The Virtuous Cycle of Purpose Driving Profit with Niren Chaudhary, Chairman of Panera Brands

Being the CEO of globally recognized companies for decades is much like driving a race car at high speed: both thrilling and intensely challenging. Reaching a finish line after being on the fast track represents a tremendous feat. After the fanfare ends, and the adrenaline subsides, what do you set your sights on next, especially when you have tremendous drive inside of you? For Niren Chaudhary, it’s back to the shop to re-configure the current model into what he calls: Niren 3.0. This new version is going to put all its energy into "pursuing significance by serving others and becoming a catalyst to help unlock human potential over the next many years."

Niren Chaudhary recently served as the Howard Johnson Executive in Residence, a “recharging station” for top executives to mentor students and guest lecture in classes at Boston University School of Hospitality Administration.  

Tune in as Niren talks about his philosophy on “work in balance with life” to find joy and build resilience in an ever-changing world. 

The “Distinguished” podcast is produced by Boston University School of Hospitality Administration.

Host: Arun Upneja, Dean
Producer: Mara Littman, Director of Corporate and Public Relations
Sound Engineer and Editor: Andrew Hallock
Graphic Design: Rachel Hamlin, Marketing Manager

Music: “Airport Lounge" Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0

Transcript

Arun: Welcome to the Distinguished Podcast, produced by the Boston University School of Hospitality Administration. I'm Arun Upneja, Dean of the school, and today I am pleased to welcome our guest, Niren Chaudhary, Chairman of the Board of Panera Brands, one of the world's largest fast-casual restaurant companies with over 4,000 locations in 10 countries. Niren has served as CEO and in global leadership roles for over 30 years at well-known companies, including Panera Brands, Krispy Kreme, and KFC. Thank you, Niren, for joining us for the Distinguished podcast and for sharing your expertise as our school's Howard Johnson Executive in Residence.

Niren: Thank you, Arun. A real pleasure to be here with you.

Arun: So let's start with what drew you to the hospitality sector. How did you get your start in this business?

Niren: Well, yeah, that's a long time ago when I fell in love with the hospitality business. I would say it's probably the time when I started my career, and I joined the Intercontinental Hotel in early 1990. And I remember walking into the lobby of this hotel, 650-room hotel, and just being stunned with the scale of this hotel. And not just the infrastructure, I think what really drew me was the people aspect of this particular hotel. Guests, the variety in the guests and the quality of the employees serving these guests. And I just knew when I walked in that I just wanted to be in this hospitality business, which is all to do with people. And there is just, I don't know, there's this irrational love for this business, primarily because it is so people-driven.

Arun: And that's very clear, you're talking about the Taj Intercontinental Bombay, which is obviously my favorite hotel in this entire world as well.

Niren: That's right.

Arun: Okay, so let's start with, for last many, many years you've been working as CEO and senior leadership roles. You've taken tremendous responsibility for profits and people. So what's your advice for maintaining balance in life and not taking your work wherever you go? So perhaps start with, do you have balance in your life?

Niren: Well, you know, that's my constant endeavor to have balance. You know, people talk about work-life balance, and I think I would say I would like to say that it's more about a life in balance. I don't think it's work-life balance. It's a life in balance. And let me share with you what I mean by that. I think all of us, you know, have various roles that we play in our life. Work is one of the roles. Other than work, you know, we have our commitment to our own mastery as people. We have a commitment to our partner that we live with, to our family, to our friends, to our community, etc. So many different roles that we play. And at any given time in our life, in different stages, one or two of these roles are more important to us than others, which is quite natural. When you're growing up, work is a lot more important. And when you're when you have grown up and you are in a different stage of life, maybe it's family, friends, maybe community is more important. So it changes. So my take is that just stepping back and understanding which of this multitude of roles that we have are more important to us at this particular point in time and then ensuring that we're devoting enough time to keep that life in balance. Work may be a part of it. Work may not be a part of it, depending on where we are on our journey. And I do think that therefore that a well lived life is not a life that is unidimensional, meaning only about work. I think life, a well lived life is a multidimensional kaleidoscope of different experiences of all the roles that I talked about. And therefore, fulfilling ourselves is about trying to seek satisfaction in each one of these different areas of life that are important to us. So that's what I mean by saying it's not work life balance, it's a life in balance that I believe is important.

Arun: Very interesting. Thank you for saying that. So then let's move on to your role as CEO. And I know that people first culture has been a high priority for you. Given your previous comments, how do you define this type of workplace culture where people come first? And how do companies become more people focused, yet making sure that they are profitable, purposeful and productive at the same time?

