Afford Anything - What You Can Learn From the CEO Who Built KFC, Taco Bell and Pizza Hut

Episode Date: August 23, 2024

#534: We sit down with David Novak, the co-founder and former CEO of Yum! Brands, the giant parent company behind KFC, Taco Bell, Pizza Hut, and the Habit Burger Grill. David shares stories from his remarkable career, offering insights into leadership, decision-making, and personal growth. We dive into one of David’s most memorable projects: the creation of Crystal Pepsi. David talks about how the idea was born out of a gut instinct when he noticed a trend toward clear beverages. The media buzz was massive, and he was convinced it was a winner. But the Pepsi bottlers pushed back, saying it didn’t taste enough like traditional Pepsi. David pressed on anyway. The product launched to a lot of fanfare but ultimately flopped.  David reflects on this experience as a lesson in the importance of listening to feedback, even when you’re sure you’re right. The conversation then shifts to David’s unique upbringing. He lived in 23 different states before high school. This taught David to adapt quickly, make friends fast, and assess people and situations—a skill set that became invaluable in his leadership roles. David then takes you through his early career, from being a mediocre student who found his passion in advertising, to making a pivotal move from marketing to operations at PepsiCo. This shift was crucial, setting him up to eventually lead Yum! Brands.  David’s journey is filled with stories of hard decisions, like turning down a bigger job at Frito-Lay because it didn’t align with what truly made him happy. He shares his philosophy on prioritizing joy and finding fulfillment in your work, a principle that guided his entire career. Leadership is a major theme in the discussion. David talks about the balance between confidence and humility, using Warren Buffett as an example of someone who embodies both. He also shares his thoughts on how to handle criticism and feedback.  According to David, the key is to listen carefully, avoid being defensive, and understand whether the feedback is valid before making decisions. David also offers practical advice on personal development. He talks about his “Three by Five” exercise, where he regularly assesses who he is today and what he needs to work on to become more effective. This habit of self-reflection has helped him stay grounded and continually improve as a leader. The episode wraps up with a discussion on company culture. David believes that creating an environment where everyone feels valued is essential for success. He emphasizes the importance of leaders modeling the behavior they want to see in their teams and being the first to extend trust and positivity. David’s stories and insights provide a deep dive into what it takes to lead a major company, make tough decisions, and continually grow both personally and professionally. Timestamps Note: Timestamps will vary on individual devices due to dynamic advertising run times. 0:00 - Introduction to David Novak and his leadership background 6:17 - David’s personal journey and learning framework 11:25 - Importance of listening to feedback in decision-making 17:31 - Impact of frequent childhood moves on David’s adaptability 23:32 - Identifying and focusing on what brings joy in life and work 29:26 - Value of learning that leads to action 35:58 - Overcoming challenges by reframing your approach 42:20 - Learning from mentors who have succeeded in your field 48:35 - Criteria for board membership: contributing and learning. 54:47 - Building a high-performance culture at Yum! Brands 1:01:02 - Mapping out learning needs for project success 1:07:25 - Gaining confidence and skills for leadership 1:13:23 - Maintaining integrity and taking the high ground 1:19:03 - A mentor relationship that shaped David’s leadership 1:26:02 - Evaluating what successful companies are doing right For more information, visit the show notes at https://affordanything.com/episode534 Learn more about your ad choices. Visit podcastchoices.com/adchoices

This is an iconic moment. I am sitting next to the co-founder and former CEO of one of the biggest companies on the globe. That company is called Yum Brands and it is the parent company of KFC, Taco Bell, Pizza Hut, and the Habit Burger Grill. The co-founder and former CEO is named David Novak. We're going to discuss lessons about leadership from the man who created one of the biggest companies that has ever impacted the earth, right? Well, thank you, Paula. You're building me up. Thank you.

Welcome to the Afford Anything Podcast. This is the show that understands that you can afford anything but not everything. Every decision requires a trade-off. And that applies to your time, to your money, to your energy, to your attention. So what trade-offs are you willing to make? And how do you more clearly make those decisions? This is a show all about optimizing your limited resource. and making wiser decisions were a show at the intersection of personal finance and personal

development. I'm your host, Paula Pant. Welcome, David. There's so much that I want to ask you about, but I'd first like to start, since we talk so much about sound decision-making as a fan of Crystal Pepsi. I have to say, the decision-making process that you used in order to get to Crystal Pepsi seemed sound. Well, it was very instinctual, to be honest with you. I remember being at Pepsi Cola, just become the head of marketing and sales there. And I sat in my office. And, you know, I'd just gone through the business review and really looked at all the data and the research. And the carbonated soft drink business was not really growing. And if you looked at what was growing, it was all the alternative beverages, clearly Canadian, water, everything that seemed to be.

clear was really doing well. So I'm in there, my office kind of ruminating, thinking about what we could do. And I said, what if we had a clear Pepsi? And I thought about, wow, that would be really shocking to have a clear Pepsi. Everybody would say, you'd have to try it. Right. I called up Roger Enrico, who's the chairman of CEO of PepsiCo, and he said, that sounds like a really good idea. You had to go do some research and see what you find. So we took it out to consumers. They said they love the idea. Now I'm like, oh, man, I'm really on to something here. And what do you do back then when you're running marketing for Pepsi?

You want something big for the Super Bowl. And this was probably around May, June. And so I wanted to get this product on the Super Bowl, make that our big news for that year. And so I immediately worked with R&D, got the product right. We put it into Test Market, actually did in Boulder, Colorado. And when it came off the lines that first day, it was the lead story on CBS Evening News with Dan Rather. He says, today in Boulder, Colorado, Pepsiola launched the Crystal Pepsi.

Now I'm thinking I've got this great idea. And by the way, people heard about Crystal Pepsi and they wanted to try it all across the country. It's like Coors Beer. People were sending cases of Crystal Pepsi to everybody. Now I'm absolutely convinced I've got this huge idea. And so I'm a heat-seeking missile. I'm going to get this on the Super Bowl. So I meet with our PepsiCola bottlers.

Pepsiola bottlers say, David, you've really got a really good idea, but there's one problem with it. I said, what's that? And they said, well, it doesn't taste enough like Pepsi. And I said, well, I don't want it to taste like Pepsi because we want to get an incremental user base. We don't just want a cannibalize existing Pepsi brand. And they said, well, David, you're calling it Pepsi. And it doesn't have enough Pepsiola flavor notes. And I said, well, I don't want that.

I want to get incremental users. And they said, yeah, but you're calling it Crystal Pepsi. So anyway, I didn't hear them. I didn't listen to them. I didn't think they got the brilliance of my idea. So I continued to rush to get this on the Super Bowl. We launched it on the Super Bowl. And by the way, it was the only product in the history of Pepsi Cola that was a carbonated soft drink that wasn't introduced at very low pricing.

It was introduced by the bottlers at premium pricing because they could control how a product was priced. And I said, why are you doing this? are you doing this. He says, well, everybody's going to try crystal Pepsi, but they're not going to come back. It's going to be a boom splash. Wow. Okay. So we launched it and guess what? Everybody tried it. But the repeat on the product was not what it should have been. And you know what the reason was? What's that? Didn't taste enough like Pepsi. I use this as a good example in my book about learning. You know, you really have to learn to listen. You know, when I first started out teaching a leadership program at Youngst's Brands, which I taught to over 4,000 people over my 17th year tenure as a CEO, one of my learnings

was some people will say it can't be done every step of the way. And then someone asked me, well, what if they're right? Well, at that point in time my career, I really wasn't asking what if they're right. They were bringing up an obstacle that I really needed to understand and convince myself with more data, a little bit more work that, you know, I had the right formulation because I didn't. And if I really would have listened to that objection, I think I would have come up with a product or a team would have come up with a product that would still be on the shelves today. So there's a lot to unpack there. And just to give both you and the listeners a roadmap of exactly where I want to go with this. First, I want to unpack. I have a lot of follow-up

questions to what you've just said. So I want to unpack the Crystal Pepsi story a little bit more. After that, I'd like to go into the story of how you grew up in trailer parks, but not necessarily in the way that people would imagine that to be. You lived in 23 states before you went to high school. So what is the story of this trailer park kid who goes on to become a co-founder and CEO of one of the biggest companies in the world, we'll talk through your personal journey. And then your framework for how to learn how to be a better leader, how to make better decisions, you break that framework down into three components, who you learn from, what you learn to do, and how you learn. That's the roadmap. But before we go down that road, or I guess at the beginning of that road, I still want

to unpack this Crystal Pepsi thing for a little while longer. Everybody likes to unpack the failures. And I've got to say, I didn't have the time to dig it up before this interview, but there's a photo of me in 2017 or 2018. I found a Walmart out in rural Nevada that was still selling Crystal Pepsi. I think there was like a limited run. Yes. They brought it back. They brought it back. It's a limited time only product.

