What great leaders know about not knowing it all

This episode of the McKinsey podcast features David Novak, co-founder and former CEO of Yum Brands, discussing his career, leadership philosophy, and key lessons learned from both successes and failures. Novak's journey into the business world began in advertising, which led him to a marketing role at Pizza Hut within PepsiCo. He found the restaurant business to be highly responsive to marketing efforts, providing immediate feedback on what worked. After successfully turning around Pizza Hut, he moved on to various leadership roles within PepsiCo, including running marketing and sales for Pepsi, serving as COO for Pepsi, and becoming president of KFC. He then went on to co-found Yum Brands. A core theme of Novak's leadership philosophy is the importance of "taking people with you to get big things done." He emphasizes that this is the only way to achieve significant goals. His approach involves understanding consumer perceptions, habits, and beliefs that need to be changed, built, or reinforced to grow the business. He believes that leaders must know their people as well as they know their customers to understand and overcome obstacles. Novak highlights the "law of leadership: No involvement, no commitment." To bring an organization along, especially one with independent franchisees, leaders must involve people, ask for their opinions, and truly listen. He uses a "people map" to identify key individuals to influence and ensures their involvement to gain commitment. Once reality is understood, a plan can be formed, strategy developed, structure built around it, and culture reinforced to support it. Novak admits that his biggest failures occurred when he neglected to involve people and disregarded their insights, believing he knew better. He addresses the common debate between strategy and culture, asserting that forcing a choice between them is "naive." For Novak, strategy without execution is meaningless, and execution is only achieved through a supportive culture. He sees strategy, structure, and culture as intertwined and equally essential components for success. Regarding continuous learning, even as a CEO, Novak believes he received honest feedback because he actively sought it. He emphasizes curiosity as a crucial driver for learning, especially in the age of AI. He suggests that culturally, organizations must teach people "how to ask better questions," as AI's effectiveness will depend on the quality of the questions posed to it. He notes that intellectual curiosity – the constant asking of questions – is a vital attribute for young professionals. Novak identifies an "uncanny combination of confidence and humility" as a hallmark of the best leaders. Confidence, he argues, must be rooted in competence, as people will only follow a leader they believe knows what they're talking about and can lead them to victory. Humility, on the other hand, acknowledges the need for others and the inability to achieve goals alone. This combination, along with a "healthy dissatisfaction with the status quo," defines exceptional leadership. When discussing balancing dissatisfaction with the status quo against "change fatigue," Novak admits he never fully figured out the balance. Instead, he aimed to create a "winning fatigue" by motivating people to be part of greatness and win every year, likening it to a "dynasty-like performance." He believes people want to be part of something special, not mediocre, and leaders should constantly "sell the dream." He suggests that leaders should not tolerate mediocrity and should manage out those who constantly express change fatigue, as excellence requires an environment of excellence. The worst way to demotivate a team, he states, is to tolerate mediocrity. Novak shares a significant learning moment from his failure with Crystal Pepsi. Facing declining carbonated soft drink sales, he conceived the idea of a clear Pepsi, inspired by the growth of other clear beverages. Despite positive initial reception from customers and Roger Enrico, then chairman, Novak rushed the product to market for a Super Bowl launch. He disregarded feedback from bottlers who felt Crystal Pepsi didn't taste enough like Pepsi, believing he needed an "incremental user" and that he knew better. The product launched at a premium price, but its repeat purchase rate was very low, primarily because it lacked sufficient Pepsi flavor. Additionally, rushing the launch led to product quality issues. His key learning was his unwillingness to truly seek and accept input, being overly convinced of his own correctness. He also shares a story about leading a decentralized organization with independent franchisees at KFC. He recounts visiting a franchisee named Billy Ball in Clinton, Arkansas, who had the most profitable buffets despite the system-wide unprofitability of buffets. Ball's strategy involved placing a large quantity of chicken on the buffet line, which counter-intuitively led customers to take fewer pieces because they knew they could return for more. He also filled the beginning of the buffet with low-food-cost items like Jell-O and mashed potatoes. This demonstrated the franchisee's deep understanding of his specific business and customers, and the courage to implement an unconventional approach. Novak's experience studying hundreds of leaders for his podcast has led him to conclude that a widely held, yet incorrect, leadership trait is the belief that leaders must have all the answers. He argues that leaders become better when they admit they don't have all the answers. If he were leading a company today, Novak states he would be "much better at technology," acknowledging he was not proactive enough in that area previously. Looking ahead to the impact of AI on leadership, he believes things will happen quicker, with unbelievable data readily available. The best leaders will leverage their curiosity to a new level. However, he asserts that two things will not change: leaders must have "great respect for human dignity" and make people feel valued and appreciated. He emphasizes the power of recognition, advising leaders to identify 3-5 key behaviors that drive results and then "recognize the hell out of it," as people will do more of what is recognized.