Know-How: The 8 Skills That Separate People Who Perform from Those Who Don't [Hardcover]

 

 

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I'm often amused to read descriptions of the responsibilities of corporate boards: "To represent shareholder interests" and "replace the CEO" are two of my favorites. Most boards do everything possible to learn as little as they can about what shareholders favor. Boards are more likely to keep a CEO on too long than they are to find a good replacement.

Dr. Ram Charan takes dead aim at lousy hiring of leaders by sharing many examples where CEOs and other leaders made a great impression during interviews, but didn't have a clue about how to run the company better. You'll probably find yourself scratching your head, for example, about why a former CFO, CEO Rick Wagoner of General Motors, chose to gamble the company's limited financial resources on a foolish charge to gain market share that left the company virtually crippled. CEOs make those kinds of mistakes every day.

What solution does the blunt Dr. Charan propose: It's simple; find people who already know how to do what needs to be done as leaders. He explores this subject at all levels of a large company, which makes the book all the more relevant and interesting.

If boards don't know what CEOs need to know, what are those factors? I've paraphrased Know-How's key points below:

1. Pick a useful direction where the organization can succeed and help your executives to understand why that's the way to go.

2. Stay ahead of the curve on emerging changes in your business and environment by paying attention to new shifts.

3. Turn your individual stars into effective team players so that you can pull together in the right direction.

4. Develop leaders who will have these same skills.

5. Create effectiveness while encouraging candor about where you might be wrong.

6. Set goals that will stimulate improved performance by having people work on the right things.

7. Establish and stick with the right priorities to meet your goals.

8. Keep track of what public opinion is and be prepared to engage those views in constructive ways whether these are the views of citizens, consumers, customers, or shareholders.

The book's format is easy to follow. Each chapter begins with a longer example that helps you get a sense of what he's describing and then fleshes out the concept with sub-points and smaller examples. It's a nice combination of theory and practice.

The book strongly praises Charan clients like Bob Nardelli, former CEO of Home Depot; Jeff Immelt, CEO of GE; and Ivan Seidenberg, CEO of Verizon. The subliminal message is "Follow the GE way." That's a point worth considering because Mr. Nardelli didn't keep his job long after this book was written. Why? He did a poor job of improving stock price, despite Dr. Charan's assurance that Mr. Nardelli had made peace with shareholders. Also, a lot of the public criticisms of Mr. Nardelli's early days at Home Depot (such as getting rid of his most knowledgeable aisle people) don't make it into the book. Be cautious about how seriously you take the positive examples. To some extent, they are there to cover clients and Dr. Charan in glory.

The negative examples are much more interesting and informative. Look closely at those.

Think of this book as raising the bar once again for all of the things that a CEO leader must do. Even Superman only had to be faster than a speeding bullet, more powerful than a locomotive, and be able to leap tall buildings in a single bound. Other researchers like James Collins in Built to Last and Good to Great, are skeptical of the view that the CEO has to be the most competent person in the company in all kinds of areas. The contrary view is that the CEO's job is to make the company competent with a management system that builds valuable insights and actions from all directions, but especially from the bottom up. Mr. Charan, however, is of the top-down school . . . and only encourages hearing from others to you can decide to promote them or not and to coach them on how to improve (but if the CEO is really wrong, once in a while you can tell the leader).

The skills described are primarily those developed and employed by corporate planners, human resources executives, and communications consultants. That's food for thought, because those disciplines are not held in high regard in most companies today.

My own view is that successful companies need only be adept at continual business model innovation, a task that isn't included what leaders need to be doing. The omission isn't surprising: CEOs have limited roles in defining and creating new business models. CEO ideas of what to do in business model innovation are frequently wrong except when the CEO was a founder of the company and has been through that process many times. Not surprisingly, the top business model innovating CEOs appear nowhere in the book.