Yeah. Yeah. That's because it is very novel and people want to try it. But the big challenge for us, when we live, we live. launched it is we really wanted to have a sustainable product we didn't want to have the traditional boom splat we really wanted to have something that could get in the marketplace and and grow i have three follow-up questions from the story that you told one is was it simply a failure of branding if you had simply called it crystal delight or whatever crystal happiness if you'd given

it a different name such that there wasn't an expectation that it would taste like pepsi i don't think that that would have necessarily worked because I don't think it would have had enough power to break through in the marketplace. What made it a really big idea was the Pepsi line extension because we were leveraging off the power of the Pepsi name. And I think to build a brand from scratch with that formulation, it might have been okay, but I don't think it would have been great. And what we really need to do in the carbonated soft drink business is have brands that really were sizable in terms of volume. So I think it would have been too much of a niche product and wouldn't have gotten enough attention. Okay. Second question then is,

is the bottlers who priced it at a premium price point because they anticipated that it would be a one and done deal, that everyone would try it for the novelty factor and then it would go the way of pogs. Did their prediction become? It's a fait accompli, basically, because that's how they saw the business. Right, right. I think that it moved things along in a limiting fashion. But I think they were actually right, because I think it should have taken. It tasted a little bit more like Pepsi. And the other thing was, is we rushed the product into the marketplace.

And the product had some product quality issues in certain parts of the country. And that's why, you know, the worst way to get on Saturday Night Live, because they did a little spoof of crystal Pepsi being poured off over mashed potatoes and gravy. Crystal gravy, that's right. So I think we could have improved the product, improved the positioning. but it was a two-part failure in terms of looking back. One was I didn't position the product properly. And two, because we rushed it, we didn't have the product quality we could have had. And I think those two things kind of took the business down, along with the fact that the bottlers did premium price it.

But it really didn't matter in terms of the trial. They probably right to premium price it anyway because everybody did try it. Because this was something that, you know, you had to try. You got to realize this was back in the 1993 and back in the Kohl Award days. There had never been a clear Pepsi. This is a shocking idea. And that's why it was so good. And that's why when I look back on it, I'm very disappointed that I didn't do a better job of introducing it and marketing it.

Because I think it was really a really big idea. You even introduced it at the beginning of the show, one of your favorite. You liked the product. I love the product. And people, you liked it in 2018. when you had the limited time only product. I look at it as more of a missed, missed opportunity, Paul. You talked about how throughout your career in any project that you do,

there are going to be people who tell you that something can't be done. Sometimes they're wrong, sometimes they're right. In the case of Crystal Pepsi, it turned out that they were correct. But there are other occasions when there will be naysayers who try to tear down a good idea. How do you distinguish between the two? Well, I think you have to listen to what the issues are. And then you have to understand the obstacles and the barriers. And then you have to find out if they're really legitimate or not.

But the first thing is, don't be defensive and try to protect your idea. Really listen to what the potential barriers and obstacles could be and then decide if they're right or not. If they're right, then you make the changes. If they're wrong, you go back and you say, hey, look, I heard what you had to say. We listened. We checked it out, but we really feel like we've got the right formulation, the right product, and we're going with it. So the leader has to make the decision in the end. But just make sure that you understand the obstacles and barriers that you've got to overcome

along the way, because you have to take people with you. If you just, if you like ignore what people have to say, they're not going to be behind it. That fait accompli that you're trying to talk about. You know, there's one law on leadership that I really believe a lot in, Paula, is that you you'd have no involvement, you have no commitment. And what happened in that situation with Pepsi and Crystal Pepsi is that I brought the bottlers in very late in the process. We were already down the path. And I really didn't want their input, to be honest.

I was going. I was that heat-seeking missile I was talking about. So as a result, I don't think they had that much commitment to it. And if I would have got them involved in formulating the product, hearing what they had to say, I think we would have gotten to a better solution in the end. and I would have a more famous story in the right direction. You know, that year that we put it into test market, it was introduced as one of the top 10 marketing innovations of the year

by one of the magazines at age or ad, I don't know, but it was very touted, okay? Then I think Fortune or significant magazine talked about in the year 2000, the biggest marketing failures, and Crystal Pepsi was on that list. So it was an idea that everybody, really thought was a big idea, but the way I was executed, it ended up being one of the failures. And by the way, one of the reasons why I probably didn't get fired by making a mistake like I did

was that everybody did price it at a premium price. We sold a lot of it and people made money on it. But the thing that bothered me the most, we could have made a lot more. How do you know, and this is another question that then everyone listening can apply in their own lives, how do you know when to pull the plug on a project, particularly a project where people are making money or where, you know, for a listener, where you are making money. Yeah. Well, in that particular situation, we made money for the short term. You know, the first quarter, that's when everybody tried the product. Then the sales waned.

At that point, you realize, well, you got one or two options. You can try to really reinvest and go back in and try to make it great. Or you can just say it's not going to really merit the distribution and the marketing cost. costs to keep it going. And so it's always a very analytical decision, but it's also a belief decision. I didn't believe that we could really resurrect it. Because, you know, once you try, it's very hard to bring back a new product that doesn't make it. You described it as an analytical decision. Do you tend to make decisions more with data or with your gut? Well, I try to be a right-brain, left brain leader. You know, I try to follow my instincts and my ideas and pursue them. I think you've got to

then be objective, and that requires some sort of analysis. I'm not necessarily the most analytical person, but I would always have people on my team that would fill that gap and give me the analysis that we really need to get at. Interesting. Okay. Let's take the story then back to the beginning. One of the core questions that I think a lot of people who are listening to this are probably wondering is how did you get to where you are? Because you've accomplished so much in your life. Let's start with your childhood. You lived in 23 states prior to high school. Your dad was a surveyor, so he moved the family across the country. And you routinely in one academic year would be in three different schools. Right. Yeah, my dad was a government surveyor. He did the latitude and longitude

points. We surveyed basically in small town America or around small town America. Paul, I'm the only person you know that's lived in Dodge City, Kansas, not once but twice. I lived in very small towns like Ticumperry, New Mexico, Detroit, Lakes, Minnesota. I was born in Beaville, Texas, all these tiny little towns. My dad in his surveying party, which basically was about 10 to 15 people, they would survey the terrain around a small town. And then we'd move to that. the next town about three months later. And so my mother would check me into schools. I remember saying, hey, David, you better make friends because we're leaving. And she was so right. I always found, Paula, that if you're one friend away from happiness, when you go into a new situation or a new job,

if you just find that one person, you know, that makes such a big difference in terms of how you feel. And I think that that experience that I got doing that really helped me assess people and go into new situations, get the lay of the land, understand what people were thinking, figure out how to maneuver to get what I ultimately wanted to get done. And that experience was very good. I remember my mother being very disturbed about the fact that she was moving me all the time. We were in Dodge City, Kansas, and I had this teacher in fourth grade as Mrs. Ansholts, and she said, oh, Mrs. Novak, don't you worry about David. He's seeing so much more than any of the kids here. He's getting so much more experienced by going from place to place. This is the best education he could ever get. And I think that was really true in many, many ways. For example, when I would see a new person come into our company

or a new person, you know, come into a situation that I knew they weren't familiar with, I would always be the first one to come up and say, hey, welcome. I'm glad you're here. Is there anything you'd like to ask me? And the reason was, is that I knew how that meant to me. The other thing that I learned from this whole process, Paula, was, you know, I had 10 to 15 families traveling with us. So when we moved, we'd hook up the government trailer to the truck and we'd go from small town to small town. We didn't move by herself.

We moved with these other 10 to 15 families. So I took my neighborhood with me. And we were very close, very close. And so like when I played Little League baseball, I wouldn't just have my mom and dad out there watching my games. I'd have like 15 other people watching my games when other people were lucky to get one parent there. So I grew up really understanding the value of encouragement and support. And I tried to take that throughout my time.

career to really be an encourager to people and recognize them for their worth. The other thing that I would say was a huge learning from my upbringing is you can't jump to stereotypes. There's no such thing as trailer trash. I never felt like I was trailer trash. I knew these 10 to 15 families. My mom and dad were great Americans. They worked their tail off.

They did great things. They wanted the education for me. They wanted me to live the American dream. And so did these other 10 to 15 families. These were really, really good people. And so I learned, I learned not to jump the stereotypes. And a lot of times I would go into situations where I would be the minority. If I was in two-combe carry New Mexico, there are more Hispanic people than are white people at school that I went to.

And so I learned what it's like to not necessarily be the one that everybody's like. And I think that was very valuable for me because one of the principles that I always tried to build in our company is that we believe in all. people. We believe that everybody can count, that everybody can make a difference. And I really wanted to make sure that I did everything I could to create that kind of environment. So I had a rich upbringing. You know, people say, how did you do this? I thought, well, first of all, I thought everybody did it. And, you know, I didn't really realize at the time that I was getting like a great leg up on a lot of people because of the upbringing I had. Right. You learned how to read the room very quickly. But how are you able, especially switching up context so often, to recognize your blind spots?

Well, you know, I think everybody needs truth tellers. You know, people need to have people that will tell them not necessarily what they want to hear. You know, I always say, see the world the way out really is, not the way you want it to be. But I think it's very important that you want the truth. You've got to seek the truth with all your heart. And if you seek the truth with all your heart, and people know that you want that, you'll get it. And so I think finding the truth tellers is great. In understanding who you are, it's so important to have self-awareness.