Niren: Very hard. No, absolutely. So I think, as you know, the primary purpose of an enterprise is to create value. And I would say value in a broader sense of the term, a value for all the stakeholders, for people, for community, for planet and for the enterprise. Now to do that, you need to have a strategy on how you will win, and you need to then execute that strategy. I think you'll agree with me that companies that outperform normally outperform because not because they have a superior strategy, but because they are able to out-execute everybody else. So it's more about execution. Strategy, I think, yeah, people have similar strategies, but the difference comes in our ability to execute that strategy better than anybody else. And if execution is more important, then execution for me is a function of having the right people, doing the right things, the right way. So it all comes down to the right people, the right things, the right way. So right people are like, do I have the right people who believe in what we believe in terms of the culture of the organization? The right things, do we have, you know, very clear focus on what's truly important? And the right way is the culture of the enterprise. So whichever way you look at it, people at the heart of being able to execute in a superior fashion the strategy that we may have in mind. And therefore I think the simplest way in which I can summarize my business philosophy, I believe that my job and our job as leaders is to love our people. If we love our people, they delight our guests. If they delight our guests, that's how we'll create sustainable enterprise value. So it all comes down to people.

Arun: So, you know, I want to dive a little bit deeper into this. And at the very beginning you mentioned that the purpose of a company is to create value, value for people, value for the community, value for the enterprise. But to begin with, the company, any kind of organization is formed by equity being provided by someone. So why isn't that the return to that equity, return on equity is the first factor that we should put it in?

Niren: Yeah, absolutely. I think profitability indeed is the first starting point because it is only by being profitable that you can actually fuel purpose. If you don't have profits, you can't fuel purpose. So profitability and appropriate return to the shareholder is the minimum requirement for us to be able to even think about pursuing purpose. However, my conviction is the following. Be profitable. Through profits, you can drive purpose. But then find ways in which purpose can in turn also drive more profit. And therefore build this virtuous cycle of profit driving purpose and purpose driving profit. Because if purpose does not drive profit, then it will not sustain. It is harder to do that. It is harder to find a playbook through which purpose can actually be profit accretive, but it is possible. And if you are able to find ways to make that possible, then that's a virtuous cycle that can sustain for a much longer period of time, because it takes all the stakeholders along on this journey of value creation for all.

Arun: I understand this and it does make a whole lot of sense. Sustainable profits, you need motivated people who believe in the company and the purpose. But is Wall Street amenable to this long-term strategy? I mean, do we sacrifice purpose at the altar of quarterly profits and showing the bottom line multiple times a year?

Niren: Sure. And I think that's an absolutely valid question. So I think I would say it comes down to this. I believe that leadership is a privilege. I believe it's a privilege and a unique opportunity to be a force multiplier for good. Which means for people, community, planet and for the enterprise. I deeply believe in that. I believe that an inclusive value creation model will outlast a model that is only one dimensional. However, there is a reality of investors and expectations around what you're expected to do. And therefore, it is hard to build this virtuous cycle of profit-driving purpose, but then purpose-driving profit, by which I mean being profit-accretive. Only if you can do that and demonstrate that to the investors, do you get the required buy-in and support to have an all-inclusive agenda, the one that I'm talking about.

Arun: So let's move on to, you know, in this day and age, it is very hard to recruit employees, and particularly if you are so selective in terms of hiring the kinds of employees you're looking for. So what are some of the ways do you recruit and maintain talent? Comparative wages, what else?

Niren: I think employees, like we discussed, they are the lifeblood of the potential success or lack of any enterprise. And therefore hiring the right people and hiring them for the right attitude and training them for skill I think is so fundamentally important. And once you hire the right people to grow them, to develop them, to retain them, I think is very important. So I have found that base compensation and benefit is a hygiene aspect of employment. However, the variable component, which can be bonuses, which can be stock options, etc. those are more areas in which you can be differentiated versus competition in your comp and ben system. So that's one aspect of it. So I think variable comp, where you're paid for superior performance in a differentiated way, is a big motivator. If people do well, they want to be paid better than anybody else.

