I HAVE THE GREATEST job in the world. I travel hither and yon, observing how organizations behave. Iâm always looking for companies that are trying to build themselves the right wayâby focusing on their customers and creating people-first, performance-based cultures.
Why is customer focus so important? Because whether youâre selling pizzas or professional services, your business is not about you. Itâs about the people you serve. I say Iâm always looking for companies that are trying to do it right because building a company the right way is a continuous journey. There is no final destination. When I find an organization on this journey, I am excited.
The Beginning
Four years ago I was asked to speak about customer service to an annual meeting of KFC (originally Kentucky Fried Chicken). At that conference I met David Novak, who at the time was president of Triconâthe parent company of KFC, Taco Bell, and Pizza Hut. During that meeting, David told me about the journey he and his folks were on to revitalize a lackluster balance sheet by becoming a customer-centric organization. David knew that his company, like most companies, had already been giving lip service to focusing on the customer. He believed that building a company the right way meant going beyond merely listening and responding to the customer; it meant putting together a can-do team that was obsessed to go the extra mile for the customer. David intended to create nothing short of a Customer Mania culture throughout all their restaurants worldwide.
Talk about an ambitious dream. In 1997 KFC, Taco Bell, and Pizza Hut had been spun off from PepsiCo to form Tricon. At that time, Triconâs balance sheet was in trouble. The new company had inherited a $4.7 billion debt and its return on invested capital hovered at a feeble 8 to 9 percent. As if that werenât a big enough challenge, in 2002 Tricon bought two additional quick service restaurant brandsâLong John Silverâs and A&W All American Food Restaurantsâand in the process became by far the largest restaurant company in the world, employing some 840,000 people at nearly 33,000 restaurants in more than 100 countries and territories. It was at this time the company changed its name to Yum! Brands. Given their financial situation and the sheer size of the enterprise, the task of creating massive cultural change was daunting, but that didnât seem to faze David. I loved that attitude. It became clear he was not just interested in creating a Customer Mania culture worldwide, he was going to do it. I would grow to admire his commitment and determination.
I got to spend more time with David six months later, when he asked me to speak at an annual meeting of all the top managers from the company. This time we had a chance for some real give and take and it didnât take long for us to realize we were soul mates. In Davidâs wanting to build a customer-focused company the right way, he was trying to implement everything I have been teaching and writing about for years. And he was doing it in one of the most difficult environments possible.
A Gigantic Do-Over
In golf if you hit a bad shot and say, âIâll take a mulligan,â you get to hit again. David Novak uses a similar phrase to depict what his company is up to. He said, âWhen my daughter, Ashley, was younger and she and her friends made a mistake in their games, they would say, âI get a do-over.â Thatâs what Yum! isâa gigantic do-over.â
The fact that this is a giant do-over makes the task of creating a customer-focused, people-first, performance-driven culture more difficult. It is much easier to implement the concepts I have been teaching over the years when you first start a company than to take an organization that has built a different culture and head it in a new direction. Starting over means winning over skeptics and gaining buy-in for a totally new way of operating.
Yum! is attempting to create a new culture from a group of decentralized companies that actually viewed each other as competitors. Disappointed by the lack of synergy and their overall performance, PepsiCo had come to the decision that it was time to shed even great brands.
While Novak was excited by the challenge, being spun off from PepsiCo made associates anxious. Although everyone knew their combined results were lower than expected, the folks from KFC, Taco Bell, and Pizza Hut still were proud to be a part of PepsiCo, which clearly had credibility and prestige as one of the worldâs great companies. People in the new acquisitionsâLong John Silverâs and A&W All American Restaurantsâalso had uncertain feelings.
Everyone was wondering, âCan they really âdo overâ an enormous company made up of firmly entrenched brands?â What would the new company be like? Would benefits go away? Would the company be first classâor coach?
âWeâve got a real opportunity here,â David told me. âHow many leaders and teams have the chance to take well-known brandsâsome that are celebrating their fiftieth anniversaryâand start a new company? If we build it the right way, we can create the company of the century.â
A Common Sense Strategy
As they rebuild their company the right way into a customer-focused enterprise, David Novak and his people are trying to make common sense be common practice. Common sense says that if you consistently treat those who serve customers as if theyâre the most important people in the company, they will treat customers as if theyâre the most important people in the world. If a companyâs people are treated as winners and see themselves as winners, customer satisfaction and profitability come naturally.