You've got to have self-awareness. You really have to understand who you are and how you can get better. And that means you've got to ask people how they see you, what you could be doing better. And then you can figure out how to fill your gaps. As I was coming up in my career, you know, I had a marketing background. I didn't have the finance background. So I realized I had to get better at finance. So I went to finance for non-financial executives at Wharton.

So I picked that up. I knew I needed to get an operating experience. So I went and got operating experience. I knew I needed to learn how to be a better speaker. So I went to a speech consultant to help me get better at speaking. But I knew this by having a high self-awareness of who I am as a leader and what I need to do better. You know, for your listeners, one of the things I do every year is what I call my three-by-five exercise. I get out a card and I write down, who am I today on one side?

And I write all the attributes that I might be at that particular point in time. And then on the other side of the card, I write, how can I be even more effective? and I write down the things I need to work on to get better. Then I put it on my refrigerator, so I look at it every day. But I've always believed that self-awareness is a characteristic that you've got to have if you really want to grow. And I'm sure you have it, Paula. You couldn't be doing what you're doing if you weren't self-aware. And you couldn't take this podcast to new heights if you weren't aware about what you needed to do to get better and better as the interviewer.

You said you've been doing this since 2016. if we went back and listened to your first interview versus where you're at today, I imagine you'd see a big difference. Yes. And that's what I think we all have to do as leaders. It's just keep sharpening the acts, keep learning, try to figure out how to get better. I've got some more questions about that. But first, we'll go with that trajectory for the listeners who want to know how you got to where you did.

You know, you started as a copywriter. Then you went into marketing and sort of ascended the ladder. But it seems like a very critical move that you made. was when you moved from marketing to operations, and that really paved the way for what eventually became the creation of young brands. I enjoyed the top of your show where you talked about what this podcast is all about. I think to understand my journey, you have to go back even to my college days. I was a very mediocre student, the first two years of college.

But my third year, I got in journalism school, and I took advertising class. And all of a sudden, man, I loved it. I fell in love with what I was doing. And all of a sudden, I went from having like a 2.5 or whatever it was to 4.0 because I loved what I was doing. How do you decide how to prioritize? How do you decide on where you want to spend your time and what you want to do? You have to start with like what gives you joy. You know, I talk about the importance of writing down your joy blockers. What are the things to take away all your joy? And then write down all your joy. And then write down all your joy. joy builders. And then look at your life. Where are you spinning? Are you spinning over on the blocking side or the joy side? And then figure out where you stand and then figure out how to get to the joy part. What happened to me was I learned very early on that advertising and marketing was my joy and that that's how I was going to spend my time from that day on. So I got out of school, I became an advertising copywriter. And $7,200 a year, I decided, okay, I'm going to be the best I can be at that. I looked at one show books, all these advertising books. There's nothing more sobering

than looking at a blank sheet of paper and you've got to come up with the idea. And it taught me how to think through the strategy, how to create, how to work in an advertising agency. But then I said, I wanted to be a business person. So I wanted to get on the business side of advertising. So I wanted to be an account executive. So I decided to go that route. And then I ended up being the account executive for Heinz 57 sauce in Pittsburgh. From that point, I went to Dallas where I was the account for Tostitos and I worked my way up on the free to lay account. And I was running Doritos, which was the biggest account, Lays, sun chips, all these great products that you, I'm sure you just love to eat. But I would, I never ever was working. I looked at my job as an advertising agency person to

provide business building ideas to clients. And one of the ideas that I came up when I was at Free DeLay was Cool Ranch Doritos. And so, you know, that got me to the point where the Free to lay people who were part of PepsiCo recommended me to become the head of marketing for pizza. Now, that was my big break. That was my big break because I got in this big company. I didn't have an MBA. I'm now the head of marketing and we turn around pizza. Then I go to run marketing of sales for Pepsi. And I realize, to your point originally, you know, it's like, I go to Wayne Calloway, who's a chairman of PepsiCo. I meet with him every quarter. I tell him what's going on. He always asked me questions. We have a great relationship. And finally he asked me,

David, what do you want to do? I said, I want to be a division president of Pepsico. I don't care which one of the divisions. We had KFC pizza, Taco Bell, Friedelay, or Pepsi. I don't care which one, but I want to be the president of one of those divisions. He said, David, you're a really good marketing guy. And I said, no, Wayne, I want to be a division president. He said, David, you're a really good marketing guy. Now, when I walked out of that room, I had the self-awareness that I had to demonstrate that I was more than a marketing person.

So when the chief operating officer job came up at Pepsi Cola company, which was a couple months later, I went in and begged my boss, Craig Weather, for the opportunity to run operations. I said, if I don't do a good job, you can put me back in marketing or you can fire me. But I really want to have this opportunity. Now, when I got that job, I was able to demonstrate that I could get into the P&L, work with the front line, understand the nitty gritty of a business. And that was ultimately why I got to become the president of KFC and all the other things that came along later. But that was me all along pursuing what I love, being good at it because I loved it, and then realizing that I was going to stall out if I didn't get another skill, which was operations.

And when I got that skill, I was able to get the ultimate job that I wanted. How did you learn the skill set required to become a good COO? Well, first of all, I acknowledged that I didn't know anything. I was the marketing guy that go into the bottling plants, and this is why Wayne Callow, he probably felt the way he did, I feign interest while I'm thinking of all the ideas I had to do when I got back, okay? But when you have that as your job, you say, okay, I need to learn in a hurry. I had a lot of power.

When you're the chief operating officer of Pepsi Cola company, you have a lot of power. So what I did is brought in the top operators who really knew what they were doing and asked them what they would do if they were me. What's working? What's not working? And we really identified the processes that needed to be fixed so that we could run better bottling operations because we were not doing it. We were not great bottlers. We owned a lot of company bottling plants. We were not doing a good job. The other thing that I did is I went out on Monday morning and I came back on Friday or Saturday and I went to the bottling plants and I listened to all the issues that that were out there. I found things that were being done that were great, how people were winning.

And then I brought all this stuff back and brought my learnings back to the team. And we acted on it. We were active learners, not just learning something. What are you going to do with it? Okay. So we would get this learning and then come back and then we changed things for the better. And that was how I did the operating job good enough to where I could become the president of KFC, which was a key moment. But I always say if you don't know something, find the people that do know it, fill your gaps. That's how you can succeed. If you try to pretend like you know everything or pretend like you know stuff that you really don't know, you'll ultimately be found out.

And you'll make some big mistakes because you don't have the knowledge or the know-how that you need to have. So what I'm hearing is a bias towards implementation. A bias towards learning and implementing what you learn. Right. You know, I used to think when I interviewed people, that the reason why you'd be successful, Paul, is you're an avid learner, okay? And then I thought, that's not really true because you could learn something and you could be very book smart. But did you put it to use? You have to make that transition and become an active learner. You know, Tom Brady, greatest quarterback of all time, he goes to see Tom House,

who's the greatest throwing coach of all time. He could go spend three days with Tom House, say, oh, I learned a few things, but then go back and set up the same way he did before throw diffus, the same way he did before. He's just learning. He's not an active learner. But what makes Tom Brady great is he puts all that learning to use. That's the key thing. You just don't want to learn for learning's sake.

It's like I read Elon Musk's book. The one by Walter Isaacson. I loved it. Very different kind of leader than me. But what an innovator he is. So if I'm running a company. I read that book and I say, okay, now, how can I do the kinds of things he does in a way that's right for my company and the way that's right for me? Maybe I don't have to do everything the way

he does it. But there's a lot of kernels in that book that I would take back and say, I'm going to do this at Young Brands. If you are still running Young Brands today, having just read the biography of Elon Musk by Walter Isaacson, what from that book would you take it? indie on brands if you were running it today? I would bring all our R&D people together and all our marketing people and our presence together and say, how convicted are we around our ideas? How much do we get into the nitty gritty? How much do we know how things really work? How much are we really setting the example of you, the work ethic that we want to have around here? How long will we push an idea even when we know it's being criticized? There are a lot of great insights in that book that I think

would force you to self-reflect on where you're at. I don't know what the answer would be for you Paul or for my head of R&D or whatever, but I know one thing, anybody you read that book with that kind of mindset is going to be a hell of a lot smarter and we'll come up with ways to drive greater action. Some of what you just said, you know, how convicted are we about our ideas? Sometimes you have conviction about an idea, but it ends up not panning out. Other times you have conviction about an idea and it works. And sometimes a switch, like I read about how you realized simply calling it ranch Doritos was not going to be enough. But cool Ranch Doritos was much more compelling. Cheese Doritos, eh, who cares? Nacho cheese Doritos. Right. Much more

compelling. Right. Well, getting back to Elon Musk, okay, a lot of the things that he did didn't work, but he pursued the idea. Right. Like, you've got he could do it with less solar panels or, you know, you go through the whole thing. Right. A lot of the times it doesn't work, you know. But see, that's what life is, Paula.