So I think I really believe in that big performance and I think that really works. I think the second thing that people look for is, is the company interested in developing me and helping me grow so that I can potentially fulfill my potential and I can grow and become a much better human, a much better leader for the future. I may not stay in this enterprise for the rest of my life, but I will be thankful for the enterprise that our paths crossed because I've become a better human and a better leader. So that's a very important requirement and something that differentiates an enterprise. And finally is to provide opportunities for employees to grow from within. That if you stay with this enterprise, this is where you can be in two years, three years, four years, five years time. I think is a very strong endorsement of the employee proposition that one may have. And then finally, I think as you would expect, having a culture that has a strong reputation externally, for being a culture which is people focused, a culture which is purpose driven, a culture where people feel proud to belong and feel that they can be themselves, I think is obviously a huge attraction for us to be able to be an employer of choice.

Arun: You know, it's very interesting. We also talk to the students about culture fit and going into organizations that are going to value you and give you opportunities for advancement and all the things that you've mentioned. But sometimes people just get focused on that bottom line number and say, so and so is giving me 3% more and so that's where I'm going to go. And we try hard to sort of tell students, you know, you really need to take a whole lot of other factors into account. So I wish more of them could listen to your response to that.

Niren: Yeah, I totally agree. Also, you know, I think perhaps if our young students and leaders of the future were to take some time and actually really envision in a slightly longer-term scale is, you know, what kind of career do I want? What kind of a leader do I want to be? What kind of industries do I want to work in? And what kind of job really brings out the best in me and resonates with who I am? If they ask themselves those questions, I think they will have a different filter of how to make some of these choices near term, because it is much more as you and I both know than just, you know, the near term comp. Comp is a component of it, but I would say our students will realize that, you know, having autonomy, having freedom, having the opportunity to build mastery, to have, you know, people invest in your skills, being in a company that is purpose driven, are equally important, if not more. And eventually, I think, if it is, if the experience is accretive in the direction of where the students want to go long term, then that, I think, makes it, you know, more meaningful than just a simple trade-off of 3% more, 4% more.

Arun: So, on the other side, where students are applying and they're looking at a culture fit, now let's talk about companies and culture of innovation. If you're a small company with very few employees, it's very easy to sort of have a startup mentality, which I like to do in my school all the time. But what about large companies? How do you inspire a culture of innovation in large companies?

Niren: You know, innovation is becoming increasingly important in this absolutely wildly volatile, uncertain, complex, ambiguous, complicated world. To me, innovation is a mindset. It's a mindset of everybody in the organization waking up determined to do things better every single day, improving what we have, and doing things differently. Both are important. Incremental innovation let's improve the current mousetrap, and disruptive. What else could we be doing, given all these rapid fire, external changes that are happening? Now, to be able to inspire that spirit of continuous improvement, which is what I think innovation is, one other qualification I'd like to make, I think innovation is only a set of activities that improve and strengthen the business model. It is not innovation for innovation's sake. That's very, very important.

So if we all concur on that definition of innovation, I think there are three things that companies can do to drive a culture of innovation. Firstly, I think it's to ensure that the human capital, the leadership quotient, the IQ on innovation ability is always growing at a faster pace than the growth of the enterprise. You're building your people capability at a faster clip than your organization is growing. That's hugely important. The second is to really constantly cut down bureaucracy in organizations. Bureaucracy, I mean when you have too many approvals, too many forms to fill, too many people doing checks and balances and controlling what you're doing, that really chokes innovation and innovative people hate bureaucracy.

So especially for large companies that need to become somewhat bureaucratic and process driven, they have to find the right balance of what is enough and what is too much. So I think being mindful of bureaucracy is very important. And thirdly, I would say, is to really build in values and behaviors that disproportionately encourage a culture of innovation. And I would, I would articulate three. One is courage. So a culture whereby everybody in the organization is focused on what they can do to change things and not spending time worrying about what's happening to them. So courage. Curiosity. That everybody in the organization wakes up every day saying that I want to learn to get better and do things better than I did yesterday.

You know, so curiosity. And I think the third one, I think, is about just tenacity, which is how do I stay with it? How do I have the conviction to keep going with what I think is really important, basis, all the external changes that are happening, et cetera. So I would say in summary, having people, Innovation IQ, growing at a faster pace, reducing bureaucracy, and then encouraging the right values in the culture that you have at the organization. And finally, another very important one in the culture is, I think, encouraging disagreement. This is a very important one, disproportionately important. Having a company where you encourage people to disagree with you, especially if you're the CEO or the leader of the company, that's only then do you create psychological safety in the organization for people to truly articulate and speak about what's on their mind. And only once you have that in the organization, do you have ideas flowing up freely, and therefore that becomes the engine for an innovative culture in an organization.

