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Yum! Brand’s Secret Sauce of Success: Recognition-Based Team-Building?

ET Cases,
AUTHOR(S) : Deepti Nair and Dr. Nagendra V. Chowdary

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Yum! Brand’s Secret Sauce of Success: Recognition-Based Team-Building?

“It takes a team to run a company and a big man to know that he needs one”. This probably is the best way to put forth the story of America’s second largest fast food company, Yum! Brands (Yum!), which is marching forward with gusto under its captain David Novak’s (Novak) command. While the company’s name adorns the high streets and highways of the world it couldn’t be more ironical that very few of its customers have actually ever heard of it. But if they know Pizza Hut, Taco Bell and KFC (formerly Kentucky Fried Chicken) then they pretty much know Yum!, the parent company of these three fast food restaurants.

With 1.4 million employees across 130 countries and stores, infusing every Yum!ster with a common purpose and sustaining their high performance over fairly longer time horizons would have been nightmarish for anyone. But not for Novak, Yum!’s ebullient CEO. Inspired by a touching event, guided by personal conviction and constantly nurtured with appropriate organizational initiatives, Novak has a self-mandated agenda of making the company a name to reckon with in the Quick Service Restaurant (QSR) industry. With Novak at the helm of affairs, Yum! has been fast scaling the ladder of success. Interestingly, the growing realization that high performing teams can serve as a competitive advantage has made business leaders look up to Novak and his mantra of recognition-based team building. It’s no surprise then that Novak is flooded with requests from fellow CEOs to share his secret recipe with their business leaders as well.

But can team-building serve as a long-term success mantra? Will the culture at Yum! continue to prosper even after Novak passes on the leadership baton?...................

Yum! Brands

The Birth of Yum!

With 1.4 million employees and a global presence spanning across 130 countries,2 the company was passionate about putting a ‘Yum’ on the faces of its customers worldwide. Headquartered in Louisville, Kentucky, Yum! has been a Fortune 500 company, ranked 201 on the 2012 Fortune 500 List.3 Over the years, Yum! has emerged as a leader in the quick service restaurant industry with nearly 40,000 restaurants across the globe, backed by a dedicated team which has been devoted to offering a unique dining experience to each of its customers............

Yum!’s Global Footprints

Sensing the tremendous growth opportunity in the global quick service restaurant industry, especially in the emerging economies, Yum! was prompt in its decision of foraying into international markets. To fulfill its ambitious dream of building a vibrant global business in the quick service industry, Yum! relied on three key growth strategies.............

Yum!’s Global Footprints: Emerging Markets and Rest of the World

Besides China, Yum! had gained a strong footing in other emerging markets as well. The Asian market accounted for 54%of Yum!’s operating profits (Exhibit I)............

Emerging markets like Southeast Asia and Africa served as new territories for Yum! in its plans for global expansion. In 2001, KFC was rated the third most loved brand in South Africa and the most popular retail brand of all. Yum! had also spread its roots into newer African countries including Angola, Nigeria, Ghana and Zambia...................

Leading Yum! To Global Success: The Novak Way

Team-Building at Yum!

An interesting trend across all of Yum!’s fast food restaurants was its highly motivated teams. Buckley said, “I think the management has done a terrific job taking kind of a messy, loosely confederated company at the  origin and making it a much more cohesive, well-functioning company.” It was not surprising then, that the world wanted to know about Novak and his team building formula..............


Exhibit I: Yum’s! Sources of Revenue

Exhibit II: Yum’s Revenues by Geographical Origin

Exhibit III: Yum’s! Performance Post Spin-Off

Teaching Note Preview

Yum! Brand’s Secret Sauce of Success: Recognition-Based Team-Building?



This case study was written to analyse team-building as a business strategy and a competitive advantage tool. It shall prove useful for understanding working teams in the Organizational Behavior Course. Using the quick service restaurant industry as a backdrop, this case study serves ample scope for discussion on the importance of teams the numerous team building techniques and the challenges of applying these techniques in cross-cultural scenarios. Despite a shaky start, Yum! Brands (Yum!) had come a long way under its leader David Novak’s (Novak) guidance. Novak was known for his unpretentious and approachable style. A strong advocate of ‘work should be fun too’, Novak had immense faith in his people and the power of teams. Replacing the conventional trophies and plaques with his maverick knickknacks like mechanical teeth and floppy rubber chickens, Novak was undeterred by how his awards were perceived as long as they were having the desired effect on his team members. But how can team building be percolated across the various levels or organizational hierarchy especially to ensure that it reaches the front-end employee? More importantly with Yum!’s growing global presence, spread across 130 countries, how will these team building techniques have to be altered?

Prerequisite Conceptual Understanding

This Case Study presupposes the conceptual understanding of how teams are formed, the stages of team development – Forming, Storming, Norming, Performing and Adjourning, etc. At this juncture, the relevant chapter from the suggested book may be mandated.

  • -Stephen P. Robbins, et al., “Understanding Work Teams”, Chapter 10, Organizational Behavior, 12th edition


Pedagogical Objectives

This case study tries to accomplish the following pedagogical objectives:

  • -To understand the nature of the quick service restaurant industry and analyse the role of recognition as a tool for employee motivation
  • -To understand and debate on David Novak’s strategy of anchoring for a unifying force in order to build sustaining high performance teams
  • -To debate on the relevance and efficacy of replicating David Novak’s team building edifice across different companies, industries, geographies, etc.


The classroom discussion can commence with the following broad questions:

Assignment Questions

  1. -What is the nature of the quick service restaurant industry? What is the role and relevance of employee recognition especially for firms in the quick service restaurant industry?
  2. -How did David Novak inculcate a culture of recognition at Yum!?How can employee recognition and team building techniques be applied across cultures and countries?
  3. ...............................



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Product code: OB-1-0025, OB-1-0025A


This Case Study enables a discussion on how to build purposeful and high-performing teams across multi-country and multi-cultural settings. While the brand is recognized globally, how do you recognize the people who nurture the brand day in and day out? David Novak's celebrated model of team-building has had pronouncing effects not just in Yum! Brands but also in other companies for its unique recognition based team-building practice. Bizarre knickknacks like a floppy rubber chicken or a set of teeth mounted on skinny legs with oversized feet are just some of the many embellishments that welcome you as you enter David Novak's (Novak) office. Not to mention the numerous photo frames adorning the office walls including most of the ceiling space! One close look is all it takes for the onlookers to realize that these photos of Novak are with people they might have never seen before. These elements undoubtedly seem odd, especially in the office of a Fortune 500 firm's CEO! What makes these uncanny office features more interesting is the fact that they form an indispensable part of a team-building system that has made Yum! Brands (Yum!), a power to reckon with in the Quick Service Restaurant (QSR) industry. This culture of recognition coupled with Novak's team-building program, 'Taking People With You', had been instrumental in creating the Yum!'s success story. But is it feasible to implement and institutionalize this unique culture on a global platform amidst cultural differences? What should be the role of leadership in all such initiatives?

Pedagogical Objectives

  • To understand the nature of the quick service restaurant industry and to analyze the role of recognition as a tool for employee motivation
  • To understand and debate on David Novak's strategy of anchoring for a unifying force for sustaining high performance teams
  • To debate on the relevance and efficacy of replicating David Novak's team-building edifice across different companies, industries, geographies, etc.

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- Case Study
- Teaching Note (**ONLY for Academicians)

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