It's not like, it's not a straight line up. You know, you've got to go through life, look for the lessons and try to be better at things, basis what you learn. I try to be a lot better listener now. I've evolved from people not realizing how smart I am. Some people say that things can't be done every step of the way, which was basically a conviction statement that when I first taught that, my leadership program, it was all about how you need to be convicted because people will say you can't get it done.

But then I've evolved that to listen to what the obstacles and barriers are and figure out if they're right or not. And then if they're not right, have conviction, but just don't assume you're right. How do you distinguish between when people are bringing up obstacles and barriers, when naysayers are bringing up obstacles and barriers, as I think through that, there are kind of two categories of obstacles and barriers that I typically hear. One are obstacles that are based around specific fundamentals, like this doesn't taste enough like Pepsi, right? There are other obstacles and barriers that seem to be based around probabilistic reasoning. Hey, Only one out of every 20 entrepreneurs end up staying in business after X number of years. Do you think about those separately when people cite probability and stats as the reasons why this is never going to work? One of the first responsibilities of leadership is to define reality. So you need to understand what the reality is of what you're trying to embark upon or get done.

If people just saw the world the way out really is, okay, and never wanted to change it, we wouldn't have all the innovation that's happened in our life. So I think you have to have a mindset that you're really trying to make your business better, make yourself better, and you've got to seek the truth out. Seeking truth is really an important thing. The holidays are right around the corner, and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need servware and cookware.

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but many things for our customers. Big Bank Muscle, FinTech Hustle. That's your commercial payments, a fifth third better. Let's go to your framework, because you've talked about seeking truth, but truth can be difficult to come upon because it's so easy to be delusional. It's so easy to to fall prey to cognitive biases, to simple heuristics, to mental models, to crises of confidence, of self-doubt. And it's difficult to sometimes see through to reality. You've talked earlier about truth tellers. Sometimes you'll encounter, this has happened to me, I've encountered, there's one person I'm thinking about in particular, who on one hand provided some good business advice in that he gave me no holds barred feedback. And much of the feedback that he gave me

were problems that I myself had noticed but had not discussed with anyone. And so he was independently highlighting very similar problems in my business that I myself had also noticed. So he independently corroborated some of what I had also seen. But he did so in a manner that amplified the flaws or exaggerated the flaws to such an extent that the prism through which he saw them seemed not overcomable, which created a crisis of confidence, which then clouded my framing in terms of how I was able to see potential solutions ahead. So this is turning into kind of a long question, but even in these moments of gathering a device, of listening to truth tellers, it can be quite difficult to navigate out of a certain set of assumptions that really create a fog. And is there even an actual truth, or is it simply an amalgamation of a lot of different perspectives? Well, I think it obviously depends on the situation and the context. I think as a leader, you want to try to understand the root of what somebody's really trying to say.

But you said something that I think is really instructional for people to think about. Here you had this person. He's giving you this feedback. But at the same time, he's knocking you down. You know, he's not building you up. He's not inspiring you to take that feedback and move up because he's just dealing with the negatives. The best way to give feedback, and this is something that I learned in my career, and I use it to this day with everybody that works for me and all my nonprofit work, is that you need to start out first with, Paula, here's what I appreciate about you. These are the things that I see that give you the differentiation that make you special, that you've got this characteristic and this characteristic and this characteristic, et cetera.

These are the things, and you've done this. this, this, and this. And then once you know, Paula, that I acknowledge that, then it's very easy for you as a coach to turn the corner and then say, and not but, and you can be more effective if you do these things. And then you hone in on the more effective things that you might want to try this, this, this, and this. That's the way to provide balanced feedback. Because once people know that you recognize them for what they've done and who they are, they will then accept that feedback. Now, when you're getting feedback, you've got to be wise.

You've got to be discerning. You've got to say, okay, now, a feedback from someone you really respect and you know has your interest at heart, that's one that you really want to listen to. If it's somebody that just kind of chimes in, doesn't really know you, kind of chips in from 100 yards away or whatever. You don't take that as seriously. So you've got to be discerning on who are you going to really listen to? And I think that

comes into a case-by-case basis. It's a context situation, but it's very important. You know, my wife, Wendy, who just passed away recently, she was my treat teller. If I gave a speech and I thought it was a A, she'd tell me that was a B. And I said, well, why wasn't it a B? Everybody gave me a standing ovation. She goes, well, it was a B because this joke missed. You kind of lost your way and this part of the speech or whatever. But I'll tell you what, I knew she cared about me before she gave me that feedback. And when I got an A from her, it worked. You know, it was like, it mattered. But I've had many truth tellers. I had Jonathan Blum, who was my head of public affairs, he would like bang my door down, okay, even when I didn't want to hear him, okay? And,

And, you know, I would at least listen to what he had to say because I knew he had my interest at heart. It's very important to know that whoever's giving you the feedback cares enough about you, has your interest at heart. Nobody's going to care about you, okay, until you care about them. And that's a key element in terms of being a good leader and a good coach. You let your people know that you care about them. Right. And you also role model truth telling to them as well. I try to.

I mean, nobody likes conflict. Right. In my leadership programs, I say, how many, how many of you enjoy conflict? Nobody raises their hand. You know, role modeling, truth telling, giving direct feedback is very important. But how you give that feedback means so much because, you know, people will read their reviews and they'll just go to the two negative things. Right.

That's just human nature. Right. Well, and that's part of why you, one of the points that you made. was that silence is something that you need to listen for because given that we are so conflict diverse, particularly at the workplace, oftentimes silence might actually mean dissent that no one is overtly voicing. Paula, one of the real arts of leadership is sniffing out the slow nose. And slow nose are often very silent.

And so you've got to ask people what they really think. don't let them get away with the slow nose. So I think you've got to sniff out the conflict. Let's say I'm having a meeting with a marketing person and a finance person. You know the marketing person never wants to take price eating. The finance person always wants to take price eat. So you've got to get that conflict out on the table and have both people really get their points of views so you can wrestle it to the ground. That's what a good leader really does.

He's constantly looking for where the conflict areas could be, where people really aren't talking. And, you know, the other thing I think is really important is when people give you the truth, scream it from the rooftops, you know, let people know that you would have gone down this path if it hadn't have been for Paula, okay? Right. And that means that you appreciate it. And then if that's what you appreciate as a leader, that's what you'll get.

So publicly praise the people who give you unfettered feedback. Yes, yes. I want to get to the framework that you have, who you learn from, what you learn to, and then there's how you learn by. Right. Right. And those are critical distinctions. In terms of who you learn from, you know, one of the things that I have discovered kind of the hard way over time is that it's most helpful to take advice from people who have actually done the thing that you are trying to do in the, the domain in which the advice is applicable. I used to make the mistake of taking a device from the peanut gallery, of not being discerning, as you were talking about earlier. Right. And oftentimes that has, you know, I thought that I was following a device, but it's actually led me astray because I violated my own instincts by virtue of assuming that others knew better than me.

How do you balance learning from others with trusting your own instincts? Well, you know, I think it comes from self-awareness that you figure out this is what I need to learn, because of basis, whatever the situation is. I think you build like sort of a know-how target list. Okay. So if I want to learn about finance, who can I learn about finance from? Like when I became the CEO of Young Brands, I'd never worked with Wall Street. So I finiggled the way to get into Warren Buffett's office in 1998. and talked to him about finance and how to talk to investors.

And he taught me a lot of great stuff. And I went to see him every year. We became really great friends. And he's a super guy. But he has knowledge that I don't have and I learn from him. And another person that has great financial skills was John Weinberg, who was the former head of Goldman Sachs. And he was on our board.

So I went to him for counseling. Ken Langone, the head of InverMed. and co-founder of Home Depot, great financial person. So I went to these people because they were people that I knew that could really help me fill my gaps. And I also knew, certainly with John Weinberg and Ken Langone, who I knew, they had my best interest at heart. And then Warren Buffett became a person who I knew had my best interest at heart and we had a great relationship. But you need to figure out what you need to learn and then ask yourself, who in your universe that you already know can help you learn this stuff.

And then ask yourself, who's outside of your universe that you'd like to go to? And then figure out if there's a way that you can somehow crack the code and get in to see them. And I've found that people love to give you advice. People are really open to giving you advice because they like to talk about themselves, that old Dale Carnegie thing. Right. I think like if you go on a new company, look around, you know, in your first, first job, look, who's really respected, who really knows something, find a way to get into that person's office, even if it means if they get there at 6 o'clock, get there at 555, be walking around, getting your coffee and have a conversation with them and then end up talking to them about when did you start in the company, what would you recommend for a person like me? And you're going to get all kinds of insight. So it can be as simple as that or, you know, not everybody gets to see Warren Buffett. You know, I was able to use my influence to do that. And I had people that could get me in that office.

