3 More Questions (Kevin Hochman) with David Novak and Koula Callahan

Summary

Podcast Summary: How Leaders Lead with David Novak

Episode: 3 More Questions (Kevin Hochman)
Hosts: David Novak & Kula Callahan
Date: April 22, 2024

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Episode Overview

This special "Three More Questions" episode features host David Novak and co-host Kula Callahan as they reflect on the recent main interview with Kevin Hochman, CEO of Brinker International (parent company of Chili’s and Maggiano’s, former CMO at KFC and Pizza Hut). The conversation distills Hochman’s approach to leadership, culture, focus, and innovation, offering tactical insights for business leaders.

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Key Discussion Points and Insights

1. Infusing Fun Into Company Culture

• Hochman's Philosophy: Making Chili's "fun again" for employees was a central goal. He introduced a "culture calendar," bringing regular, anticipated moments of fun to the workplace.
• David Novak’s Take:
  • "The way how to have the most fun is win. I've never seen people have more fun than when you're winning." (02:21, David)
  • It's important to take the business seriously—but not yourself—so humor and fun can coexist with high standards and accountability.
  • Recognition is central to Novak's leadership style: "One of our major principles was recognize the greatness in others and have fun doing it...That's why I gave away rubber chickens and cheese heads and things like that." (02:58, David)
  • Memorable Quote: "It's hard to have fun, though, Kula, when Rome is burning, but I don't think Rome's going to stop burning a whole lot faster if you forget to laugh..." (03:33, David)

[01:51 - 04:48]

• Kula points out that a leader who doesn’t take themselves too seriously gives everyone permission to relax, collaborate, and avoid taking interpersonal issues personally.
• David: While people should care deeply and sometimes take tough moments personally, leaders should lift others up, not drag them down.

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2. Product Focus: Simplifying for Impact

• Chili’s Menu Revolution: When Hochman became CEO, he identified that four menu items accounted for 40% of sales—the "core four." He cut less essential products to help teams focus on what mattered and delighted customers.
• David Novak’s Advice:
  • "All products are not created equal...You gotta really understand where you're making your money...where do you really make customers happy? That's where you gotta focus." (05:19, David)

[04:48 - 05:56]

• Leaders should regularly evaluate their product or service offerings, double down on the "big movers," and avoid getting distracted by marginal items.

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3. The Realities of Innovation

• Hochman's Perspective: "Innovation is the lifeblood of any company, and if anyone tells you that they don't need innovation, they're crazy." (Referenced at 06:23)
• Alignment Matters: Innovative efforts should support the company’s big vision and focus on delighting customers.
• David Novak’s Advice:
  • Leaders shouldn’t always be chasing the next big disruption—incremental innovations around core products can be highly effective: "You don't need a magic trick...the really great companies innovate around what really matters in their business and they make the products that are important—the core four—better." (06:23, David)
  • Example: At Pizza Hut, incremental moves like adding extra pepperonis (Pepperoni Lovers Pizza) drove sales before the eventual "disruptive" innovation of Stuffed Crust Pizza. "Eat it backwards so you no longer had to leave that crust on the plate, and it drove sales over 20%." (07:44, David)
  • Key Takeaway: "Look at all the incremental innovations you can do...then push everybody to think outside the box and come up with that breakthrough." (08:59, David)

[05:56 - 08:59]

• Focusing innovation on proven customer favorites increases impact, with occasional breakthroughs being company game-changers.

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4. Winning with Margaritas: Driving Profits by Doubling Down

• Chili’s Margarita Fun Fact: If Chili’s were a country, it would rank third globally in margarita consumption—behind only the US and Mexico. The brand’s innovation is often in variations of what already works (margaritas with new premium tequilas, flavors, etc.).
• David Novak’s Perspective:
  • "I can tell you, you make a lot of money selling margaritas, so they're focusing on something that really drives a lot of profit, and it's something that customers love..." (09:50, David)
• The focus: Find the overlap between what delights customers and what drives margins, then continually innovate within that space.

[08:59 - 10:11]

• Personal anecdotes close the segment, with Novak joking about tequila and sharing his "ranch water" recipe as a low-calorie alternative to margaritas.

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Notable Quotes & Moments with Timestamps

• On Fun at Work:

  • "The way how to have the most fun is win. I've never seen people have more fun than when you're winning." (02:21, David)
  • "You need to take your business very seriously, but not yourself." (02:31, David)
  • "It's hard to have fun...when Rome is burning...but I don't think Rome's going to stop burning a whole lot faster if you forget to laugh." (03:33, David)

• On Product Focus:

  • "All products are not created equal...where do you really make the bucks?...That's where you gotta focus." (05:19, David)

• On Innovation:

  • "Innovation is the lifeblood of any company, and if anyone tells you that they don't need innovation, they're crazy." (Referenced at 06:23, Kevin via Kula)
  • "You don't need a magic trick...the really great companies innovate around what really matters." (06:23, David)
  • "Eat it backwards so you no longer had to leave that crust on the plate, and it drove sales over 20%." (07:44, David)