How relevant is the book for a smaller company's leader? Less so, I think. The list will be a good reminder of tasks to work on, but you probably won't get the amount of detail you need to learn what to do. This book will, therefore, be of most value to those who already know how to do these tasks . . . but just need to be reminded to focus on them.

But as a statement of where the GE CEO concept has evolved, this book is well done.

On page 3, Ram Charan establishes a rapport with his reader which he then sustains throughout his brilliant book: "You will be constantly tested for your know-how to lead your business in the right direction. Will you be able to do the right things, make the right decisions, deliver results, and leave your business and the people in it better off than they were before?" Note his use of direct address. By intent, this is Charan's most personal book by far. With all due respect to his earlier works (e.g. Profitable Growth Is Everybody's Business as well as Execution which he co-authored with Larry Bossidy), I think this is also the most valuable book he has written thus far. Charan is a relentlessly pragmatic business thinker who, with all the skills of a master raconteur, anchors each of his insights concerning productive leadership in a real-world context.

The material is carefully organized within nine chapters, followed by a "Letter to a Future Leader" and a brief review of the eight "know-hows" on which his narrative has focused. It would be a disservice to Charan as well as to those who read this brief commentary, were I to list the "know-hows." They are best revealed within the context that Charan establishes for each of them. I commend Charan on his provision of several reader-friendly devices. For example, he concludes Chapters 2-9 with a checklist of key points, each of which specifies an action to be taken or an issue to be addressed. I also appreciate Charan's probing and instructive analysis of several leaders whose "know-how" produces exceptional results. Here are three brief excerpts:

"Palm's designs became more customer oriented not because the CEO [i.e. Todd Bradley who is now president of Hewlett-Packard's personal systems group, competing successfully and profitably against Dell] said they should, but because he got people oriented toward well-functioning operating mechanisms. He was careful in selecting the people in charge of them, and he tracked their progress and output with consistency and appropriate frequency. He worked backward from the desired business results - products that exactly met consumers' needs - to the business activities that drive them and the critical intersections of people and perspectives."

Steve Jobs "has an unusual ability to imagine things that don't yet exist and win people over to his vision. The Mackintosh brought life back to Apple and set the standard against which the rest are compared. Then, with Pixar in the movie-animation business, and most recently in the music industry, Jobs has shown that he has a firm hold on the realities of the marketplace. His successful launch of the iPod was based on a combination of detecting a need, imagining a new way to satisfy that need, thinking through the specifics of what it would take to make it fly in the real world, and then repositioning the company."

"Jeff Immelt spends 30 to 40 percent of his time on coaching, training, and managing people at GE, and for people at the highest levels, he says, `Everything we do is a performance review of some sort. Every touch point becomes a way to talk about that set of people. I'm thinking about this group every day.' Leaders with this know-how simply make the time because they grasp the importance."

I agree with Charan that know-how separates leaders who perform - who deliver results - from those who don't. Of course, he fully understands that some business leaders delivered results that proved disastrous for companies such as Adelphia Communications, Arthur Andersen, Enron, Global Crossing, and WorldCom. In this book, Charan views know-how in terms of "what you must both do and be." He respects ambition but not at all costs, drive and tenacity but not stubbornness driven by pride, self-confidence but not becoming arrogant and narcissistic, psychological openness rather than shutting others down, being realistic rather than glossing over problems and assuming the worst, having an appetite for learning rather than repeating the same mistakes.

Obviously, I think highly of this book for various reasons indicated. Will those who read it immediately possess the skills that separate those who perform from those who don't? Of course not. But Charan's book can -- and will -- help those who read it to gain a much better understanding of what they need to KNOW as well as a better understanding of HOW to gain and then apply that knowledge productively.

Presumably Ram Charan approves of my suggestion that those who now suffer from what Jeffrey Pfeffer and Robert I. Sutton characterize as a "knowing-doing gap" carefully consider what Thomas Edison once observed: "Vision without execution is hallucination."

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