Staffing Management

David Novak Talks Recognition Lessons

By Rita Pyrillis

Apr. 27, 2016

When David Novak joined the pedigreed ranks of PepsiCo Inc.’s executive management team in the mid-’80s, he stood out from the start. His regular-guy demeanor, untucked shirts and slight Texas twang seemed at odds with the besuited Ivy League MBAs hungry to succeed in the company’s sink or swim culture. 

Novak was different, recalled Gregg Dedrick, a former president at KFC, which was owned by PepsiCo at the time.

“He was not of the typical Pepsi mold,” said Dedrick, who met Novak in 1989, three years after Novak joined the company as chief marketing officer for the Pizza Hut division, which was also owned by the soft drink giant. “He was down to earth. He asked questions about you and he cared about his team. He was a non-MBA in a land of MBAs. You could see that sometimes he felt like a fish out of water, but not because of his abilities and skills.”

His lack of academic credentials was a sore spot so tender that Novak had to leave the room whenever colleagues began talking about their degrees and alma maters.

 “All those guys had MBAs from Harvard and Northwestern, you name it, and I had a bachelor’s from the University of Missouri, so whenever anyone talked about where they went to school, I went to the bathroom,” Novak said. “I was just insecure about it because I didn’t have an MBA. Yet I was growing faster and moving faster up the ladder than most of my peers.”

‘All those guys had MBAs from Harvard and Northwestern, you name it, and I had a bachelor’s from the University of Missouri, so whenever anyone talked about where they went to school I went to the bathroom.’

—David Novak

Clearly, the lack of a high-dollar degree wasn’t a hindrance. It took the humble, unassuming Missouri grad just a decade to scale PepsiCo’s ladder and become CEO of Yum Brands Inc., which under his leadership grew from a fragmented collection of financially embattled eateries into a world-renowned, multibillion-dollar force in the fast-food industry. Novak, 63, guided Yum as CEO until stepping down in 2014, and is now the executive chairman, a role he'll retire from at the end of May. Today his primary focus is on launching a new business venture, developing leadership programs for middle school students and funding various philanthropic projects through his family’s foundation.

Novak’s rapid rise can be traced back to 1994 when he became KFC’s president. The fast-food chain was struggling financially and suffering from low morale after PepsiCo acquired it nearly a decade earlier. It was there that he began building a reputation as a skillful leader and became the launching pad to follow through on a promise he made to himself years before.

Early in his career, he recalled meeting with a group of salespeople at PepsiCo who expressed high praise for a colleague who was about to retire. As they expressed their admiration, the sales veteran began to cry, Novak recalled.

“I asked him, ‘Why are you crying? These guys are heaping praise on you.’ He said, ‘Well, I’ve been with this company 47 years, and I didn’t know people felt this way.’ ”

That’s when Novak vowed that if he were ever in a leadership position, he would make employee recognition a top priority. He did just that at KFC and eventually turned the chain around.

Chicken Idea Hatched

Novak credits the concept of recognition and rubber chickens for his success.

He began rewarding employees for good work by tossing them a rubber chicken. He conceded that it might seem hokey but said it went a long way toward boosting morale. “Sometimes the soft things bring hard results,” he said.

His accomplishment did not go unnoticed.

In 1997 when PepsiCo spun off its struggling fast-food division, which included KFC, Pizza Hut and Taco Bell, Novak was asked to lead the new venture that would become Louisville, Kentucky-based Yum Brands. It was a big step for Novak, but an even bigger challenge.

“We were struggling, we had terrible results, and we had a bad culture,” he said. “We took three great brands that were poorly managed, and we were able to put the right culture and processes in place and we had enormous success. One of the things that really drove it was the fact that we made creating a culture where everyone makes a difference a top priority.”

Today, Novak is an evangelist of employee recognition, promoting the power of a simple “thank you” in a new book titled, “O Great One: A Little Story About the Awesome Power of Recognition,” and a new venture called OGO Enterprises. The acronym OGO comes from the name he jokingly asked his three grandchildren to call him — O Great One. While the details of his new company are still being hammered out, he said that OGO Enterprises offers online leadership training and will sell recognition-related products like an “OGO jar” modeled on a Father’s Day gift he received from his daughter. The jar contained slips of paper inscribed with expressions of gratitude from family members.

“I realized that the concept of recognition is totally universal so why not create a brand around it?” he said. “I’m going to spend the rest of my life on my vocation, which is building awareness of the global recognition deficit and giving people ways to recognize others. I’m not going to make a dime on this, and I don’t really care. What I do care about it is making a difference in the world.”