Making common sense common practice involves understanding people. In the case of Yum! that means understanding customers, suppliers, franchisees, team members, leaders, and yes, investorsâeveryone around the globe who is involved or impacted by the organization. With its emphasis on understanding people, one of the things Yum! stands for is:
You Understand Me
Recognition: A Universal Need
The phrase âYou Understand Meâ means you not only understand my unique needs but also universal needs, such as recognition, that apply across cultures all over the world. David sums it up:
In The One Minute Manager, Spencer Johnson (the guy who moved the cheese) and I said that the key to developing people and great organizations is to catch people doing things right and to accentuate the positive. Davidâs commitment to that principle is obvious. He is passionate when he explains that he wants to take recognition and celebration to new levels in building and sustaining exceptional performance around the world.
Foremost among the things that impressed us were Davidâs energy and passion about the company and the business he is in. Just walking into Davidâs office is an experience. Most executives have their companyâs motto âlamed and framedâ on the wallâin this case the motto would be, âWe recognize people.â But Davidâs entire wall space declares the value of recognition. Itâs completely covered with pictures of people heâs honored around the world. David pointed to pictures heâd put on the ceiling when he ran out of wall space.
âThe loss-prevention guys are letting me keep those up there as long as theyâre bolted in so they donât fall and hit someone on the head,â he said with a smile.
All that evidence of recognition is not there just for show; itâs for him. He told us, âIâve got the greatest CEO office in the world.â He is like a kid in a candy storeâso glad to be there.
Getting Help
The more I found out about Yum!, the more excited I got about the possibility of documenting their journey. As I said earlier, Iâm always looking for good examples of people attempting to practice what I preach, but I had never seen a group of top managers who were interested in âdoing the whole thingââimplementing a complete corporate do-over.
When I shared my excitement about their journey being a case study that could help other people and organizations, David and his people got excited, too. Given the size and complexity of the potential assignment, I knew Iâd need some help. I asked two of my colleagues, Fred Finch and Jim Ballard, if they would join me on this project. I have known both of them for over thirty years. Fred is a founding associate of The Blanchard Companies and an excellent consultant. Jim is a fine writer and trainer who has worked with me on a number of books, including coauthoring Whale Done!: The Power of Positive Relationships.
After Fred, Jim, and I met with David in his office in Louisville, we agreed that he and his people might just pull off rebuilding their company the right way and creating a Customer Mania culture worldwide. But our enthusiasm about the project increased leaps and bounds when Davidâs team said, âOkay, have at it. As long as you donât write a book thatâs a whitewash.â They told us to go anywhere in the company and talk to anybody. âBut make sure that anything you write reflects accurately what you findâthe good, the bad, and the ugly.â That even gave us permission to raise tough questions. This drove us on even more, since we didnât want to be involved in writing a book that amounted to a lot of hoopla. That point was reinforced when David insisted that he didnât want the book to be about him either. Given the egos of CEOs weâve run into, that was really impressive.
Knowing that the behavior of top management is always mirrored right down the organization, we began by interviewing senior management people at Yum! corporate, as well as at each of the brands. Focusing on vision, values, and leadership, we got a feeling for what the company believed in, their aspirations, and the direction they were going in their journey. Then we talked to franchise owners, leaders down the line, restaurant managers, and team members, both in the United States and abroad. As the project grew, so did our confidence in the companyâs commitment to its people.
Organization of This Book
Over the years I have found that leaders in great organizations, large or small, know how to build a customer-focused company the right way. They do that by leading at a higher level and focusing peopleâs attention on more than making money. They understand the power of a people-first, performance-driven culture and intuitively practice the four key steps to building a company the right way:
Step One: | Set your sights on the right target and vision. |
Step Two: | Treat your customers right. |
Step Three: | Treat your people right. |
Step Four: | Have the right kind of leadership. |
Let me make it clear that when I talk about leaders, in many cases Iâm not simply referring to top management. Leadership is an influence process and leaders can be anyone with the opportunity to affect others, for better or worse. A great organization has leaders at all levels.
This book is organized into three parts. The first part contains this introductory chapter and gives a brief history of Yum! Brands. Part IIâthe main body of the bookâzeroes in on the four steps to building a customer-focused company the right way. It consists of four chapters, each representing one of the key steps. The first part of each chapter is labeled Blanchardâs Dream and contains my thinking about what it takes to do that step in an ideal way. The second part of each chapter is labeled Yum!âs Reality. This section releases the voices of people throughout Yum!âtheir leaders, coaches, and associatesâand tells their story. It describes how they are using that step to rebuild the right way and accomplish their dream of establishing Customer Mania worldwide. At the end of each chapter is a Scorecard. This is my sense of how well Yum! is doing in each key area compared to the ideal I described in my Dream sections. Part III, Next Steps, explores the challenges they face to keep the momentum going and what theyâre d...