ARJUN:
David, you’re a true leader in the field of finance who has always lived at the intersection of brilliant thinking and total integrity. I had the chance to know you at Papa John's, but your career has been bigger and broader than that. Looking at the success you've had, starting at Ernst and Young, then moving on to Papa John's and Benihana, what are some of the secrets behind your success?
DAVID:
I think the biggest success of my career was the caliber of our finance team that we built at Papa John's. When I first got there, we had about 400 restaurants, and it was very much a regional company in the Midwestern and Southeastern parts of the U.S. When I left, there were over 4,000 restaurants all around the world and we had, for our organization, an incredible finance team. I’m very proud that I could help to build and develop a world-class finance team in an organization that started out as a very small regional restaurant company and became one of the leading pizza companies in the world.
ARJUN:
Can you give me an incident that inspired you and how it impacted you?
DAVID:
One thing really inspired me and led me to believe that you never let a good problem go to waste, because you can always learn something from it. Papa John's grew very quickly. We ended up having some quality issues, and that was going to damage the brand long-term. I'll never forget John telling franchise and company-owned operators, “We've got a problem.” He did a very secret shopper program where he actually took pictures of the pizzas as they were being prepared at the time, showed them to the operators at one of the operators conferences and said, “Look guys, this isn't going to cut it. We are the quality brand. We’ve got to fix this.” He had such a passion for quality. We fixed it by developing a very rigorous measurement program. The franchisees and the operators that were going to do best with that program actually asked to be measured more than the required amount of measurement. Every store would have secret shopping and measurements done and the really good operators said, "I want more measurements. I want to see how my quality is coming along. I want to see if I'm upholding the standards." That lesson really stuck with me. We had a major problem, but we didn't avoid the problem. We addressed it head-on and came away with a very successful outcome.
ARJUN:
That's brilliant. There are several things I'm taking from that. Number one is the acknowledgement of a problem and bringing it to everyone’s attention. Also, being fortunate to work with John, it illustrates his amazing, simple, and human way of dealing with things. Thirdly, I like the idea of not denying there is a problem, putting measures into place, and charting a path forward. But what really hits home for me is how the best operators want to be measured more. That's such an amazing key performance indicator for finding out who is the best. Who is the person who wants to separate themselves from failure and move forward?
Building on that and talking about continuing leadership, what are some of the traits that you respect and see most in future leaders, and how do they translate into big wins?
DAVID:
I've been very fortunate in my career to work with a variety of leadership styles. I hope I learned a little something from each of them, but there are some traits that I think are more important than others. First of all, passion, and caring about the goals of the organization. At Papa John’s, John had a passion for quality, and he wanted the entire organization to embrace that passion. It’s about that culture of quality, so that even when you hit bumps in the road, you have that touchstone to fall back on. Passion is extremely important.
The other thing I always found very valuable in a leader was to have a curiosity. I had a chance to work with a lot of good analytical people throughout the years. Let me tell you about one of them. His name is Edo Licina, and he worked for me at Benihana. I always told him he was amazing in that I would come to him with a problem or a situation that I wanted him to do some analysis on, and he would come back to me and say, “Here are the results of what you asked for, but here's the question I think we should be asking.” He would go that extra step, answering that question that should have been asked, having that curiosity to not just take the easy answer or the obvious answer that comes up, but to dig a little deeper. Edo was just outstanding at doing that. I really appreciated it and I think that's a good quality for a leader to have.
Then I think the final quality is kind of a combination of team building and communication. If you have good communication skills and you put the team ahead of any of your own personal goals and objectives, then I think the team looks to you as the leader. That's a very important skill to have.
ARJUN:
Regarding team building, there's a legendary story about you refusing a promotion at Papa John’s until your entire team was recognized first. That’s a one-of-a-kind situation during my corporate life. I've never seen that. What were you thinking that day? What led to that decision?
DAVID:
You probably actually remember that more than I do because to me it just seemed like the natural thing to do. As I mentioned earlier, we built a tremendous finance team at Papa John’s. In my early days, my key finance team subordinates were three women: Sheryl Ball, Connie Houston, and Keeta Fox. They were all phenomenal at their jobs. They each had different areas within the finance organization, and it didn't appear that finance, as a whole, was getting some of the acknowledgements that it should have gotten in our senior team meetings and so on. I just wanted to make a point about how important these finance people were in an operations-focused company. They were extremely important. They were very operations-focused on their own way, and they needed to be recognized to demonstrate to the non-operations corporate world that we have important roles to play in the organization too. I think it worked out very well.