• On Margaritas and Focused Innovation:

  • "There is obviously a reason why Chili’s sells so many margaritas—because they focus a lot of their innovation efforts on different types of margaritas." (09:14, Kula)
  • "You make a lot of money selling margaritas... they're focusing on something that really drives a lot of profit, and it's something that customers love." (09:50, David)

• Lighthearted Closer:

  • "Next time I see you in person, we're going to have to share a margarita together." (10:11, Kula)
  • "Absolutely. Well, I actually prefer ranch water...Very refreshing and doesn't give you a hangover." (10:15, David)

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Important Segment Timestamps

• [00:17–01:19] Reflections on working with Kevin Hochman at Yum Brands and his approach to leadership
• [01:51–04:48] Fun at work, recognition, and attitudes towards success and mistakes
• [04:48–05:56] Product focus, simplifying menus, and doubling down on what works
• [05:56–08:59] Innovation: balancing incremental improvements with disruptive thinking (Pizza Hut examples)
• [08:59–10:11] Case study: Margaritas at Chili’s and margin-driven innovation

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Summary

This "Three More Questions" episode delivers sharp, actionable leadership wisdom by examining how Kevin Hochman approaches fun, focus, and innovation at Brinker International. David Novak, drawing on decades of C-suite experience, doubles down on the power of celebrating wins, recognizing employees, concentrating on high-impact products, and innovating both incrementally and disruptively. The conversation is peppered with humor, memorable anecdotes, and clear frameworks for leaders at every stage.

Transcript

[A]

Welcome to How Leaders Lead. I'm Kula Callahan, here to bring you another edition of Three More Questions with David Novak. David, I'm so glad to be back recording another episode with you. How are you today?

[B]

I'm fine, Kul. And back at you. Let's go.

[A]

Well, today we're debriefing your conversation with Kevin Hockman. He's the CEO of Brinker International, which is the parent company of Chili's and Maggiano's. And this episode is amazing. I mean, Kevin is a marketer by trade, and so he's just so engaging with all the stories that he tells and how he really infuses fun into the culture at Brinker.

[B]

You know, Kula, I'm so proud of Kevin because he worked with me at Yum Brands. He was the chief marketing officer of kfc, and he's the. The one that brought back the Colonel and had all the famous advertising, you know, bringing Colonel Sanders back in different ways, even having Reba McIntyre be a colonel. I mean, but it was a lot of fun, and he. He turned the business around, achieved a lot of success, and then did the same thing at Pizza Hut and then got the opportunity to become a CEO at. @ Brinker's. And. And I can only say that he's just one fine person, and it's great to see him do so well there.

[A]

It was fun to hear how he's implemented a lot of the stuff he learned from you at Yum and his work with his team at Brinker, and we'll dive into some of those concepts as we roll into the questions for today's episode. So let's get going.

[B]

But before we do that, Kula, I got to say, I learned a lot working with Kevin. You know, he is such a really good thinker and comes at the issues in such a simple way. I kind of marveled at how he. He worked through the problems.

[A]

Question number one. When Kevin took over as CEO, one of his main goals was to make Chili's fun again for the employees. He believes it's his job as CEO to remove friction for his employees so they can have engaging with customers. One of the things Kevin did was institute a culture calendar, so every few weeks, the employees have something fun that they can look forward to. David, how much value should leaders place on making fun part of their culture?

[B]

Well, I think the way how to have the most fun is win. I've never seen people have more fun than when you're winning. You know, business is not that fun when you're losing So I would say, you know, if you're winning, it makes fun a whole lot easier. So, you know, I think fun is very important, but the way I think about it is, is that you need to take your business very seriously, but not yourself. And when you don't take yourself too seriously, you have a tendency to display a little humor, laugh at yourself, make it a little bit easier to do the tough stuff in business.

[A]

And.

[B]

And, you know, I always believed the best way to have fun was to recognize people. In fact, one of our major principles was recognize the greatness in others and have fun doing it. And, you know, I think you can have a lot of fun when you take the time to recognize people by just, you know, thinking about a little bit harder about how you can make it fun for the other people and your team when you do the recognition. You know, that's why I gave away rubber chickens and cheese heads and things like that. I always recognized very serious behavior that was growing the business, but we had fun doing it, and it's a great combination. It's hard to have fun, though, Kula, when Rome is burning, you know, but I don't think Rome's going to stop burning a whole lot faster if you forget to laugh and you forget to kind of, you know, spur each other on by just being positive and exhibiting as much positive energy and as fun as you can.

[A]

When a leader sets the tone of taking the business seriously but not taking him or herself seriously, it allows other people to do the same. And so I think, you know, in my experiences with leaders who have conducted themselves in this way, it just kind of creates this understanding that the business is the thing we take seriously and not each other. So it allows you to just not take things too personally, which I think creates a culture where people just feel more comfortable in.