Arun: You know, the three qualities that you talked about, courage, curiosity and tenacity, and then at the end you also talked about encouraged disagreement. I think that to a great deal is hiring obviously the right kind of people, but also creating that culture where people are not worried about their jobs or worried about who is saying or talking about them or what politics are being played and curiosity and tenacity. I mean, you know, if you take on a project and you see some early signs of it's not going to succeed, then you've got to stick with it. And that's hard when you're constantly worried about what people are going to say.

Niren: Yeah, I totally agree. And I think this also, you know, this as is often said that, you know, make it safe for people to fail, no shame in failure, only shame in not learning from failures, celebrating failures, as much as celebrating successes, you know, encouraging disagreements. I think it's that side. But I have to say that these things people agree with intellectually, but they're very hard to do. And they're hard to do because I think it has to be leader led. You know, the CEO has to lead it, the executive team has to role model it. And then more importantly, when it actually happens, and sometimes at great cost to the company to actually step back and say, okay, the way I'm going to react to this failure is going to define, encourage or discourage innovation for the future. So let me be careful. I think those are the moments if leaders are so aware that they catch themselves in the moment to constantly encourage experimentation, taking chances, allowing people to be curious, being resilient, tenacious, disagreeing. I think that's when you really encourage a spirit of freewheeling, you know, innovation and help unlock the potential that people have.

Arun: I am curious, though. Many times, you know, this EOS has reached that position because he or she has had all of those things, courage, curiosity, tenacity, and ideas, and, you know, the courage to take those ideas and pursue them. And so at some point, there is going to be disagreement. And how do you then balance as the leader when employees are disagreeing with you on something that you want to push, but you are determined you want to push it through? That's kind of... So on one side, you are determined you want to do this, you have this idea. The other side, you have now employees who are disagreeing or perhaps putting out an alternative idea. How do you pursue your idea without discouraging the employees?

Niren: Fantastic question. And let me share with you... I think this is such a real issue. I think the answer lies in agreeing upfront team norms, which clearly align the expectations of the enterprise around what is expected in our meetings, how do we make decisions, and what do we do after decisions are made by involving all the people, getting the people together and saying, hey, listen, it's very important how we work with each other. So let's define those rules. So I'll give you some examples. So in my past life, when I've worked with companies, with teams, we've had rules such as every leader in the room has to wear a business hat, not a functional hat. So when you speak, talk about the enterprise and what's right for the enterprise, not for your function, for example. Or second, if there is a conflict, resolve it within 24 hours with a peer.

No triangulation, resolve it directly or let it go. Third, no decisions without disagreements. If everybody in the room is agreeing, there's something wrong. So you stop and you say, okay, somebody has to disagree. So you make it safe for that minority voice to be heard. And then finally, you say, well, decisions are time bound. No decision is not good. And therefore, we're going to decide by superior logic will prevail, not rank superior logic. But if there is a stalemate, the CEO will decide. And once we decide, everybody leaves the room with that one decision. One team together, one team apart. So if you upfront agree that this is how we do business at this place, then there is absolutely nothing wrong with people saying, okay, I'm at the table. It's safe for me to disagree. We may or may not make the decision based on what I think. But I have the opportunity to express what I feel. And I think that is so important that people feel that they are heard in the organization. You may take their point of view, you may not. That's not as important. What is important is what they have a chance to say and be respectfully heard. And then, of course, you have to make a decision.

Arun: Outstanding. Let's talk about mentorship. Where do you think this future generation needs to expand their thinking to grow, learn and improve the current way of business, of doing business?

Niren: Yeah. So, you know, I really believe that for the future generations to realize that leadership, they are leaders of tomorrow, realizing that they have a higher order of responsibility than ever before, giving so many challenges that there are in the world right now. And having the mindset of, as leaders of the future, there is perhaps little impact that we can have directly on the world around us and what's happening in the world around us, but we have all the control in the enterprises that we steward. So why can't we make the enterprise that we steward a shining example of the world that we wish to see? Why can't we make the enterprise that we steward embracing, respectful, loving, inclusive, tolerant, diverse, and enabling and unlocking excellence? So by that I mean leaders, for leaders to recognize that they have in their control the ecosystem that they will lead to make that a role model of the world that we wish to see.

So that's the first thing I would say to them. The second is I would say that we tend to, to be able to do that, we tend to actually spend a lot of time developing our competence, our intellectual ability. And I would say that more and more as I see it in the world around us, we need character, not just competence. And therefore spending time deepening and strengthening the foundation of character, which can happen through different experiences, learning experiences, coaching experiences, friends that you choose, what you read, to have greater clarity on values, who you are, what you stand for, what's truly important and holding yourself accountable every single day so that you show up congruent as a leader, as a human. What you think, what you say, what you do is always aligned. And therefore, you're congruent, you're consistent, you're trustworthy in terms of your character.