ARJUN:
The promotions to Sheryl, Connie and Keeta, all were very well-deserved. Of course they were all brilliant in finance, but more than that, they were business-first people. They knew the business we were in. They never wanted to be a roadblock. They always wanted to be an ally to help us do the right thing, the right way. I am so fortunate to hear that story from you because it was about respect and what was best long-term for the organization. Working off that, as you found and developed these amazing leaders, what was your secret to helping them grow? How did you empower them to become future rock stars?
DAVID:
I think some of it is just being fortunate enough to have the right people. Here are two examples. We had a situation where a business opportunity had arisen, and it was going to require some analysis of the financial part of it. More importantly, it was going to require some negotiating with the terms of this opportunity going forward. At the time, we had a young financial analyst in the finance area of Papa John's named Shane Hutchins. We asked him to run some of the numbers to see how it all might play out. He did such a good job that as the negotiations proceeded, we said, "Shane, you're the guy. You're our representative." He ended up meeting with some very senior executives from this organization that we were working with to put this business arrangement together, and he more than held his own with those folks. We ended up getting a very good result because of him. Yes, we gave Shane that opportunity, but he blew us away with how well he performed. It was probably great for his self-confidence too. He now runs a major division within Papa John's, the PJ food service distribution.
Going forward, Shane was mentoring one of our interns, named Steve Coke. Shane demonstrated that same leadership with Steve, giving him opportunities just like we gave him. I know Steve actually had to work very closely with one of our more difficult franchisees that we had a joint venture arrangement with. Again, we said, "Steve, you're the guy," and he took the ball and ran with it. Steve is now an executive of strategic planning at Papa John's. One other example of someone taking on significant additional responsibilities and doing great things was my Director of Financial Reporting at Benihana, Nicole Thaung. When Benihana was acquired by a private equity firm, we consolidated some functions and added controller responsibilities to Nicole’s already very full plate. She did such a great job taking on these additional duties that she is now the CFO at Benihana. Those kinds of results where you give someone an opportunity, maybe you push them a little bit out of their comfort zone so they see how well they can do something, just launches them towards more success. As a leader, that gave me such a feeling of accomplishment and pride in what those guys were able to do.
ARJUN:
We all work in a world where there is no guaranteed success. There are times we see failure as imminent but there are ways you have proven to navigate away from that to come out and create big wins as a team. When you look back at this incredible career of yours, what would be an example of a time when failure seemed nearly certain, but you and an amazing team navigated around it and came out with a huge win?
DAVID:
During my time as CFO at Papa John's, there was a period of several years where I also headed up the international division on an interim basis. International is tough and at this time it was new to Papa John's. We were trying to grow the business. We had good partners in some areas of the world, and in other parts of the world we had partners and franchisees who were not so good. One particular situation involved a country that we thought had a tremendous amount of opportunity for us, but we just didn't have the right franchise partner. We had a finance person, Joe Smith, who oversaw such problem cases in our international division. He did such a great job that he ended up overseeing pretty much all of our development and ultimately became CFO at Papa John's. At this point though, Joe was helping resolve problematic issues within the international franchise community. We met with another franchise partner in that part of the world and through Joe's creativity and with some good communication, we were able to resolve the problem between the franchise groups. We ended up getting the proper franchisee in place, and that person has not only done a phenomenal job growing in that challenging country, but also expanded further into Europe and is now one of the leading franchise groups within the organization. That was a really good success that began as something that was a problem. Joe was a tremendous asset in getting that resolved.
ARJUN:
I want to take you to a slightly different place. I don't want to look at specifics about Papa John’s, Benihana, or any brand specifically, but restaurant chains and other brands in general. There are times as they climb rapidly, they hit a phase where things pause, or there’s a little growth, but that’s not considered success because you were expecting more. Brands always face this. Looking back with your experience, not only as the CFO but as a business leader, what's your advice to brands when they face similar situations?
DAVID:
Working for a couple public company restaurants, Papa John's and Benihana, one of our responsibilities was to provide guidance on how we thought we were going to perform. There are two schools of thought. You can provide guidance, or you can’t provide guidance. I always preferred to give guidance; if you don't give it, they're going to make up their own and you're stuck with whatever they come up with that may not be realistic. As you're giving guidance, I think it would be important to be careful in how you do that. You have to be conservative because the minute you see that the world or situation has changed, you may need to make a different strategic move that will take you away from that guidance. The biggest lesson I learned is, investors and all the interested parties just want to know that you're being honest and transparent with them. They may push back on your rationale for taking path A instead of path B, but that can be healthy. You want to make sure that you're not giving them a surprise that you weren't able to tee up in advance. That's when people start getting nervous. In order to keep people from being nervous, management may not do what's best for the company. In the short run you may feel better, but in the long run you're going to pay for it. You need to be transparent. You address issues as quickly as you are aware of them and you always make the decision that has the best long-term interest of the company in mind rather than looking for some short-term value.
