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A realistic look at what makes effective leaders

Management guru Ram Charan says they're made, not born. And honing eight key skills could distinguish them from the rest.

December 31, 2006|Stefan Stern | Financial Times

Even in the crowded business book market, a new work by Ram Charan generates interest.

This is the author who in 2002, with Larry Bossidy, brought us "Execution," a title that identified what was to become the most popular business buzzword in the following years. If Charan declares that something matters, the chances are that it really does.

"Know-How" is a down-to-earth account of what it takes to be an effective leader today. And its realistic tone stems from Charan's sober worldview.

He is suspicious of charismatic, superficially impressive leaders. Leadership is hard work, he says, requires intense attention to detail and is developed over years. Charan says leaders are made, not born -- although it helps to have a keen intelligence, psychological maturity, a wide range of interests and boundless energy.

This is a business book, and Charan makes sure to comply with one key requirement of the genre. He lists eight important skills or abilities the effective leader must be able to display. These are not skills that only a superhero might possess, although a boss who excels in more than half of them at any one time would be a rare boss indeed.

First, Charan says, leaders must know how to position the business to make money. This is not so much a question of business models as whether your company is "in sync with your customers and ahead of the external environment."

And, because no one positioning will work for any guaranteed length of time, it is a difficult skill to master.

The second task is to connect what is happening in the outside world to what it means for the business.

"You need to expand your view, observe from the outside in and be psychologically open to the patterns you detect," Charan says.

This will make it possible for you to "detect the points before they tip," he says, alluding to Malcolm Gladwell's book "The Tipping Point." General Electric Co. Chief Executive Jeffrey Immelt is a master of this skill, Charan says.

The third skill involves managing the "social system" of your business so that people can work together more effectively. Charan cites Bob Nardelli, Home Depot Inc.'s CEO, as a supreme exponent.

When he arrived at the struggling home-improvement retailer, Nardelli introduced himself at a Monday morning, two-hour conference call with his 25 senior managers. Skepticism faded as managers realized that he was serious about listening to their ideas and feeding them back into the business.

Fourth in Charan's list is the process of judging, selecting and developing leaders. Here is a skill that can be developed only through practice, he says. Good leaders become people experts: They know how to ask questions of potential future leaders that reveal personality and capabilities.

Following this is Charan's fifth leadership skill: molding a team of leaders.

Having a team of talented people at your command is "a huge multiplier of your capability for making better decisions and getting things done." Mark Fields, the U.S. manager brought in to revitalize Japanese carmaker Mazda Motor Corp., is Charan's poster boy for this skill set.

Fields challenged the prevailing culture of the business and, slowly, got his senior managers to open up and engage in constructive debate. He eventually created what he called "unity without uniformity" in his top team -- no small achievement in consensual Japan.

Charan's sixth requirement is that leaders choose and set the right goals.

Compare and contrast General Motors Corp. and GE, Charan says.

While GE is seeking opportunities in emerging markets and investing heavily in green technology that it believes will win it new customers, GM is struggling on the back of a misguided ambition to rebuild its U.S. market share.

Greater profitability rather than crude market share would have been a better bet, the author says.

Choosing the right goals is vital, Charan says, because that affects the seventh key task: setting clear priorities that will help achieve those goals. Badly chosen goals cause you to pursue the wrong priorities.

Lastly, the best leaders react well when forces beyond their control make themselves felt. Today's round-the-clock, online and interconnected business world can throw up challenges at any time.

The eight skills together constitute what Charan calls know-how. After four decades of studying and working with leaders, he believes it is this essential know-how that separates winners from losers.

Honing all eight skills is obviously a daunting task. It might even remind you of the time-honored variety act in which a performer keeps several plates spinning on poles at the same time.

But our sober management guru has a point. The best leaders do know what they are doing. And they never stop working at trying to get better at it.

*

Stefan Stern is a columnist for the Financial Times, in which this review first appeared.

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The essentials

* "Know-How: The 8 Skills That Separate People Who Perform From Those Who Don't"

* By Ram Charan

* Crown Business, $27.50, 304 pages

Source: Publisher

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