I was honored to receive an advance copy of Ram Charan’s newest opus Global Tilt: Leading Your Business Through the Great Economic Power Shift. It’s a brilliant explanation of the shift in business and economic power from countries of the Northern Hemisphere to those of the Southern.
I cannot stress enough how highly I recommend this book for all leaders, particularly C-Level executives!
In my experience as Chief Relationship Officer at CEO Connection, I can honestly say most of the strategic challenges our member CEOs currently face involve global economic dynamics and uncertainties. So, I took the opportunity to ask Ram a few questions I knew were on the minds of the CEOs I work with. I genuinely hope you’ll find his insights valuable to you in your role:
1. What would you advise a CEO who understands the importance of the Global Tilt, but whose board includes members from Northern countries, including Japan, who are risk-averse and set in old-world, command and control belief systems?
If the CEO is committed to having the company take advantage of the global tilt, he or she has a few steps to take. First, he or she needs to think through and discuss with the management team the risk of not making a shift to take advantage of the global tilt, and share that view with the board. Second, the CEO and the team need to gather information and expert opinions, which they should also share with the board. Bringing in outside information should be continuous, at every board meeting. The CEO could arrange for the board to meet with people whose knowledge and opinions they value for a half hour at the dinner or breakfast before the board meeting. Those people could be CEOs of other companies, or one or two members of the board who have a different perspective but don’t get a chance to explain their views.
The term risk averse is a broad brush. Before any company makes an investment, they need to explore. Exploration has learning in it. The CEO needs to get his or her people to survey, explore, and identify opportunities and potential competitors, then get the board engaged.
It’s now common in America for boards to be actively involved in discussing strategic options for the future, their pro’s and con’s. In some companies, such discussions span two or three board meetings. They’re not one-way presentations of 200 PowerPoint slides that put the board to sleep. They are true dialogues, or conversations.
It’s the job of the CEO to do a balancing act between the short-term and long-term and risk and reward. Experimentation is a necessity for any company to build the future. Is there an option that requires the allocation of limited resources, so that the board can accept the possibility of its failure?
If the board is completely too conservative and is living in the past, consider bringing in one or two new board members who are respected by the existing directors but will help shift their mindset.
2. What kind of “compass” should today’s CEO use, knowing – as you eloquently demonstrate – that the rear view mirror of history can no longer serve as a guide since the Southern competitors are not playing by the same rules, following Northern models or seeking acceptance by the international business community?
I am absolutely clear that the executives of Northern companies must continue to live by their values even though they may have setbacks in operating in the South. Besides, the rules are never going to be totally uniform across the globe. Leaders have to learn how to navigate those inconsistencies without violating their values.
Recruiting the right people can help. If you’re going to have to deal with an uneven playing field, you can hire people who have experience doing it. They’re available.
3. How can a CEO of a US-based company allocate the resources needed for local, southern leadership, decision-making and initiatives knowing the US street is looking for short-term gains? How can US CEOs deftly handle this dilemma and move their boards, the street and investors to a longer term mentality?
CEOs who are totally focused on the short term and do not innovate or explore or invest in the short run to build the future will be shortening their own tenure and the longevity of their companies. Despite the felt pressure from short-term traders, CEOs must artfully balance the short term and the long term.
When they’re making a change in strategy, and when therefore they’re shifting the resource allocation, they must excel in all of these three things: 1. They must be extremely clear about where they’re going to play, how they’re going to play, and what resources they’re going to deploy—both people and money—quarter by quarter. Clarity and specificity are extremely important, even though the actions may be risky. 2. They must execute those actions as promised. Often top management does not spend enough time on executing flawlessly. 3. Some 70 percent of stocks of publicly traded companies are held by institutions. The CEO has to be extremely clear in communicating to these investors, laying out the answers to their questions, and building credibility by executing what’s been promised. Amazon.com has clearly demonstrated that investors will stay with you when they’re convinced that you are doing the right things. ~
Ram Charan is a world-renowned business advisor, author and speaker who has spent the past 35 years working with many top companies, CEOs, and boards of our time. In his work with companies including GE, MeadWestvaco, Bank of America, DuPont, Novartis, EMC, 3M, Verizon, Aditya Birla Group, Tata Group, GMR, Max Group, Yildiz Holdings, and Grupo RBS, he is known for cutting through the complexity of running a business in today’s fast changing environment to uncover the core business problem. His real-world solutions, shared with millions through his books and articles in top business publications, have been praised for being practical, relevant and highly actionable—the kind of advice you can use Monday morning.
Ram’s introduction to business came early while working in the family shoe shop in a small town in northern India, where he was raised. He earned an engineering degree in India and soon after took a job in Australia. When his talent for business was discovered, Ram was encouraged to develop it. He earned MBA and doctorate degrees from Harvard Business School, where he graduated with high distinction and was a Baker Scholar, then served on the faculties of Harvard Business School and Northwestern University before pursuing consulting full time.
Ram’s work takes him around the globe non-stop and gives him an unparalleled, up-to-date insider view of how economies and leading companies operate. Through keen observation and analysis, he forms powerful insights that help business leaders face their toughest challenges in the areas of growth, talent development, corporate governance, and profitability. His timely concrete advice is a powerful tool in navigating today’s uncertain business climate. Former Chairman of GE Jack Welch says Ram “has the rare ability to distill meaningful from meaningless and transfer it in a quiet, effective way without destroying confidences,” while Ivan Seidenberg, the former CEO of Verizon, calls Ram his “secret weapon.”
Ram has coached more than a dozen leaders who went on to become CEOs. He reaches many more up-and-coming business leaders through in-house executive education programs. His energetic, interactive teaching style has won him several awards, including the Bell Ringer award at GE’s famous Crotonville Institute and best teacher award at Northwestern. He was among BusinessWeek’s top ten resources for in-house executive development programs.
He has authored 15 books since 1998 that have sold over 2 million copies in more than a dozen languages. Execution, which he coauthored with former Honeywell CEO Larry Bossidy in 2002, was a #1 Wall Street Journal bestseller and spent more than 150 weeks on the New York Times bestseller list. He also has written for publications including Harvard Business Review, Fortune, BusinessWeek, Time, Chief Executive and USA TODAY.
Ram was elected a Distinguished Fellow of the National Academy of Human Resources and has served on the Blue Ribbon Commission on Corporate Governance. He has served on the boards of Hindalco in India, Emaar, Austin Industries, Tyco Electronics, and Fischer and Porter. His newest book, Global Tilt (Crown, February 2013), is a guide to leading your business through the radical shift in economic power currently underway.
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