Four Tips on Winning by Yum Brands President David Novak: Chief Executive Magazine

Yum! Brands’ David Novak at right

Yum! Brands’ David Novak has a secret for staying on his leadership toes: the “hot-shot-replaces-me” scenario. “I think, ‘If someone replaced me tomorrow, what would he or she do?’” explains the CEO of the world’s largest restaurant company, which encompasses the KFC, Pizza Hut and Taco Bell brands. “Since I like my job, why don’t I do it first?”

Results suggest his method is effective. During his tenure as CEO, the $11 billion company has flourished, reporting 13 percent-plus earnings per share growth for each of the last nine years. Novak has also spearheaded global growth; approximately 75 percent of the company’s profits now come from outside the U.S. versus 20 percent in 1997. The firm is one of a handful of U.S. companies that have taken China by storm, in its case by leveraging brand expertise—intellectual property that local competitors can’t reverse engineer as they might a physical product.

In a recent meeting with Chief Executive, Novak, who penned the recent book, Taking People With You: The Only Way to Make BIG Things Happen, offered four tips to delivering growth.

Be Humble. “Recognize that nothing big gets done by you alone,” he says. “So you need to know who’s on your team the same way a marketer knows its target audience. Know your people cold. What’s in their heads? What are they thinking? And then you’ve got to say, ‘Okay, to take them with me to achieve this strategy, what perceptions or beliefs do I have to build, change or reinforce to get them to come along?”

Grow Yourself. “Never stop learning,” urges Novak, who points to John Wooden, legendary UCLA basketball coach, as an example. “When he was winning national championships he met with and studied extra tall people and coaches of extra tall people. He was still focusing on growing himself. I think when you do that you’ll end up growing your business because you’ll be sharpening your skills and be able to apply that personal growth to growing your business.”

Wipe out “Not Invented Here” Syndrome. “Often when you have success, you get so insular that you don’t go outside and look to see what other people are doing,” he says. “I tell people one of the ways you get promoted in our company is to be a know-how builder, to get knowledge from other people and make yourself [and the company] smarter.”

Make Your Culture a Hero. “When we started our company, I had a chance to do a gigantic do-over, because we had been part of PepsiCo,” he explains. “So we looked at some of the best companies in the world at that time—Wal-Mart, Home Depot, Target and Southwest Airlines. Every one of them said the key to their success was their culture. You want to make it clear what you value in your company and then recognize the people role-modeling that behavior. Then make culture the hero of all the good things that happen in your company. As a CEO, you have to be the culture champion. via chiefexecutive.net

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Valve's Michael Abrash: Hierarchical Management Bottlenecks Innovation - Forbes

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Valve's Michael Abrash says management hierarchy is a thing of the past.

Valve’s Michael Abrash has written a fascinating post about his history with the video game developer and the way that the company itself is run. According to Abrash, no formal management or hierarchy exists at Valve.

The old industrial management model is a thing of the past, argues Abrash. Gone are the assembly line days of productive repetition. Value in the modern economy is created by doing something different each time, rather than repeating the successes of the past. The creative act itself is the spark that must be perpetually lit and rekindled, even if that means doing away with old ways of doing business.

The success of Id Software’s legendary game, Doom, illustrates this point.

Abrash tells the story of his Valve coworker, Gabe Newell. When Newell was at Microsoft in the 90′s he conducted a survey to find out what was actually installed on peoples’ computers. Windows took the number two slot. The most-installed program was Doom.

 

 

 

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“The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity,” Abrash writes. “When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.”

Now all that’s changed, Abrash argues.

The military model is dying alongside the rapid growth of technology. Hierarchy itself is quickly becoming irrelevant, as the importance of originality goes front and center. Anyone can duplicate, Abrash points out. Any programmer worth his salt could replicate Facebook or Angry Birds. The trick is doing something new.

“If most of the value is now in the initial creative act,” Abrash continues, “there’s little benefit to traditional hierarchical organization that’s designed to deliver the same thing over and over, making only incremental changes over time. What matters is being first and bootstrapping your product into a positive feedback spiral with a constant stream of creative innovation. Hierarchical management doesn’t help with that, because it bottlenecks innovation through the people at the top of the hierarchy, and there’s no reason to expect that those people would be particularly creative about coming up with new products that are dramatically different from existing ones – quite the opposite, in fact. So Valve was designed as a company that would attract the sort of people capable of taking the initial creative step, leave them free to do creative work, and make them want to stay. Consequently, Valve has no formal management or hierarchy at all.”

Don’t mistake this for anarchy. People commit to projects and choose “leads” by informal consensus. It reminds me a bit of the Finnish education system, where trust and team efforts have replaced more traditional teacher-student relationships. Give people trust and respect and make them a part of the effort, and they respond in kind.

(In a sense, this is exactly what anarchist intellectuals envision from a truly anarchistic society, so when I say “Don’t mistake this for anarchy” I mean, “Don’t mistake this for chaos.” The distinction is important.)

Is this a hint at things to come? I’ve written before that technology is changing organizations, both public and private. At Techonomy last year, the story was one of leveling. At times these libertarian techno-Utopians at the conference sounded downright Marxist as they gleefully cheered on the end of bosses, the end of top-down business models, the leveling of workers and management.

Of course, they envision something more akin to Valve’s hierarchy-free innovation as opposed to a socialist Utopia, and rightfully so. Empowered individuals are more valuable to society and the economy than anything on offer from a top-down collective society (though the collective collaboration of individuals is exactly the sort of thing on display at Valve.)