ARJUN:
I want to talk about another passion in your life. How did a super CFO evolve to be the perfect partner with your wife, Vicki, and start winning dog shows around the country? What is the secret behind making that happen?
DAVID:
Thank you for bringing up the Westies. We do agility with the Westies. They have to go over jumps, and run through tunnels, and things like that. It's an active sport. When I was working full-time, it was pretty demanding. With the demands of being CFO, my time got stretched pretty thin. I could help support Vic as she was training the dogs to do agility, but I couldn't really participate fully until I retired and returned to consulting where I had a lot more time. It was then that I started training the dogs also. It's something that we can do together. We really enjoy it. It keeps us in shape too, because even when we're not doing formal training, we're taking the dogs for a walk. It's a healthy thing for us to do. It's good time that we can spend together, and we really enjoy it. We've been fortunate to have dogs that have been pretty good at agility. We've done well while not being super competitive about it. It's a hobby.
ARJUN:
What's the secret to winning?
DAVID:
There are people who are on the world agility team with border collies that would amaze you. We're not them. We're like the weekend golfer. We are out there to have a socially good time. We're not going to win the club championship, but the secret is, the more you train with your dog, the less stressed you will be when you get into a formal competition. I think that analogy applies to a lot of things. If you feel like you're prepared, then you're less nervous and less stressed out when it's time to truly perform. I think that applies to us and the dogs. I don't know that the dogs themselves get stressed out, but they can absolutely tell the difference in environments between a normal training class and a formal competitive event. Preparation is the key.
ARJUN:
A leader who is prepared, calm, and under control is much easier to align behind than the person. With a leader who is nervous or anxious; you have no clue what's going to happen next.
DAVID:
I think that's very important. It also plays into the hand of not being overly critical. When you try an idea and it doesn't work, you can gain a lot of valuable information from something that fails. I got to work for Nigel Travis, and he was excellent at saying, "Hey, we tried that. Guess what? We learned something that didn't work and that was valuable." He really encouraged people to try out-of-the-box ideas. It might work and it might not. That resonated with me. Don't stress out over things. That way, the team feels more comfortable in trying new ideas because if it doesn't work there's no penalty box you're going to go into. We just learned something that didn't work and that's okay. We can now move on.
ARJUN:
Reflecting back on an incredible career, if today’s David could go back and give one piece of advice to a young David just starting his career, what would it be?
DAVID:
Probably that learning what doesn't work is not a waste of time. That's the story I just told about Nigel. I wish I had known that 35 years ago because that takes a lot of pressure off the idea of, “Oh my gosh. Somebody's looking at my performance. I need to make sure I do everything exactly right. I'm kind of afraid to try this idea. It might not work.” If I had learned that earlier, it might've encouraged me to be a little more creative with things.
ARJUN:
I've always seen that with leaders, there's a process. Success that is planned and has a process can be repeated. Any other successes are random. What's your process? What is the first thing you do every morning and what's the last thing, you do when you are finishing up a workday?
DAVID:
This would lead into what I felt my responsibility was as a leader. I’m kind of a night owl. I’ll start with my last thing at night. I might spend an hour checking emails. As the day wears on, things happen, your plans get altered. Before I go to bed, I want to make sure I didn't miss something that maybe came up late in the day; an email, an important meeting that got scheduled, something like that. My last thing of the day is to go back and reflect on the day and see if there was anything I missed that I need to be prepared for the next morning. In the morning, the important thing to me, is to look at the day's schedule.
At the executive level, you're going to be in a lot of meetings. There are a lot of tasks. You have to set direction and see how projects are coming along. I would evaluate who, from the finance team or the international team, needed to be involved in the meeting, and plan the day out. If it wasn't necessary to bring someone to the meeting, I always felt my goal was to be the buffer. I could be the communicator. I can go to the meeting, listen to the issues, express the finance view, and come back to the finance team, the people who are actually doing the work, and say, “Here are some of the key things we need to focus on.” I kind viewed myself as that buffer so they didn’t get bogged down in some of the bureaucracy of running an organization. It also ensures that they get work done. That's how I wanted to start my day. I want to see where I am most needed to be that kind of communicator and buffer for the rest of the team.
ARJUN:
Thank you, David. What I love most about our conversation is your heart-felt caring and appreciation for everyone in your team. You never miss a single opportunity to invest in your team, to celebrate them and to cheer them on. Thank you again!