[B]

Well, I think that's true, but at the same time, I have to tell you, Kula, I like people taking the business personally. You know, if you screw up or you don't do the job you should have did. You got to take it personal. But what I think you're really saying is, is that, you know, don't wear it so much on your sleeve that you bring everybody else down and you don't find ways to lift each other up. And I totally agree with that.

[A]

Question number two. When Kevin took over as CEO, the menu at Chili's was quite complex. They had a ton of menu items that they offered at the time, though there were four menu items that made up about 40% of their business. Kevin deemed These menu items, the core for and began eliminating many other menu items so that they could focus on the ones that customers truly love and the ones that drove the majority of their business. David, how should leaders evaluate their menu of products as they think about scaling their business?

[B]

Well, I think the most important thing is just to remember all products are not created equal. Basically, you got to really understand where you're making your money and what products are the keys to making your money. And then make sure that you're doing everything you can to drive those products and make them as relevant as you can for your customers. You know, so many times people spend too much time on the wrong side of the decimal point. You know, where do you really make the bucks? Okay. And where do you really make customers happy? That's where you got to focus.

[A]

Question number three. I love what Kevin says about innovation. He says innovation is the lifeblood of any company. And if anyone tells you that they don't need innovation, they're crazy. Kevin believes that when you innovate, you have to make sure everyone is aligned around the big vision of the company so the innovation supports it and you have to ensure that the customer is going to love it. What else would you tell leaders to consider as they drive innovation in their own business?

[B]

Well, the first thing I would say is you don't need a magic trick. People always talk about disruption, and I love disruption. When you could disrupt a category, I mean, it is absolutely incredible. But the really great companies innovate around what really matters in their business and they make the products that they make that are important. That Core four that Kevin talked about, they make them better and figure out ways to expand that category without trying to chase this big idea that's going to change everything forever. Now I'm not saying don't chase that idea, don't chase the disruptive idea. I think that's an important thing to always be pushing your yourself on and your people on. But those disruptive ideas don't come along every day. So in the meantime, you gotta innovate as much as you can around the products that you know that your customers are buying so that you continually make em fresh, continually make em exciting, continually make the business that you're in as powerful as it can be. And then if you can grow that business 50 times by coming up with that disruptive idea, of course you want to do it. It's just not that easy. Let me give you an example. You know, one of my favorite examples that I talk about is when I was a pizza, we Were looking for this tremendous new dough. Okay? We wanted to have a new dough type that was going to change the category, and all this kind of good stuff. Well, it was very difficult to come up with. But in the meantime, you know what we did? We doubled the number of pepperonis on our pepperoni pizza and called it pepperoni lovers. And that was an innovative product at that point in time. That drove more sales growth than any that we'd had since. We had our most innovative dough, which had been pan pizza. But then we continued to be working on the big ideas and the big disruptive ideas. And you know what? That was in the pizza category. This was years ago. Okay? Now everybody has it. But it was putting cheese in the crust, and it was called stuffed crust pizza. And we said eat it backwards so you no longer had to leave that crust on the plate. And it drove sales over 20%. So I think you want to come at things both ways. Look at all the incremental innovations you can do around the products you know, your customers love, and then push everybody to think outside the box and come up with that breakthrough that can really dramatically grow your business.

[A]

I love hearing Kevin talk about how if Chili's were a country, it would rank third in consumption of margaritas. So margarita consumption by country is the US Then Mexico, and then Chili's. And I think, David, there is obviously a reason why Chili's sell so many margaritas is because they focus a lot of their innovation efforts on different types of margaritas that they can offer with different levels of premium tequila. And they just keep creating new margaritas, and they keep selling the heck out of them.

[B]

I think my bar at my house is a neighborhood for tequila.

[A]

Well, Chili's definitely has a great margarita, and it's one of their core four products. So it makes sense why they keep doubling down on creating new, exciting offerings for that key product.

[B]

And back to what I was saying earlier, I don't think Kevin talks about the. The margins that you have in the margarita business, but I can tell you, you make a lot of money selling margaritas, so they're focusing on something that really drives a lot of profit, and it's something that customers love, and it's something that makes them want to come to Brinkers. Good combination.

[A]

Well, David, next time I see you in person, we're going to have to share a margarita together.

[B]

Absolutely. Well, I actually prefer ranch water. You know, you get a great tequila and then put that topo chico in it. Oh, man, that water is really good. Sparkling water. And then a few limes and I mean, you're on your way. And by the way, it's very refreshing and doesn't give you a hangover.

[A]

Take note, folks, ranch water over margarita.

[B]

Well, I like the margaritas too, but you know what, they've got a lot more calories and we'll probably give you that hangover that I avoid with my ranch water.

[A]

Ranch water is the headache free way to have a great time.

[B]

There you go.

[A]

Well, that does it for our episode of three more questions. Thank you so much for tuning in to how Leaders Lead. We're on a mission to make the world a better place by developing better leaders. And if you carve out a little time with us each and every week, we'll help you build the confidence you need to lead well.

[B]

And coming up next on HAL Leaders Lead is Hal Rosenbluth, chairman and CEO of New Ocean Health Solutions. And he is a very disruptive thinker.