More than likely, we have a long way to go before more organizations adopt a hierarchy-free management style. It can be difficult to identify where value actually comes from. But even an organization like Forbes has made this move over the past couple of years, giving writers like myself a great deal more creative autonomy and control than in the past, embracing the spirit and tactics of new media and less-hierarchical structures, to great success.

It’s also heartening to read this about a company like Valve, because Valve hasn’t merely adopted a radical departure from an archaic business model, they’ve done so while maintaining a sterling reputation within the gaming community. Is part of this their ability to let go of top-down control and let creativity flourish?

Given the creative nature of the business they’re in, I’d say so. But of course, embracing a business strategy that promotes creativity and autonomy is a good idea even outside of gaming and media.

We’re in an age of perpetual newness; it’s only fitting that prehistoric management models go extinct as well.

Follow me on Twitter or Facebook. Read my Forbes blog here. via forbes.com

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The Real Leadership Lessons of Steve Jobs

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His saga is the entrepreneurial creation myth writ large: Steve Jobs cofounded Apple in his parents’ garage in 1976, was ousted in 1985, returned to rescue it from near bankruptcy in 1997, and by the time he died, in October 2011, had built it into the world’s most valuable company. Along the way he helped to transform seven industries: personal computing, animated movies, music, phones, tablet computing, retail stores, and digital publishing. He thus belongs in the pantheon of America’s great innovators, along with Thomas Edison, Henry Ford, and Walt Disney. None of these men was a saint, but long after their personalities are forgotten, history will remember how they applied imagination to technology and business.

“The people who are crazy enough to think they can change the world are the ones who do.” —Apple’s “Think Different” commercial, 1997

In the months since my biography of Jobs came out, countless commentators have tried to draw management lessons from it. Some of those readers have been insightful, but I think that many of them (especially those with no experience in entrepreneurship) fixate too much on the rough edges of his personality. The essence of Jobs, I think, is that his personality was integral to his way of doing business. He acted as if the normal rules didn’t apply to him, and the passion, intensity, and extreme emotionalism he brought to everyday life were things he also poured into the products he made. His petulance and impatience were part and parcel of his perfectionism.

One of the last times I saw him, after I had finished writing most of the book, I asked him again about his tendency to be rough on people. “Look at the results,” he replied. “These are all smart people I work with, and any of them could get a top job at another place if they were truly feeling brutalized. But they don’t.” Then he paused for a few moments and said, almost wistfully, “And we got some amazing things done.” Indeed, he and Apple had had a string of hits over the past dozen years that was greater than that of any other innovative company in modern times: iMac, iPod, iPod nano, iTunes Store, Apple Stores, MacBook, iPhone, iPad, App Store, OS X Lion—not to mention every Pixar film. And as he battled his final illness, Jobs was surrounded by an intensely loyal cadre of colleagues who had been inspired by him for years and a very loving wife, sister, and four children.

So I think the real lessons from Steve Jobs have to be drawn from looking at what he actually accomplished. I once asked him what he thought was his most important creation, thinking he would answer the iPad or the Macintosh. Instead he said it was Apple the company. Making an enduring company, he said, was both far harder and more important than making a great product. How did he do it? Business schools will be studying that question a century from now. Here are what I consider the keys to his success.

Focus

When Jobs returned to Apple in 1997, it was producing a random array of computers and peripherals, including a dozen different versions of the Macintosh. After a few weeks of product review sessions, he’d finally had enough. “Stop!” he shouted. “This is crazy.” He grabbed a Magic Marker, padded in his bare feet to a whiteboard, and drew a two-by-two grid. “Here’s what we need,” he declared. Atop the two columns, he wrote “Consumer” and “Pro.” He labeled the two rows “Desktop” and “Portable.” Their job, he told his team members, was to focus on four great products, one for each quadrant. All other products should be canceled. There was a stunned silence. But by getting Apple to focus on making just four computers, he saved the company. “Deciding what not to do is as important as deciding what to do,” he told me. “That’s true for companies, and it’s true for products.”

After he righted the company, Jobs began taking his “top 100” people on a retreat each year. On the last day, he would stand in front of a whiteboard (he loved whiteboards, because they gave him complete control of a situation and they engendered focus) and ask, “What are the 10 things we should be doing next?” People would fight to get their suggestions on the list. Jobs would write them down—and then cross off the ones he decreed dumb. After much jockeying, the group would come up with a list of 10. Then Jobs would slash the bottom seven and announce, “We can only do three.”

Focus was ingrained in Jobs’s personality and had been honed by his Zen training. He relentlessly filtered out what he considered distractions. Colleagues and family members would at times be exasperated as they tried to get him to deal with issues—a legal problem, a medical diagnosis—they considered important. But he would give a cold stare and refuse to shift his laserlike focus until he was ready.

Near the end of his life, Jobs was visited at home by Larry Page, who was about to resume control of Google, the company he had cofounded. Even though their companies were feuding, Jobs was willing to give some advice. “The main thing I stressed was focus,” he recalled. Figure out what Google wants to be when it grows up, he told Page. “It’s now all over the map. What are the five products you want to focus on? Get rid of the rest, because they’re dragging you down. They’re turning you into Microsoft. They’re causing you to turn out products that are adequate but not great.” Page followed the advice. In January 2012 he told employees to focus on just a few priorities, such as Android and Google+, and to make them “beautiful,” the way Jobs would have done.

I encourage you to continue reading this article via hbr.org. 

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As the CEO and founder of InnoThink Group, Jim can help your organization enhance the strategic innovation and competitiveness of your business policy and strategy, with an emphasis on increasing top line growth.  

 If you’re interested in having Jim speak at your next event, simply use this form to send us your details and speaking requirements, and we’ll be in touch shortly. Or you may call us at 719-649-4118.