A Portrait of an Unconventional CEO

David Novak hasn’t exactly led a charmed life. He grew up in trailer parks, sold encyclopedias door to door, and worked as a night clerk in a run-down hotel. If that’s not bad enough, he is the guy behind Crystal Pepsi, which Time magazine called one of the worst new-product ideas of the twentieth century.

To say that he has taken an unconventional track to the CEO office is an understatement. He majored in journalism, never got an MBA, and took his first job as a $7,200-a-year copywriter at a tiny advertising agency. Yet in 2000, at the age of 46, he was named CEO of Yum Brands, owner of KFC, Taco Bell, and Pizza Hut, and one of the largest restaurant companies in the world.

Novak, who attributes his ascent to a passion for learning and a knack for motivating and connecting with people, chronicles with co-author John Boswell his unlikely career in The Education of an Accidental CEO: Lessons Learned from the Trailer Park to the Corner Office (Crown Publishing, October 2007).

The book is a humorous yet earnest take on getting ahead using compassion and showmanship rather than bravado. As a child, moving from neighborhood to neighborhood provided early lessons in the value of teamwork, loyalty to one’s own, and the ability to make friends fast. While his trailerpark experience was atypical—his middleclass family moved around because of his father’s land-surveying job—it helped forge many personal characteristics that later would serve him well. “Because I never had a formal business education, a lot of what I’ve learned may also be unconventional and was often self-taught,” Novak writes. “Failure is a great teacher and I have been its student on more than one occasion.”

"Because I didn't listen to my critics, I was really out there on a limb when Crystal Pepsi went south. [But] I didn't get fired. Pepsi is a company that knows you won't get innovation if you don't encourage risk." -- David Novak, Yum Brands 

Eventually, that unusual blend of street smarts and determination landed him the job as a “spiritual leader” for PepsiCo, a title conferred on him by then-CEO Roger Enrico (now chairman of DreamWorks Animation SKG) who noticed in Novak an ability to build rapport and motivate employees at all levels. In this role, Novak set out to meet as many employees as he could, as well as the franchisees of each of the company’s brands. He sent letters to those he couldn’t meet that described his passion for the restaurant business. When PepsiCo decided to spin off the restaurant division, he reassured those who feared being laid off that they were secure as long as they performed.

In the early 1980s, he helped coin the slogan, “Makin’ it Great,” for Pizza Hut, and pushed to reinvent Tricon Global Restaurants after the spinoff. When Lynn Tyson, head of investor relations, suggested “YUM” be used as a ticker symbol, Novak saw the future. Eventually, he was able to sell the idea of renaming the company and rewrote the corporate mission statement “to put Yum on people’s faces around the world.”

In addition to serving on his own board, Novak is a director of JP Morgan Chase. Working in that capacity, he writes, affirms his belief that the roles of the CEO and the board are equally important. Warren Buffett once suggested to him that the purpose of a board is to ensure that at least there is a mediocre CEO in place; Novak’s own rule of thumb is to treat his board like any boss he’s ever had.

In Novak, Buffett sees mediocrity’s opposite: “If CEOs were selected like NFL quarterbacks, Novak would be a firstround draft pick,” says the Oracle of Omaha. The lesson for nominating committees is when recruiting a CEO, consider Novak’s example that strong character and charisma can trump mere credentials.