So those two things, I think, basically recognizing that they have all the power in the world to shape their ecosystem to be exceptional. And they'll be able to do this if they also spend time developing a strong foundation of character.

Arun: Like I said, I'm going to get all my students to listen to you. Let's pivot to Niren 3.0. What is Niren 3.0?

Niren: Well, I want to be a lifelong learner. I want to constantly evolve. And every so often I ask myself, OK, how do I redefine myself? How do I, what's the next version? What's the new iPhone version of me? And that always inspires me and fills me up with a huge amount of optimism. So the new 3.0 is essentially going to be me who's going to pivot from pursuing personal success to pursuing significance, significance by serving others. And my vision is that I want to inspire myself and others, especially those who I may not have ever met, to unleash their full potential and to live glorious lives. And I want to do that by sharing everything that I know with as many as fast as possible.

So right now, that is the intent that I have of 3.0. And then of course, as you can imagine, I'm creating a pathway of different experiences, as I mentioned, that will help me dial up my skills so that I become ready for what lies ahead. So I'm exploring options that are academic and new certifications. And then finally, I want to explore under this umbrella of being a catalyst, being a multiplier, what could I actually do, of course, you know, in enterprise value creation roles, like I'm doing, but apart from that, in the academic circle, could I do something more in terms of mentoring and coaching, etc. So I think lots to look forward to. I think of myself as a forever work in progress. And so I think by the time I'm done, maybe you'll see a Niren 100.0 in the next couple of years because I want to keep reinventing who I am, keep trying to get better and fulfill the potential that I have and also that in other people around me.

Arun: That's amazing. When you said Niren 100.0, I was trying to do the mental calculation. You also said iPhone. And so each year they come up with a new model. But you have a long way to go for Niren 100.0. For a bit of fun, we wrap up each podcast with a quick round of questions. You are in a rock band. What rock star would you most like to play with?

Niren: Well, I am in a rock band. As you know, I'm a very enthusiastic guitar player and singer and all that kind of stuff. But growing up, I loved Dire Straits because my voice is very similar to Mark Knopfler's, I think.

Arun: I think I agree with you.

Niren: Or Bruce Springsteen. So those two, and Springsteen in particular is a phenomenal performer. And even as he gets older, he gets much better. So that inspires me. I want to also get better as I grow older. And then, of course, from the current lot, I love Michael Buble. Because again, he has a contemporary style of making the old new again. And that again resonates with me at multiple levels. I want to make the old new again.

Arun: Fantastic. Now, Michael Buble is someone I listen to only one time of the year. What's a skill you would like to learn?

Niren: You know, I love music. And my son's an incredible musician, a professional musician. And I went to his studio recently and I saw him like a wizard on Ableton. And you know, he has this music studio and he was recording music. And I was so inspired by that. So I want to really learn how to mix music. So I'm trying to learn. I've got a teacher teaching me Pro Tools. So I've set up this whole music studio with mics and speakers and all that. And it is so damn difficult. You know, I hadn't realized it's almost as difficult as learning an instrument, which is why I love it. Because I think once I'll get to the other side and start recording a few songs, I think it'll be a pretty cool feeling. But it is taking me a long, long time.

Arun: Any book, movie or TV show recommendation?

Niren: I loved Adam Grant's book called Unthink. And how he says the power of persuasion is to be a scientist and not a politician with people that you're talking to. And I love the way in which he writes. Movie, you know, I'm biased. I think The Sky is Pink.

Arun: It's the best movie. I agree. I really enjoyed it.

Niren: Since Time Immemorial. It's a movie for the listeners who may not know. It's a movie about my daughter and I love that movie. It's The Sky is Pink. And TV show, I really enjoyed Money Heist. And, you know, for me, a really great test of a good TV series is that you binge watch and you don't want it to stop. And once it stops, you say, what will I do with my life now?

Arun: Why do they only put one season at a time these days? Just drop all the seasons at one shot.

Niren: Exactly right.

Arun: Niren, you are such an inspiring leader. I really, really appreciate you. And thank you for joining us on the Distinguished podcast and your engagement with our school, students and team. We are truly fortunate to have this opportunity. Special thanks to the team that produced this podcast, Mara Littman, Andy Hallock and the entire team at Boston University School of Hospitality Administration. To keep up with the Distinguished podcast, be sure to subscribe wherever you listen to your favorite podcast.