What is it about Warren Buffett that makes him so special? Well, I think Warren Buffett has the characteristic I write about of all great leaders and how leaders learn. He has an uncanny combination of confidence and humility. He's extremely confident. He knows how to do analysis for investments. He knows that he can assess people. He has all the skills it takes. But he's humble enough to know that he doesn't know everything and that he needs other people.

and that he listens to him. So it's that balance of confidence and humility that makes him really special. And I think the humility part is what motivates and inspires other people. Right. You wrote about, you gave the example of Jamie Diamond when he joined the board of Young Brands, in part because there were things that he wanted to learn from other board members about retail. Yeah, he wanted to learn the consumer side of business. in retail. And I think he got a lot out of that. And then I later went on his board because I wanted

to learn more about the financial world. And we both went on each other's boards because we cared about each other too. We took an interest in each other. We wanted to help each other be successful. So it was a win-win-win-win that way. And I think that's the best of all situations. You know, I went on the Comcast board with Brian Roberts. You know, Brian Roberts is a fantastic CEO. But I went on because I wanted to stay current. I wanted to know what was going on in the world, you know, in the world of NBC, the universal, sky, streaming, you know, everything is going on in cable and broadband and the entertainment world, movies.

There's no way. I wasn't going to stay on top of what's going on in the world. And by being on that board, I was going to have that opportunity. So that's how I looked at my situation, because I'm not a person who, go on a lot of boards. I like to run things versus be a board member. But I felt like I could really help Brian and I felt like I could learn a lot at the same time. And I have. It's been great. That was exactly what I was going to ask about. I actually, literally, you'll see, I have my finger on the page and I highlighted the part where you talked about how you got invitations to a lot of boards.

You said no to most of them. You said yes to Comcast. I wrote in the margin, why, what was the differentiator? There you go. And that's why. Right. That's why. And I originally told him no. But then I hung up and I thought about it more and I thought about what would keep me current and young and on top of things. I have loved every bit of my board meetings. I look forward to going to the board meetings. Just like I would look forward to going to work. I never went to work. Okay. I went to pursue my hobby. And that's kind of how I feel with Comcast. Right. So essentially, board service and more broadly for the listeners, being involved with other companies, advising other companies is a way to not just serve others, but really to learn, to hone your skills. I think you should look at it. I would never go on a board if I didn't think I could support and encourage the CEO or if I didn't think there was something new that I'd be able to learn to put into my repertoire that I needed. In terms of who you learn from, one of the stories that you tell is the importance of learning from the right people at times of crisis. In 2007, there was a video of rats getting into a KFC that went viral on YouTube. Yeah, it was a tough time for us, obviously.

Embarrassing. But you have to learn from crises. And the biggest thing you have to do is you have to say, hey, here's what the situation is, is, here's what we're doing to solve the situation. And then here's what we're going to do to make sure it never happens again. And in this particular case, we did all of those things. And we enhanced all of our pest control policies and suppliers. And we came out better from it. But it was a very painful experience. But you can't waste a crisis, I think, as I think Henry Kissinger said that or somebody did. You got to take advantage of those crises and learn from them. And do

everything you can to make sure they don't happen again. I remember I learned from Craig Weatherup when we had the syringe crisis at Pepsi Cola Company. People put syringes in the Pepsi. Right. I remember. And I remember walking into Craig's office one night when he's getting ready to go on the Larry King show to talk about. I said, what are you doing? How do you get ready for Larry King? He says, I'm reading my mail. Now, why would he say something like that? Because he knew the business cold. And, you know, I saw how calm he was under pressure. I learned that from him. And, you know, that was very valuable because when you have crises, you can't run around like the chicken with his head cut off. You've got to be the person that's going to steer the boat and people are going to follow you.

And people have got to have the confidence that you're going to come out stronger. Right. But what happens in a crisis when you, and this goes back to the importance of being discerning about who you learned from, What happens in a crisis when you take advice from the wrong people and they lead you astray in terms of crisis management? Specifically, the example I'm thinking of is the story that you tell about United Airlines. Yeah, well, Oscar Munoz, who was a CEO of United Airlines, they had a passenger incident where the passenger was thrown off the plane and, you know, it was very ugly and they used some wrong language about, I forget what the language was, but it's unaccommodating or something like that. And it was just a complete BS. And he's being sheltered by his people.

This is something that'll blow over. And then it didn't get solved until he actually went on a Today Show or a morning show and he told everybody, I absolutely blew it. I mean, I'm accountable for this and we did it wrong and we're going to make sure it doesn't happen again. Right. But sometimes people want to hide. They want to hide from the problems, hide from the crisis and just pray that it goes away. It'll go under. I think when you know you've got a problem, the sooner you can identify what that problem is and deal with it.

with it and face that reality, the better. In that particular instance, it sounded as though he received the advice to deflect. Right. And that turned out to be the wrong advice. How do you know then in any situation, but in a crisis in particular, when you're getting advice that's actually misguided? You know, a lot of it's got a lot of it is the reason why you're the leader. I mean, until he made that right decision, he'd made all the wrong decisions.

And I guess he said he got down on his knees before he literally, before he went into this show and something told him that he needed to let people know that this is the deal. That was some tough learning for him. But unfortunately, I had quite a few crises to deal with in my career, but I always found being very clear about what's the issue. Here's what the issue is. Here's what we're doing about it. and here's what we're doing to make sure it never happens again. It's real one, two, three, very simple, but you follow that and you'll come out of it. And it doesn't have to be a crisis.

This is kind of like you should almost assess everything you do that way. Here's what we learned. Here's what we should do about it to be better the next time. And here's what we're going to do to make it even better the next time. But, you know, you can work off those three questions and do a lot of good things. Right. Is it more important to assess failures or successes? It depends on what you're looking for, right?

Failures, I think, are really good to learn from. And failures give you a history lesson and learning that can help you handle the next time. I'm a big believer that you should learn from winning. You know, when I was the CEO of Young Brands, we wanted to become a great company. We wanted our stock price to grow on a consistent basis. So we identified the winning companies at that point in time. And we went and we visited with Walmart, Home Depot, Southwest Airlines, Target, General Electric was a powerhouse at that point in time. These were the great companies in the world or certainly in the United States.

So we visited them and we came back and we codified what they did that allowed them to get consistent results every year because we went to them because they had consistent results year after year. The stock went up year after year because of that. So we came up with the, I wanted to create dynasty-like performance. Like that was my phrase. We wanted to create the Yum Dynasty. And so we codified what we learned. There are five things. Every great company, all the dynasties create cultures where everyone counts.

They're maniacal about their customers. They have competitive differentiation in everything that they do. They have continuity and people in process. And they consistently beat year ago. And those became our five dynasty drivers. And I built the company with my team around those five drivers for my entire tenure. I always talked about how we're building the Young Dynasty. And I also learned that the dynasties consistently got at least 10% earnings per share growth every year.

So we got 13%. And that's why our company did so well. What were the factors that didn't make it onto the list? I don't think we really had any issues with things. that she didn't make it on the list. Because the good company's doing the great stuff. We went there to learn what they were doing. We learned by winning.

So we weren't really learning from their failures. But I will tell you this. The single most important thing that all the companies talked about was creating a culture where everyone counts. That was the number one thing that I worked on as CEO, was working on the work environment where everybody in the company counted. What would a company look like if there was a culture in which people didn't count. People don't feel valued. People, every job doesn't have dignity. It's very top

down. It's a telling culture. It's not an involvement culture, very little collaboration. It's a miserable place to work. And it's a reason why I think 82% of people don't feel like they're appreciated at work, you know, by Gallup polls. It's said, there's two reason why companies lose people. number one, they don't feel appreciated for what they do. And number two, they don't get along with their boss. So that's why I was a huge believer and still am in recognizing people for their contributions. And that's why I believe that you don't have bosses, you have coaches. And that was the mindset that we tried to build.

What are the biggest challenges in steering a culture towards one in which everyone counts? I think the first thing is that you have to recognize that the leader can. the shadow. People are going to do what you do. So you as a leader, you've got to believe this with every fiber in your body. Then you got to make sure that your direct team believes it. And then you got to hold them accountable for getting their direct reports to believe it. And you just cascade it all the way up the organization. That's the way how you get it done. You can't just say something. You've got to show it. You know, people often judge themselves by their intentions. But the key is the actions that you take. That's what's important. We've talked a lot about who you should learn from,

but let's talk about learning to the habits that you adopt in order to be a lifelong learner and the methods through which you develop better critical thinking skills, that metacognition of thinking about how you think. Yeah. Well, first of all, you have to learn to listen. That's one of the most important things I talk about. That's a critical learning skill that too few people have. In the book, I talk about Ken Chenalt, who was the CEO of American Express, and he thought he was a really great leader, and he thought he was a good listener, and his people told him, you're not. You're not a good listener. We have a little phrase for you, which is you go into the kin zone, when somebody disagrees with what you have to say. That really made him internalized that,

gave him higher self-awareness, and then he worked on being a good listener. And it said it took him a long time to overcome that perception. And that's one thing to remember. When you have a perception, it's not going to change overnight. You've got to work at it every day. I think about five years later, people started recognizing him for being a good listener. But that's a very, very good thing to be thinking about. You've got to learn to see reality, see the world the way it really is not the way you want it to be. So you've got to open your mind to see what's really happening out there. A lot of times you get so insular and you think you've got it all figured out and your business is running well, but you've got to have a healthy dissatisfaction with the