Jonathan Blum, former senior vice president and chief of public affairs at Yum, calls Novak a visionary leader with a gift for recognizing what drives others.

“That was his greatest gift to the organization,” said Blum, who was recruited to Yum by Novak in 1997 from Taco Bell. “Coaching people to success, he’d meet with team members, franchisees, supervisors, everyone. He would know what motivated you, and he would unlock that and work toward that for you. If someone wanted more responsibility, he would provide that. If someone were motivated by title, he’d use that. It’s an insight that not everybody has.”

Neal Sullivan, chief business development officer at OGO Enterprises and a former marketing executive at media giant Gannett Co., attests to Novak’s ability to motivate. He recalled leaving a lengthy business meeting at Novak’s home and walking out to his car where Novak said his goodbyes.

David Novak2 April 2016

David Novak, then-chairman and CEO of Yum Brands, serves milk to children at the Leovigildo Pineda Cardona community school in Santa Rita, Honduras, as part of the company’s annual World Hunger Relief effort (2011).

“He stopped halfway to the house and yells, ‘Hey Neal, one more thing,’ ” said Sullivan, who met Novak through Lead2Feed, a student leadership program established by Novak. “I’m thinking, ‘What didn’t we cover?’ and then he puts his hand out and looks me in the eye and says, ‘I just want to say how much I appreciate your passion for making this business a world-class brand.’ That just blew me away.”

Movin’ on From Town to Town

One could argue that Novak’s people skills were honed by a childhood spent as the perennial new kid at school as his family moved from state to state — 23 of them by the time he was in seventh grade. His father was a surveyor for the U.S. Coast and Geodetic Survey; Novak and his two younger sisters grew up in trailer parks throughout the Midwest as well as New Mexico and Texas.

“My mom would check me into school and say, ‘David you better make friends because we’re leaving,’ ” he said. “It taught me early on how to work through the anxiety of being in new situations, how to size up people, how to figure out who I wanted to make friends with, and how to get along.”

Last year, Novak received a Horatio Alger Award from the Horatio Alger Association of Distinguished Americans, which recognizes renowned leaders who have overcome adversity; he considers himself anything but unfortunate.

“I like to tell people that my biggest break was being the son of Charles and Jean Novak,” he said. “They are wonderful people from humble backgrounds who wanted to make sure their kids achieved the American dream.”

Novak, who was the first in his family to attend college, said his upbringing helped him to become a better leader.

“When I’d go out to the restaurants and I’d see my mom and dad — really smart people — working hard, trying their best to make a living for their families,” he said. “I never felt that I was any better than anybody else. I just think I’ve been blessed to have great coaching and great experiences that have allowed me to take advantage of the gifts that God gave me.”

Novak, a devout Christian, said his faith has taught him humility — a quality that Dedrick said helped him to win over even the biggest skeptics at PepsiCo. He recalled Novak taking the stage at a big company meeting, slightly rumpled with his shirt hem hanging out and fumbling with his microphone, prompting the public relations director to slip him a note with instructions. Novak read the message out loud.

“It said, ‘That thing is a mic so you might want to keep it near your mouth,’ ” recalled Dedrick. “People just roared. They loved it. People responded to his willingness to be vulnerable and transparent.”

Novak never did earn an MBA, but he no longer needs to leave the room when others boast about their academic accolades. Turning Yum Brands from an underdog company into a global giant with 41,000 locations in 125 countries and annual revenue of more than $13 billion means that business school students will likely be learning from his leadership style for years to come.

“You have to get through those inner dragons,” Novak said, referring to his insecurity over not having an MBA. “Experience trumps education over the long term and your ability to add value trumps a pedigree. It’s what you do with your experience that matters.”

Novak hopes to spend the rest of his life sharing his experiences with others through his leadership training programs and by spreading the word about the importance of recognizing people’s accomplishments.

“You may not believe in a floppy chicken, but you should believe in the concept of recognition,” he said. “If you don’t use recognition, you’re giving up one of the biggest advantages you have as a leader, which is to show people that you care about what they do and that you’re watching.”

This story was updated on April 28, 2016, to correct David Novak's age as well as his current position at Yum Brands. He is retiring from his current position as executive chairman in May 2016. Also, Jonathan Blum is a former senior vice president at Yum.

Rita Pyrillis is a writer based in the Chicago area.

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