’re totally aligned around making our brands vibrant wherever we do business with operational excellence as our foundation.

Q: Who has been one of your most inspirational mentors for engaging people and why?

I think one of the most inspirational mentors I ever had was Andrew Pearson who was the chairman of our company when we were first spun off from PepsiCo. He really served as a great example of a leader-teacher.

Q: Is it possible for a leader to develop passion if it’s not there in the first place?

I think passion comes from what you’re passionate about. I always tell people one of the first principles that you should have is to make sure that you love what you do. Because if you love what you do, then it’s easy to get passionate about it The best advice I give young people is to find out what you love early because when you do that you’ll be passionate about it.

Q: With three distinct brands under Yum! Brands, how do you maintain their uniqueness while encouraging one overall vision for the company?

We’ve clearly defined each brand and we want the brand personality executed with local relevance all around the world. We have unity and values, diversity in style and every country has a different consumer base so we hold our local company managers, people who are indigenous to that country, we hold them accountable for making our brands relevant on a local basis. Pizza Hut stands for unbelievably great pizzas and inspiring social connections. Taco Bell stands for being first and leading the way in everything we do in Mexican-inspired food. KFC stands for indulgent food that tastes so good and moments that you remember. So every brand has its own distinct personality. What we have is consistency on the behaviors we want to see executed around the world that will drive the results behind each of those brands.

Q: What advice would you suggest to those companies that have managed to display consistent growth over time whose investors and critics wonder if it can continue?

What you have to do is to continue to reinforce the fact that you have unfinished business and that you’ve got a future-backed vision for success and continually keep driving home the progress you’ve made against key business strategies and more importantly, talk about what your future plans are. For example, at our investor conference, we talked about the Yum! growth story under the theme of China and a whole lot more. We talked about the fact that we’re really on the ground floor of global growth. We have a portfolio of brands with leadership positions. We have a long runway for growth, new unit development, same-store sales growth and high returns are part of the Yum! sustainable formula. And the three things that drive shareholder value I constantly reinforce are: new unit potential, same-store sales growth and return on investment capital.

Q: What is “reframing” and how can other franchises benefit from the practice?

Reframing is when you look at a basic business issue and lay out in more descriptive terms of what you have and rather than just talking about it generically, you reframe what your product is or what your business is in a way that has much more relevance and insight for the customers you want to appeal to. It’s not enough to just say we offer these things, you want to offer these things in a manner that shows you understand your customers and it’s relevant to them.

Q: Would you share the origin of the floppy rubber chicken recognition and how it has evolved?

When I first become president of KFC back in 1994, I knew I wanted to make recognition a major driver in our company because I’d seen how starved organizations are and how much people love when you give them recognition. Fun drives a lot of what makes companies special and unique. And what I wanted to do was take recognition which I knew was powerful and important for the reasons I just talked about and use recognition as a way to drive fun in our organization. So rather than give away a plaque or an award, a watch or a pin, I decided to come up with a really creative recognition award. 
Laura Fenwick is the manager of publishing for the International Franchise Association. She can be reached at 202-662-0761 or lfenwick@franchise.org.

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