status quo that forces you to literally want to see it the way out really is. Given that there's a natural tendency to have some degree of confirmation bias and to filter for data or arguments that feed our preconceived notions, how do we circumvent that? How do we overcome that, given how natural that is? Well, it's a beautiful thing you just asked, right? Because you know that. The first thing is you've got to be aware of that. learning about confirmation bias and then asking yourself, what am I going to do to make sure that I don't exhibit that, I think, is key. But you got to first of all recognize what is confirmation bias. That became sort of a hot topic a few years ago without having an understanding of it. It's hard to deal with it. And then it's why when I'm watching news, I never watch MSNBC without flipping the channel to Fox because I'm aware of confirmation bias. I want to see what both sides are really

thinking. And, you know, I think in the news world today, that's, it's almost imperative because it's not an objective world in news. It's hard to get the objective facts. So you've got to filter both sides to really get it. And I think that that's true. And when you're building your know-how and learning how to learn. You know, how are you going to make sure you get the total picture? How do you curate your information? I was very applied. I'm very practical. I didn't like to waste a lot of time. I didn't read nonfiction or I read stuff that I figured would help me. I curated my learning around what I felt would help me move the ball forward. That's why I created almost a learning map for every big initiative I had. It's like a lot of times people

will say, okay, I want to, I've got this product, this is my target audience. I would have a learning map of the places I would go to seek knowledge, seek know-how. That worked for me. So let me make sure I'm understanding that correctly. So let's say there was a particular initiative or project that you wanted to implement. You would map out what are the things that I need to learn in order to execute this? And then those would be the specific things that you would then seek to learn? Yes, absolutely. Who could I learn from? You know, if it's technology or whatever, maybe I got to go to Microsoft. Or there's a particular leader who just wrote a book about this particular thing. For example, at one stage in our company, I thought we had a lot of

really good ideas, but we weren't that great at execution. So I built a relationship with Larry Bossi, who wrote the book, Execution. And I had Larry Bossi. come talk to our top 100 leaders. And it was very applied. So I read the execution book because I thought it was something that I could actually use. And I did. And we put a lot of the things that he talked about in his book into practice at Yom. Are you a believer then in what's referred to as just in time learning that rather than broadly develop a skill set that could be nimble, you instead have task-based learning that you do just in time. I would say I'm more of a magic of the end to use the Jim Collins phrase.

I think you need both. You've got to look at your general assessment of where you stand and where you need to build your know-how that will ultimately make you a better leader. And then you have different tasks and different projects or products that you might be working on. And then that becomes more of a task-based know-how building project. Know-how building is a great skill that everyone needs to pick up because it is the characteristic that I think the most successful people in the world have somehow stumbled into or they have it, that they learn on purpose.

You mentioned earlier, so if you're trying to execute upon a particular project, you map out particularly what you need to learn for that project. Is it more important to ask how or to ask who? In other words, to acquire the skill set or to recruit people onto your team who are experts at doing the things that you need done. I think how and who are intertwined. I really do. You know, you can talk about how I'm going to do something, then who's going to do it? Okay, who can I learn it from?

So I think they're very intertwined. How do you develop the skill set of recognizing excellence in the who, particularly for tasks that are newer or skills that are newer? Like if you had to hire somebody for AI right now, how would you even recognize the person who's genuinely good versus the person who's full of bluster? Good question. Really good question. I'm not sure I'd be perfect at it. It was never perfect at hiring everybody at 100% level. But I guess what I'd do in a situation like that is I would go what companies really would have the people who are experts in AI.

So obviously, NVIDI is one that you would look at. companies that you look at. And then I would always try to check what people have done, you know, myself. If I hired somebody from Nvidia, I'd try to make sure that I found a way to check out the references myself. If the person gave three or four references, I would want to call those people directly and smoke it out because people have a hard time when you call them directly. they have a hard time not telling the truth. You can pick it up. That's sort of an instinct maybe, but you can pick it up. If I'm hiring for areas that I'm not that familiar with, I would definitely think about the companies that are good at it. Then I would try to find some people in that

company that could really help us. And then I would try to corroborate that with the references. And then I would also try to ask other people who else I should. be talking to. And you can do that. Almost at every level. I think you can do it. This isn't just CEO stuff. This is what I did. You know, when I moved from copywriter to account executive to marketing head, you know, I did this my entire life. I've been a learner my entire life. That's the only reason why I was able to get to where I am because, you know, I don't have the MBA. I had to learn my MBA. And I had to get results. And the only way I could get results is if I put the learning that I got into action. And this works for everybody. You do not have to be a CEO of a

company to do what I'm talking about. That's why I think, you know, how leaders learn is such a good book. It's just practical advice with stories, people working their way, up their life, up their career, finding their way to the top and to the success that they have. That's what people want to learn. That's what people want to know. They want to know how you got to where you are. And it's not straight line. It's not straight. We all struggle. along the way. If you read How Leaders Learn, you'll read a lot about the times I did not do what I wanted to do. You spent the first 15 minutes talking about Crystal Pepsi, okay? But that's okay. That's what people want to know. When I taught my taking people with you program at Young Brands,

what people wanted to know, most people know how you got to where you are. Most people definitely know who you are, okay, why you're the CEO, et cetera. They don't know how you failed along the way. They don't know the stumbles. They don't know the anxiety that you had. You know, Like, people can't believe that I used to be worried about speaking. I mean, I get paid a lot of money to do motivational speeches now. But when I was coming up, I said, you know more than you could say, you know. I mean, I was nervous. I would have the stupid joke that didn't work.

I just really wasn't that good of a presenter. But I learned how. And I told everybody how I learned how. I told everybody what the challenges were for me. and that once I started focusing on the audience and not listening to everything that I had to say, that if I made a mistake, it really didn't matter. I was focused on you. I wasn't focused on anybody else.

I'm focused on the target. That's when I became a good speaker. But I didn't learn that when I was 24. I didn't learn when it was 26. I learned 27, I was terrible. And then I was afraid of doing it for six years. and then I finally had a big breakthrough moment where I got the confidence in the training to get to where I needed to go. But that's what I think people want to know.

They want to know how you learned. You mentioned both confidence and training, and it seems like both of those are necessary. For the people who are listening to this, who lack the confidence, you know, we ask our listeners, the ones who subscribe to our newsletter, we say, hey, email us, back and let us know what are your dreams and what's stopping you from getting there. And time and time again, people reflect that they suffer from a lack of confidence, you know, that they're not sure that they can do something and that they're plagued by all of these anxieties. How do you, and I thought your earlier description of Warren Buffett was beautiful where you said he has that ideal balance of both confidence and humility.

How do you develop confidence in an area where, you have no track record and when you are attempting something that does have a high probability of failure? Well, the first thing is you've got to be good at what you do. You've got to make sure you have the skills to get it done. You have that capability first. If you have capability first, you can do the job well and then you get results and then you get wins and the wins are what give you the confidence. If you're falling down all the time, it's hard to be confident. You've got to perform when it really matters. When you perform when it really matters, that gives you the confidence. It's hard to fake it. Maybe you haven't won a Super Bowl. But you got the capability. You know you

have the capability, but you haven't reached your full potential yet. So at that point in time, you got to know that you have the capability and fake it until you make it. Isn't it easy, though, so you said that confidence comes from wins. Isn't it often easy to attribute wins to some degree of luck. I think those are the people that just make up the reasons why they're not getting the wins, okay, that somebody else is lucky, et cetera, you know. It's funny how many times how successful you are, where people will say you're lucky or whatever, but there's always a lot of hard work behind most of these things, okay? I think that that may happen once or twice. You know, it's not how you build sustainable performance. And a lot of times people make excuses,

saying, oh, that person was lucky and I didn't have the break or whatever. And you've got to take the initiative and try to make the breaks for yourself. Right. No, I meant it the other way around. It can be easy to discount your own successes. Sometimes there's a tendency to view others who have succeeded as highly capable while simultaneously discounting your own successes because you can see in your own circumstances the ways in which,

fortuitous timing played a role. Yeah. Well, I think that can happen. But that's why maybe you need to, not you, but people need to have their own personal highlight reels. You know, when you have those wins, you know, write them down. When did you have success? Create your own personal highlight reel. It will give you confidence. You know, it's a process that we all go through. You don't get to the very top all at once. It's a real process that you go through. And building that confidence is I think one of the more challenging things to do, but I think your point is right. You must not discount what you've done and minimize that.

In fact, you need to elevate it so that it will help you get to where you want to go. Because people will be chipping away at you. It's just a natural kind of thing. You know, sometimes people are not really rooting for you, okay? So you've got to root for yourself. You've got to be your number one fan. Right. And it's oftentimes the people who are not rooting for you disguise themselves as those who are.

So it can be. Maybe. I'm more of a trust and positive intentions kind of person. That's just how I've always been. And I look for the positives. I extend trust first until somebody proves that they're not trustworthy. And I think 99.9% of people come to work wanting to do well. I think people do not want to be a part of mediocrity.

They want to be a part of greatness. you need to help them see their part within the mission, with whatever your team is. It doesn't matter the whole company. It could be just the team that you have. What role do you play? Why are you important? But you got to trust that people want to be a part of something great. And I think that trusting and positive intentions is a very important thing.

