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CEO David Novak Learned Leadership by Making Mistakes

In his 17 years as CEO of

Yum Brands,

the fast-food corporation that operates KFC, Pizza Hut and Taco Bell,

David Novak

doubled the company’s size, increased its market capitalization 800% and broadened its reach overseas. Before stepping down in 2016, he was ranked among the best CEOs in the world by Barron’s and Harvard Business Review. But now that he is a leadership coach, Mr. Novak often likes to talk about his “epic fail”: Crystal Pepsi, the clear cola he developed as Pepsi’s head of marketing in 1992.

“I thought I was the genius of all time,” Mr. Novak, 69, says over the phone from his home in Louisville, Ky., where he lives with his wife, Wendy. After noticing that colas were losing market share to clear drinks, he dreamed up a colorless Pepsi and pushed it into stores in time for a big Super Bowl campaign. Pepsi-Cola distributors quibbled that the soda didn’t taste enough like Pepsi, but Mr. Novak brushed them aside. “I was a heat-seeking missile,” he recalls. Crystal Pepsi turned out to be a dud and was off the market by 1994. Time magazine listed it as one of the “10 Worst Product Fails of All Time.”

Today he uses the case of Crystal Pepsi as a cautionary tale about hubris.

Any experience offers “an opportunity to learn and grow if you choose to look for the lesson,” Mr. Novak writes in his new book, “Take Charge of You,” which he co-authored with Jason Goldsmith, a golf coach. Today Mr. Novak uses the case of Crystal Pepsi as a cautionary tale about hubris: “I was too in love with my own idea, and I moved too fast on it.” He suspects that if he had taken time to listen to feedback from doubters, the soda would still be on the market today.

When he teaches leadership—in his podcast, online courses, or at the Novak Leadership Institute he endowed at the University of Missouri, his alma mater—Mr. Novak believes it is important to talk about missteps. “People know how you’ve gotten your success, but they don’t know how you failed along the way,” he says.

His own unconventional ascent burnishes his appeal as a coach. His father’s job as a government surveyor meant that the family lived in 32 trailer parks in 23 states before settling in Kansas City, Mo., when Mr. Novak entered seventh grade. “I’m the only person you know who’s lived in Dodge City, Kansas, twice,” he says. Today he believes his nomadic childhood served him well, since he often had to move quickly to make friends and assess new surroundings. “I’ve got a good gut instinct,” he says.

David Novak helps serve meals at a school in Nicaragua that received aid from Yum Brands, August 2010.



Photo:

Business Wire/Associated Press

When Mr. Novak entered journalism school at the University of Missouri, he was the first in his family to go to college. He was a mediocre student until he took an advertising class in his third year. “I loved figuring out what problems consumers have and how to solve them,” he says. After graduating in 1974, Mr. Novak proposed to Wendy, moved back in with his parents and got a job as a copywriter at an ad agency, making $7,200 a year.

He earned extra income by working nights at a

Holiday Inn,

where the pop singer Engelbert Humperdinck once stiffed him on a tip. “I’ll remember until the day I die how bad that made me feel,” Mr. Novak writes in his 2007 autobiography, “The Education of an Accidental CEO.” The experience taught him the importance of recognizing and rewarding employees, something he emphasizes in his leadership training. “One of the top reasons why people leave companies is they don’t feel appreciated for what they do,” he says.

By age 27 Mr. Novak was running

PepsiCo’s

Frito-Lay account at an ad agency in Dallas, where he helped invent the concept of Cool Ranch Doritos. But as he writes in his new book, the job often involved pitching ideas he didn’t like or that were never executed, which left him feeling “stuck.” Itchy to run something on his own, he leapt at the chance to head the marketing department for PepsiCo’s Pizza Hut, where he helped double the restaurant’s sales and profits. Soon he was put in charge of both Pizza Hut and KFC.

When PepsiCo spun off its underperforming restaurant division as Yum Brands in 1997, Mr. Novak was named president of the new $20 billion company. He became CEO in 1999, when he was 46, overseeing the opening of around six new restaurants a day outside the U.S. and leading the company’s expansion in China. “Watching that kind of growth was just phenomenal,” he says. Mr. Novak also oversaw the launch of leaner, healthier options at the company’s restaurants and the pioneering removal of trans fats from cooking oils at KFC.

‘Investors suddenly trusted me more when I let them know what could go wrong with the business.’

In his books and lectures, Mr. Novak touts the value of asking for help or advice. He notes that the leaders he has interviewed on his podcast, including quarterback Tom Brady and JP Morgan Chase CEO

Jamie Dimon,

are “avid learners” who are always looking for new ideas and insights. As a new CEO with little experience with investors, Mr. Novak says that he sought counsel from

Warren Buffett,

who taught him the importance of sober selling. “Investors suddenly trusted me more when I let them know what could go wrong with the business,” he recalls.

Mr. Novak says that he is no longer a “restaurant guru,” but he remains bullish on the fast food market. Although the Great Resignation has hit the restaurant trade especially hard, and labor shortages have curbed operating hours across Yum Brands in recent months, the company opened a new restaurant every two hours or so last year, pushing the global total over 53,000. Despite the industry’s notoriously low wages, Mr. Novak argues that workers who start at the bottom can work their way up to become restaurant managers and even area supervisors, earning “near six figures” running up to 10 restaurants. “I don’t think there are too many industries that are more indicative of what is possible in America as the restaurant industry,” he says.

Mr. Novak says that his own humble background has helped him see the potential in others. In his tours of Yum restaurants, he often saw people who reminded him of his parents, who he believes could have been company presidents: “They just didn’t have the college education or mentoring or coaching.” Given his own good fortune, he now feels a responsibility to be that mentor or coach to others. “Lots of people work hard, my mom and dad worked hard, but not everyone gets to do what I do,” he says. “It’s a mistake to take any of this for granted.”

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