A management guru leads an overhaul of some iconic fast-food chains

This article from The Economist outlines Yum! Brand’s CEO Dave Novak’s initiative to create a single global entity that emphasizes “constant innovation.” Fast-food is not known for investing much in its workers, but as the parent company of KFC, Pizza Hut, and Taco Bell, Yum! has 1.4 million employees in 112 countries, so Mr. Novak realized the need to find a cohesive corporate culture.

Since 1997, Yum! shares have risen fourfold, and the company has grown by more than 10% a year for seven years in a row. Interestingly, 65% of the revenue is earned outside of the US despite being a company of America’s most iconic chains. As a global company, Mr. Novak sought to avoid complacency by launching a review to identify best practices and to learn from competitor McDonald’s. The studies presented three areas for improvement:

•                      Sell more healthy foods.

•                      Offer greater variety of drinks

•                      Change menus according to the time of day.

The set back, however, was the corporate culture. As a truly global company, brands around the world operated differently, which inhibited the spread of ideas. As a result, Mr. Novak sought to create a global corporate culture that emphasizes constant innovation and the faster spreading of initiatives. “Achieving Breakthrough Results” (ABR) is the course managers teach their staff. It involves a trickle-down theory, starting with senior executives and moving down the chain of command. This helps ensure successful innovations in one country are quickly adopted in others.

Multi-concept restaurant chains and international hotel groups can adopt Mr. Novak’s techniques to create corporate cohesion. Implementing lessons learned from one division should be applied around the company. The article concludes: Mr. Novak’s “conviction that ABR is responsible for Yum!’s success seems to rest on nothing more objective than internal surveys and appraisals.” It is a simple method that ensures quick progress to enhance the brand.

Read the Economist article here.

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