Podcast Summary: How Leaders Lead with David Novak

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

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.

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.

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.

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.

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.

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)

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

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.