And that's one of the learnings that I think has really helped me a lot. That's kind of flipping the script when it's easy to go negative. You know, when people are going negative, I try to flip the script. Right. Do you think that that's helped you over the span of your career? Trusting and positive intentions? Yeah. Absolutely. You're not going to like me, Paula, if I don't like you. Right. You're not going to trust me if I don't trust you. Have you ever liked anybody that didn't like you? I'm trying to think. You're going to have to think pretty hard. Yeah, I'm trying to think. Have I ever liked anyone that didn't like me? No, I can't think of anybody. No. And that's just kind of the way how it is. Okay.

I guarantee you've never trusted anybody that didn't give you a sense that they trusted you. So if you're going to get people really motivated and believing in you, be the first to extend it all. Then let the facts come rise. If somebody proves to be untrustworthy, you figure that out. But at least you rounded up. At least you rounded up and gave them a chance. And you're not stupid. You're not going to like just let somebody keep taking advantage of you or whatever.

you'll call them on it or whatever. But man, if you take the high ground, you're almost always going to win. You know one thing that I didn't ask about when we talked about your assent, the formation of Yom brands as a company. Can you talk about that? Yeah. In 1996, Pepsco made the decision to spin off the restaurants into a public company.

When they made that decision, I was the president of KFC and Pizat. I wanted to be in that job and be the head of the company. And I was in the right place to end up being in a very influential role in the company. And originally, Roger Enrico was the chairman. He was making this call. Actually, Indra Nui was the CFO. She later became the president CEO of PepsiCo.

And Roger at first had asked me to go to Frida Lay, to be the chief. head of Free Delay, but I turned it down. Now, why did I turn down Free Delay? It was a much bigger division than KFC because of my joybuilders. I love food. I love marketing. I love people. I love the restaurant business.

I didn't necessarily like the package as near as much. So I turned it down. He goes, what? Yeah, I turned it down. It was a much bigger job, but he was trying to get me back into PepsiCo so I could compete for the bigger jobs at PepsiCo down the road. But I said no. Little did I know they were spinning off the restaurants.

And so I said, you can give me pizza. So now I had pizza at and KFC. So now I've got two of the three brands. I don't have Taco Bell. So Roger comes back and says, David, I think the guy who's running Taco Bell, he should probably be the CEO. He said he should be the CEO. You should be the president, chief operating officer.

You're the spiritual leader. You know the restaurant business better. You know, you're the guy to do that. Well, I didn't really like that idea because I thought I knew more about the restaurant business than this other guy. and Roger goes, well, he knows a lot about finance. Well, I've checked this guy out. He didn't know any more about finance than me.

So Roger said, you got to go to dinner with him. So I go out to dinner with him. He's a great guy, liked him. But I felt like I was looking in the mirror. But he didn't have anything that I didn't have. So I went back to Roger and Rica and said, I'm not going to work for him. He says, oh, yes, you are. I said, no, I'm not.

So I go back to Louisville, Kentucky, and I get this phone call from Bill Bensel, the head of HR. And he says, David, you've got to take this job. You're going to get fired if you don't. I said, well, you can fire me, and I hung up. Well, when I did that, Paula, I realized there's only one person that wins in a situation like that as the boss. So I called up, Roger, who was a friend of mine, which was the good news. And I called him up. I said, look, I want to come see you, Martin Luther King Day.

I'm going to fly up and I'm going to tell you what kind of company I want to build and, you know, why I should get the job. He says, well, come up. So I put together like a 30-page presentation of my vision for the company, what we could do, et cetera, et cetera. And he said, okay. He said, I'm going to go with you. I'll handle it. I see, he said, but you got to get a chairman. You've got to have a chairman that can deal with Wall Street and teach you what you don't know because you don't know what you don't know.

And he was right about that. But anyway, I was going to be the CEO. And I said, well, look, one guy I'd recommend is Andy Pearson. He used to be on the PepsiCo board. He's a really tough guy. But I like him. We could get along well. So we go through a five-month process where they're looking for different.

chairman's, okay, and every one of them didn't work out. So we're getting the point now where in September, we got to go on a road show and take this public company out there. So he calls me up and says, I've been thinking, what do you, what would you think about as Andy Pearson's being your chairman? I said, I think I'd be fine. Let me go talk to him. So Andy's favorite article was he was the top 10 toughest bosses on fortune. And he was tough. He was, as I said, past president, of PepsiCo, a teacher at Harvard Business School. He was Clayton Dubloir and Rice, private equity, fantastic brain, one of the smartest guys I've ever been around. So he loved the fact that he was one of the world's toughest bosses. And I asked him, who's your favorite CEO? And he said, well, my favorite CEO is Bob Crandall, American Airlines. Bob Crandall was one of those guys in the top 10 toughest bosses list.

So I said, well, Andy, my favorite CEO is Herb Keller from Southwest Airlines. And Herb Keller is people first, you know, lots of fun, spreading love all over Texas, built the great brand. I mean, he unbelievable culture, all this. And I said, you know, if you are a Bob Crandalli guy and I'm a Herb Keller guy, we could really have a real problem there because I want to build a company like Southwest Airlines and we could be diametrically opposed. You need to read this book.

And I gave him this book called Nuts was about Southwest Airlines. Great book. I recommend it to everybody to read you. If you read this book, you'll get lots of ideas for your company or for your team. And so he reads it. And then we come back and have dinner again. He says, you know, I read this book nuts. And, you know, I can support you because I believe that's the frontline business.

And what you want to do is right. And he says, there's only one problem. I said, what's that? He says, I want to be the CEO. And I said, okay, no problem. That's what you want to do. He was 72, I think, or 71. at the time. I knew that I would be the next CEO. He had a three-year contract. I figured if I couldn't

convince everybody that I was the guy within three years or something wrong with me. So he became the original CEO. Whenever he was in Louisville, which was our corporate headquarters, he lived with me. I never let him out my side. He became my best friend. When he was 80, I gave his eulogy at his funeral. I mean, it was like, I love this guy, incredible learner and opened up so many doors for me. He was so good. but he made me CEO two years afterwards. So it all worked out for me. But the big lesson there was, number one, make sure you follow your joy builders. Okay.

Number two, if you have something that you want and you think you deserve it more than someone else, make sure that you follow your conviction and fight as hard as you can for it. And number three, if you can learn from somebody, it's okay. It's okay to have them work for them. I never ever felt like I worked for him. We worked with each other. We're co-founders. We did the whole thing together.

He was awesome. I loved Andy. Was it a good balance then given that you guys? Originally, yes. Personality. Great point. Great point. At first, he was tougher than me at the end.

You know what his favorite article was? What was that? It was in a fast company. It was Andy Pearson finds love. Oh. And it was about how he became focused on the people. etc. He said, David, you know, one of the things that you got to think about is you may be getting a little tough, you know. It's like, so we kind of reversed each other, but it was a,

it was an incredible learning experience. I'll tell you a story about learning. Andy was this guy who was the smartest guy in the room. You can tell I love Andy just talking about Andy, okay? But he goes to Harvard after a PepsiCo. He's a Harvard Business School professor. He just tells everybody how to think. He just says, this is it because I'm Andy Pearson. Okay. So they give the 360 degree feedback from all the students. He's ranked the worst in all of Harvard professors, the worst.

Ouch. The next year, he takes it to heart. He uses a Socratic method of teaching, case histories, and brings in all of his contacts. And he's ranked number one. one. It's why I like the book How Leaders Learned too, because what I have in my life, because of what I've been able to do, I have all these incredible contexts. So you read the book, you're learning about Jamie Diamond, Indra Newey, Marvin Ellison, Condoleezza Rice, Tom Brady, Anil Boucherie, all these people, all these great CEOs. Right. And great sports figures and great government

leaders. I can open up my knowledge base to other people. That's what. what Andy did for me. I mean, he introduced me to a lot of great leaders. Right. Among all of the great leaders that you know, the CEO, sports figures, heads of government, are there certain specific attributes or habits that seem to be relatively universal that they have? And also, are there certain attributes or habits that they do not possess, specific things that people do not do. Yeah. Well, I mentioned uncanny combination of confidence and humility, which leads to a learning mindset and a belief in people. They all believe that you've got to have great people to get things done. The people who are not successful are arrogant, not humble, think they know it all,

and think that they're above all the people that work for them. And the other point is the people who are successful see leadership as a privilege. They don't see like it is something that they can lord their power over other people. They view themselves to be people that need to help other people succeed. So that's a little, a few characteristics. Well, thank you. All right. We'll close out with a couple of final questions around Taco Bell.

Very much in the way that we started by talking about Crystal Pepsi because I absolutely love Crystal Pepsi. I'm a massive fan of Taco Bell in particular. I have to admit to the audience these final questions I'm asking largely just for my own personal curiosity. In the 1970s and the 1980s, Taco Bell was incredibly important to what at that point was a very relatively small proportion of the population, which were Hindus, South Asians. And it was because Taco Bell was the only major fast food company where you could find vegetarian options. In my childhood, in the 80s, Taco Bell was the one place where my family could go. And that was why it was so important to us. Did Taco Bell leadership at the time, were you aware of that?

