What great leaders know about not knowing it all

In a special monthly series on the McKinsey podcast, Eric Kutcher, McKinsey's chair of North America, engages in conversation with prominent leaders about the experiences that have shaped them. This episode features David Novak, a renowned business leader, co-founder and former CEO of Yum! Brands, and former C-Suite executive at KFC, Pizza Hut, and PepsiCo. Novak is also a best-selling author and podcast host. The discussion begins with Novak's career journey, starting in advertising before transitioning to PepsiCo, where he led marketing at Pizza Hut, then marketing and sales for Pepsi, and ultimately became president of KFC. He describes the restaurant business as being akin to direct response marketing, where the impact of marketing efforts could be quickly assessed. Novak also hosts a podcast focused on leadership, and he shares his philosophy on the subject. He believes leadership is fundamentally about "taking people with you to get big things done." His approach centers on understanding consumer perceptions, habits, and beliefs that need to be changed, built, or reinforced to drive business growth. He emphasizes that leaders must know their people as well as they know their customers to identify and overcome obstacles. He quotes the adage, "If you want to go fast, go alone, but if you want to go far, go together," highlighting the importance of collective effort. A core principle Novak espouses is "no involvement, no commitment." He stresses the necessity of involving people in decision-making, listening to their opinions, and then making informed choices. He uses a "people map" to identify key individuals who need to be influenced and involved to secure their commitment. Once reality is understood, a plan can be formulated, followed by structuring the organization around it, and ensuring the culture reinforces the strategy. Novak admits that his only business failures occurred when he neglected to involve people and dismissed their insights, believing he knew better. Addressing the perennial debate between strategy and culture, Novak argues against forcing a choice, stating that "strategy without execution is nothing." He believes that execution is only achieved through a culture that reinforces it and drives the desired strategy. He emphasizes that strategy, structure, and culture are intertwined and equally crucial for success. Leaders must understand their resources and ensure they have the right people, especially in areas like technology, to achieve their goals. On the topic of continuous learning, Novak, who wrote a book titled "How Leaders Learn," highlights the importance of curiosity. He notes that with the increasing influence of AI, a critical cultural skill will be teaching people how to ask better questions, as AI's effectiveness depends on the quality of queries. He believes intellectual curiosity is a vital attribute for aspiring leaders, urging them to ask "why" repeatedly. Novak observes that a significant percentage of people experience toxic work environments, which he attributes to poor leadership. He identifies an "uncanny combination of confidence and humility" as a hallmark of the best leaders. Confidence, he explains, must be rooted in competence, as people will only follow leaders they trust to guide them to victory. This confidence is tempered by humility, acknowledging the need for others. Additionally, top leaders possess a "healthy dissatisfaction with the status quo," constantly striving for improvement. This curiosity, he adds, cultivates competence over time. When asked about balancing the pursuit of excellence with "change fatigue," Novak admits he never truly balanced it. Instead, he focused on creating "winning fatigue" by motivating people to be part of something great and to win consistently. He calls this the "Yum! Dynasty-like performance," explaining that people desire to be part of something special, not mediocre. He actively "manages out" those who resist change and tolerate mediocrity, emphasizing that pursuing excellence requires an excellent team that shares the same vision. Tolerating mediocrity, he states, is the worst way to demotivate a team. He encourages everyone, regardless of their position, to "be the leader" and act like a leader by bringing forward ideas and not waiting to be told what to do. Reflecting on his failures, Novak shares the story of Crystal Pepsi. During a period when Pepsi's carbonated soft drink sales were declining, he sought big ideas. Observing the growth of clear beverages, he conceived of "Clear Pepsi." Despite initial excitement, positive customer feedback, and a rushed launch to coincide with the Super Bowl, the product ultimately failed due to low repeat purchases. The primary reason, he learned, was that it "didn't taste enough like Pepsi." He admits he didn't listen to the bottlers' feedback, who had warned him about this issue, and was too convinced he was right. Additionally, rushing the product to market led to quality control issues. His key learning was the importance of seeking and valuing input, rather than being overly confident in one's own convictions. Novak then discusses leading a decentralized organization with franchisees, sharing an anecdote about Billy Ball, a KFC franchisee in Clinton, Arkansas, who successfully managed buffets by understanding customer behavior. Ball observed that if he kept the chicken abundant and stacked high, customers would take fewer pieces because they knew they could return for more. This "abundance versus scarcity" approach, combined with strategically placing low-food-cost items at the beginning of the buffet, made his buffets highly profitable. Novak highlights that Billy Ball knew his business intimately and had the courage to implement his insights, even when others wouldn't believe it. Regarding widely held but incorrect leadership traits, Novak states that the belief that leaders must have all the answers is wrong. He asserts that leaders become more effective when they admit they don't have all the answers. If he were leading a company today, Novak would fundamentally prioritize technology more aggressively. He believes that AI will accelerate processes and provide data quickly, making curiosity and a learning mindset even more crucial for distinguishing the best leaders. However, he emphasizes that respect for human dignity and making people feel valued and appreciated will remain unchanged leadership principles. He advises leaders to identify three to five key behaviors that drive results and then consistently recognize those behaviors, as people tend to do more of what is recognized.