Executive Insights | May 2010 | By Staff

Why the Customer is So Important to David Novak

The Yum Brands CEO tells QSR what drives innovation in his global food company and what he considers a “home run.”

In the May 2010 issue of QSR, Yum Brands CEO and chairman David Novak was selected as one of the quick-serve industry’s Top 10 Most Innovative People. Novak has been at the helm of one of the world’s largest quick-service companies for the last six years and has made broad changes at the company.

In just half that time, the company’s World Hunger Relief effort has generated massive awareness, volunteerism, and funds for the United Nations World Food Programme (WFP) and other hunger relief organizations saving millions of lives. To date the initiative has raised $60 million for WFP.

During his 20-year tenure with the company, Novak has more firsts than even he can count. Among the hundreds of innovations during Novak’s run is the iCHING internal business network, which allows employees worldwide to collaborate and share best practices; the Achieving Breakthrough Results high-impact leadership training; an aggressive international expansion program; and such popular menu roll outs as the Kentucky Grilled Chicken product line.

Last year marked the ninth consecutive year that Yum opened more than 1,000 restaurants outside the U.S. And the company is ranked No. 239 on the Fortune 500 list, with revenues of nearly $11 billion in 2009.

In Novak’s own words, here’s just exactly where all those good ideas come from.

QSR: Where do you get your best ideas?

David Novak: Customer insights and building know how. It’s so important to be an avid learner, pursuing knowledge and best practices inside and outside our company.

Building know how is one of our How We Win Together principles that defines our culture, and it’s a key to innovation. Breakthroughs come when we get people with knowledge thinking creatively. I also like to practice pattern thinking, which is the ability to make connections, pick up on consumer insights or trends and apply what’s going on in the world to our business.

Is it harder to find innovation in a company the size of Yum! Brands as compared to smaller businesses?

Our mission is to constantly listen to the voice of our customers, connect with them, and always reach for new innovations and excellence in everything we do. We have leading brands that are loved by customers around the world in 100 countries, but we’ve found ways to make a big company feel small so each individual feels a personal connection and accountability to building the business.

In our culture, we believe that everyone can make a difference regardless of where they are or what function they work for. Some of our greatest innovations come from our franchisees.

My constant challenge to everyone is to ask, “What can I do now to get breakthrough results in my piece of Yum?” This is an important part of our Achieving Breakthrough Results training and the kind of thinking that drives step-change. I also view our 37,000 restaurants as laboratories where we can experiment, learn, and share best practices on global scale. Our scale is an advantage in so many ways. One example is our World Hunger Relief effort that in just three years has generated massive awareness, volunteerism and funds for the United Nations World Food Programme and other hunger relief organizations saving millions of lives.

Does your background in marketing help you discover innovative ideas?

My marketing mantra for the organization is, “What consumer perception, habit, or belief do you have to either change, build, or reinforce in order to grow the business?” I think that when you truly listen to the voice of the customer and answer that question, you’ll have a home run. Building know how and wiping out “not invented here” mentality definitely helps to fuel innovation.

How much innovation in general are you seeing in the restaurant industry these days?

There can never be enough. The restaurant industry is more competitive than ever as we all seek ways to bring innovation to the marketplace. Today’s consumers want more choices in tune with their lifestyles and they are more selective than ever about how they spend their money.

You have to look at every customer touch point including assets, service, menus, and delivery models to back-of-house cooking processes.

It is important to realize that innovation isn’t just the responsibility of marketing. Innovation is the responsibility of everyone in the organization. You have to look at every customer touch point including assets, service, menus, and delivery models to back-of-house cooking processes.

The advantage we have is our global presence where innovation in one part of the world can be translated to another part of our world and quickly brought to market. I see our worldwide teams making great progress on building sales layers and leveraging day parts, introducing exciting new products, developing cutting-edge store designs and finding unique ways for consumers to access our products.

Our goal is to constantly raise the bar as the defining global company that feeds the world.