I mean, we were, there were so few of us in the U.S. We knew that we were a vegetarian option, but it wasn't where we were headed. Yeah. We were trying to mainstream Mexican food, which was very challenging in and of itself, because we had to build awareness of the category and the brand, which is really hard. But the good news about Taco Bella was first in, and there really is not a national competitor. Taco Bella is like a 70% share of the quick service restaurant, fast food business. Right.

Chipotle's come on and fast casual, but, you know, Taco Bell pretty much is the dominant brand in fast food. But it was never really the thing that made Taco Bell go. It was more, we wanted to make the brand very mainstream, which we did. The biggest thing that Taco Bell did was disrupt the quick service restaurant industry on value. We have amazing value. You get so much food for the money, more so than any other fast food concept. And the food is really good. And so people like it. And it's got a great young, irreverent target audience. And I think for Yum

today, it's 80% of the profits in the United States. I think Yum has two twin engines, you know, of growth Taco Bell's one. The other is KFC International. Those are the two big growth drivers for Yum. Right. Why is it, Del Taco hasn't taken off in that same way? It's just more of a regional brand, not as good of food. never had the scale to market in a competitive fashion versus Taco Bell. And there's only one Taco Bell. So conversely, then, what about, you know, and you wrote about this in your book as well, McDonald's was seeing some gangbuster growth at the time.

You were actually observing, in your tenure CEO of Yum, you were observing McDonald's as, hey, they're the winners. What is it that they're doing that we're not? Right. And so we went out and we had a global immersion day on McDonald's. I had all everybody, all the leadership teams around the world go spend a day or two in McDonald's and then codify what they were doing that we weren't so that we could grow our same store sales at a similar rate. So we started after that what we called a sales layer strategy where we wanted to leverage our day parts. We added breakfast late night.

We wanted to have everyday value menus. We wanted to have desserts. We really wanted to have different proteins if possible so that we could bring new sales. layers to the party just like McDonald's had done, coffee business, things like that, that we just were not doing. And we started that in the minute our sales improved because of it. We had a Taco Bell breakfast. I don't know if you've had that, but it's awesome. Right. Well, my favorite is Mexican pizza, so I was heartbroken. I was actually tweeted about it when it got taken off the menu. Yeah, it comes back. We bring it back as a crystal Pepsi. And when we do, it has gangbusters sales,

because people love it. Those are my two favorite products are the Mexican pizza and Crystal Pepsi. The problem is that it's more complex to make, so it slows down your speed of service. And so that's why we just gear up for it every now and then. Right. But you had it for many, many years. I mean, decades prior to what triggered that. We added a lot of other products.

The big breakthrough we had on Taco Bell is the importance of falling in love with the problem. We really believed that you need to find out. what the single biggest problem is that occurs most frequently. And when you do that, then you can go after growths. We had a cassidia, a grilled stuffed burrito. These are two products we put in a test market. We said, come try our cassidia, come try our grilled stuffed burrito. No sales growth. Then we did a problem detection study, and we found out the single most important problem that occurs most frequently at Taco Bell is lack of portability, messy to eat. So what we did is we took the cassidia I hired Jeff Bezos, believe it or not, at Amazon to do the ad.

I had eight people sitting around a table talking about the hottest new handheld on the market, and it was our cassidia. We have double-digit sales growth. Then we take our Real Stuff burrito, which is a heavier product, and we called it the heavy-duty portable and had people driving into our drive-through, and as soon as they got the Grilled Stuff Burrito, their cars tilted up because it was so heavy. But it's called a Heavy-Duty Portable, and that got great sales growth. those are the same product but we just reposition it differently and then we created the product of

the year the crunch wrap which is a great product and is contained within the wrap and easy to eat we positioned it as good to go and then we took our advertising and created a new line called think outside the bun because we were trying to go up against hamburgers so all of that led to record sales growth for taco ball and and we continued to to have unbelievable sales results of Taco Bell. It's a great brand. How did you find out that lack of portability was the single biggest issue? The way you do a problem in the Texas study is you go do focus groups.

You have everybody tell you all the problems they have with Taco Bell. Just list them all out. And it's real simple language like restaurants aren't clean. Products are messy, et cetera, et cetera, et cetera, et cetera. Write them all out. Then you do quantitative research where people rank in order, which are the most important problems. And then you ask, how frequently does it occur?

And the real problem for Taco Bell was lack of portability. Because, you know, you perceptually, are you going to eat a taco on the go? Right, right. Exactly. You get it at the drive-thru and it's hard to eat in the car. Yeah, but that's how it works. And I think that if you look at all the great innovators today, they fall in love of the problem.

They figure out what the most important problem is occurs most frequently and they create businesses all around it. And that's how you win. That's how you become a great entrepreneur. That's how you grow your existing, you know, businesses. Excellent. All right. Are there any final takeaways that you want to leave this audience with? If people walk away with one key message, what would that be? Go out and buy how leaders learn and learn a ton. Excellent. What do you expect me to say? I'm a marketing

guy. All right. Then one more follow up. Okay. I figured you'd have what. Between KFC Taco Bell, Pizza Hut, and Habit Burger Grill, which one's your favorite? They're all my babies. Come on. You have a favorite child. I got a favorite product at every one of them. Oh, okay. Yeah. Let's go with that. Favorite product. I love pan pizza, pizza. Just plain cheese? Well, pepperoni. Pepperoni. Pepperoni. Pepperoni lovers. Oh, okay. Peroni lovers, pan pizza. At KFC, I love original recipe. I love it. There's no fried chicken any better than KFC's original recipe. And at Taco Bell, I love our fresco. line, okay, which is, you know, we have five items under 10 fat grams that I like that are very good,

really simple meal that is great. Wow. And I vote for the Mexican pizza. There you go. I'm going to tell everybody, bring it back. I know one person that's going to buy it. Bring it back. And again, particularly for the Hindus out there, when we, my childhood was Mexican pizza, no meat. That was the thing. All right. Yeah. That's great. Bean burrito, extra onions. Yeah. I like those too.

I like bean burritos. Yeah. I'm not even a vegetarian. That was just what my whole family ordered. All right. All right. Well, thank you. Thank you.

Appreciate you very much. I enjoyed it. Thank you, David. What are three key takeaways from this conversation? Key takeaway number one. Prioritize joy in your work. David emphasizes the importance of finding joy in what you do. He believes that understanding what

makes you happy is crucial for long-term success because this is a marathon, not a sprint. You have to be able to sustain it for a multi-decade career. Even if you're retiring early, it's still at least a 15 to 20-year career minimum. So find activities that bring you joy and eliminate the joy blockers from your life. I talk about the importance of writing down your joy blockers. You have to start with what gives you joy. So that is the first key takeaway. Key takeaway number two. Learn by doing.

David stresses that learning must lead to action. It is not enough to acquire knowledge. You have to apply what you learn in order to achieve results. You might learn something, but if you never implement it, then what did you bother learning it for? So that you could know it theoretically? Great. What's that going to do for the world?

So learning through implementation has, has driven his success, and this can be a powerful strategy for anyone, whether you're an entrepreneur, whether you're a W-2 employee, doesn't matter, implement, have a bias towards action. You could learn something, and you could be very book smart. But did you put it to use? You have to make that transition and become an active learner. Finally, key takeaway number three. Seek mentorship from those who have succeeded.

So David highlights the value of learning from mentors who have already achieved what you aspire to. And I'm not talking about formalized mentorship, which actually has a documented poor track record. I'm talking about lowercase M informal mentorship. I'm talking about finding role models and learning from them because this approach can help you avoid common pitfalls. It can help you learn from the mistakes of others and it can help you accelerate whatever path you're on. I think you build like sort of a know-how target list. If I want to learn about finance, who can I learn about finance from? Like when I became the CEO of Young Brands, I'd never worked with Wall Street. So I finiggled the way to get into Warren Buffett's office, talk to him about finance and

how to talk to investors. And he taught me a lot of great stuff. And I went to see him every year. We became really great friends. And he's a super guy. But he has knowledge that I, don't have and I learn from them. Those are three key takeaways from this conversation with David Novak, the CEO and co-founder of YUM brands, which is the parent company of KFC, Pizza Hut, Taco Bell, and Habit Burger Grill. Thank you so much for tuning in. If you enjoyed today's episode, please do three things.

First, subscribe to our newsletter, afford anything.com slash newsletter. Second, follow us on Apple Podcast and on Spotify. Open both of those apps. Hit the follow button. While you're there, please leave up to a five-star review along with a few sentences about what you enjoy about the show. Third, recommend us to your family, friends, neighbors, coworkers, dog walker, babysitter, second grade teacher. Recommend us to everyone you know because that's how you spread the message of great financial health. And can I throw in a fourth?

All right, thank you. Chat with other members of the community. Afford Anything.com slash community. all of which is no cost. Thank you again for tuning in. My name is Paula Pant. This is the Afford Anything podcast, and I'll meet you in the next episode.