A Crash Course From Yum's 'Accidental CEO'

Former Adman David Novak on Crystal Pepsi, Rubber Chickens and Growing Up

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David Novak, chairman-CEO of Yum Brands, parent of KFC, Taco Bell and Pizza Hut, has penned a business book with the eye-catching title "The Education of an Accidental CEO: Lessons Learned from the Trailer Park to the Corner Office."
Photo: Seth Wenig

David Novak, chairman-CEO of Yum Brands

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That path has propelled Mr. Novak through a succession of agency positions to top marketing and management slots at PepsiCo and the three restaurant chains it has since spun off as Yum. Mr. Novak, who is donating his proceeds of the book to the United Nations World Food Programme, discussed with Advertising Age everything from his successes with franchisees to his failure with Crystal Pepsi -- and explained why he has a thing for rubber chickens.

Advertising Age: Why call the book "The Accidental CEO"?

David Novak: I didn't really have a master plan to become a CEO, and my background is very untraditional, starting from when I was a kid growing up in a trailer park. Living in 23 states by the time I was in the seventh grade. Being a journalism major vs. an M.B.A. Starting out as a copywriter, being in the agency business vs. being on the client side. ... I ended up being CEO of the largest restaurant company in the world, but if I look back at my beginnings, I don't think I ever envisioned myself there.

Ad Age: What did that experience growing up teach you?

Mr. Novak: One thing that was extremely valuable for me is that I did have to move every three months. It forced me to work through the anxiety of the unfamiliar and taught me how to work with, learn from and get along with many different types of people in many different situations.

Ad Age: What does your background as an adman bring to your job?

Mr. Novak: When you are in advertising, you have to be a student of the consumer. You have to be a great communicator, and a lot of what I do is communicate our vision for the company. ... My background in the agency business has given me a core competency in advertising and more importantly how to motivate and raise the bar on an agency's performance. In the agency business, you are in the service business and -- guess what -- we are in the service business. In both, you have a huge sense of urgency around making the customer happy. ... And finally, you have clients in the agency business. We don't have clients per se, but we have franchisees, and we need to motivate and convince franchisees to take the direction that we want. Franchisees don't work for you, so you have to use indirect influence, and I learned to use indirect influence skills.

Ad Age: What advice do you have for marketers who deal with franchisees, auto dealers or other middlemen?

Mr. Novak: Take the mind-set that the franchisees are vital partners. They have tacit knowledge because of their experience that you typically don't have. Most franchisees have been in the business a lot longer that you. ... Spend time with the good ones. There are always some really great thought leaders and innovators, and you need to make them your internal board of advisers. The last thing to remember is that all franchisees want to be led. The only time they will start doing your job is when you are not doing it.

Ad Age: In the book, when you talked about parting ways with an agency on Pizza Hut because the people there were "afraid we wouldn't get their ideas," what did you mean?

Mr. Novak: Agencies make big mistakes when they think that clients don't really understand what great creative is or that clients don't get it. Sometimes there's an arrogance that agencies have that they get it and other people don't. ... They are so much in the mode of trying to protect what they have or what they have done that they are not really listening to what the business problem is to find a solution that works.

Ad Age: You like to "shock the system" through events and things out of the ordinary, such as giving away free tacos if someone steals a base during the World Series. Why?

Mr. Novak: Consumers like to have fun. People work hard, and if you get into a routine, your life becomes monotonous, and you are doing the same thing all day every day. When you shock the system, you break through the clutter. ... We are always looking for ways to use events or be topical so that we can bring a smile to peoples' faces.

Ad Age: Of course, the bigger the idea the bigger it can flop.

Mr. Novak: You have to have a view in marketing that nothing ventured, nothing gained. You can't get to greatness in any situation by being driven by fear.

Ad Age: What would you say was your worst mistake in marketing?

Mr. Novak: ...The biggest mistake in marketing would have been Crystal Pepsi.

Ad Age: In the book, you say your failure there was not listening to warning signals.

Mr. Novak: If you look at what's going on in the beverage industry today with all the flavors and the better-for-you products, Crystal Pepsi was an idea that was well ahead of its time. It was a brilliant idea. It was just poorly executed because I wouldn't listen. I was so in love with the idea that I didn't step away from it enough, so that I didn't listen when people were giving viable suggestions. We could have been clearer in the positioning to have it taste a little more like Pepsi, like people suggested, and it would have been a home run. If I hadn't rushed it to get into the Super Bowl, which is always the big thing at Pepsi, we would have had a lot better product quality. ... Sometimes people will say "It can't be done" every step of the way, and as a leader, I have to say, "Man, I'm gonna follow my convictions," and that's what I did in this case. The problem is that sometimes when people say "It can't be done" every step of the way, they might be right. ... The thing that upsets me about Crystal Pepsi isn't that it failed; it's that it could have been so great.

Ad Age: The book is very heavy on motivating and celebrating people. Meeting people at the airport with brass bands and handing out rubber chickens as recognition trophies at KFC. What do you say to people who might look at this as cornball?

Mr. Novak: The great thing about recognition is that it's an absolutely wonderful -- and very cheap, by the way -- means to celebrate results and have a lot of fun doing it. What we found is that these recognition awards are very personal, so when you give one away, you give a little bit of yourself and what you value. ... No matter where you live, what kind of person you are, you love to get recognized. It just makes our culture that more unique. A universal selling proposition as to why you should come to our company is because what you do is valued.

Ad Age: What happens, though, when your results are not there? There are times when there is nothing to celebrate.

Mr. Novak: Just because you recognize people doesn't mean you don't have performance management. ... The bottom line is that if you don't have performance, you don't have credibility. And no one is going around recognizing people that aren't getting things done. When times are tough, you still need to have positive energy, and you can still find people who are doing great things that need to be recognized. It's more important to recognize the doers in difficult times than when things are going great.

Ad Age: Speaking of difficult times, you weathered the rat infestation and E. coli situation with Taco Bell. What advice do you have when it comes to crisis management?

Mr. Novak: The first is don't panic. The second thing is get all the facts. Then, once you have a stable situation, you are calm and collected, then you make a good decision based on the facts. The good decision in my mind is always based on doing the right thing. Whatever the right thing is, do it. If it means you have to close the restaurant, do it. If it means you have to stop selling the product, do it. But do the right thing. And then continually get the word out on how you are handling the situation, and then, once the crisis is over or subsided, then you have to lay out what you are going to do to the public to make sure it doesn't happen again.

Ad Age: You talk a lot about benchmarking in the book. Who -- outside your own company -- would you say is doing an outstanding job of marketing today?

Mr. Novak: Apple does brilliant work. They position themselves as the smart, hip choice vs. the big guy. I love Target. Target has shown how to do tremendous branding in a tough retail environment. I actually like AT&T right now. They look like a leader. They have great leadership stature. I always liked Saturn. It was smart, intelligent work. Inside our category, Jack in the Box has an outstanding campaign. And I really admire what McDonald's has done recently.
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