The disruptive Ram Charan!

IIPM : EXECUTIVE EDUCATION

Management magnate Ram Charan shares his insight on disruption exclusively with B&E

Ask this 67-year-old Harvard doctoral graduate over dinner about why he never married and this preeminent global strategy guru dismissively parries our query off like a celebrity would. Recently, Forbes magazine quoted a global survey ranking him amongst the world’s top 25 business thinkers. GE’s Jack Welch consulted him for over three decades. When Jeffrey Immelt took over GE, Ram Charan was the first person he called. Ram serves on the boards of innumerable Fortune 500 companies. With his books having sold millions of copies, Ram Charan makes a meteoric impact. B&E caught up with this magnate over two days to understand his views on disruption. Some excerpts:

B&E: Why has the phenomenon of disruption become prominent in recent times?

Ans: At a critical top level, disruption is a phenomenon with the capacity to not only make companies disappear, but even industries. The voice based telecom industry will disappear one day due to internet telephony. The key point for a CEO hit by such disruption is to understand that whatever he’s doing needs to be radically changed. At a second level, well entrenched companies are themselves creating disruption by introducing new business models. The reason why this has become more prominent is because industry/company/product life cycles are becoming much shorter.

B&E: How can (or should) well entrenched players prevent such disruption?

Ans: Some changes are continuous, some disruptive. The leaders who succeed are vigilant about changes, anticipate changes, and are themselves confident about creating changes. For a well entrenched CEO, complacency is never good. In any industry, many innovative technologies exist with the capacity to cause disruption. But well entrenched CEOs should realise none of these can really cause disruption till some entrepreneur converts a technology into one that’s customer oriented, something big enough. Steve Jobs is one CEO whose biggest plus is his capability to marry incisive consumer insight with his product offering.

B&E: What strategic points are required to change the rules of the game in a sector?

Ans: First of all, a leader needs to have the courage to make strategic bets. Beyond that, the leader should: a. Define precisely what the ‘specific’ opportunity is, not just the broad category. A telecom player entering the insurance sector cannot just generally think of ‘insurance’, but rather specific segments.
b. Understand what capabilities you need to capitalise on the opportunity – both internal and external.
c. Find out what leadership/leaders you need to implement the plan in action.
d. Finally, do you have enough financial resources – can you move with speed and become profitable? B&E: Which companies/leaders have been most successful in enabling disruption?

Ans: Apple (Steve Jobs) in various products. The iPod completely disrupted the music industry. In the same way, Rupert Murdoch buying The Wall Street Journal is another classic example.

B&E: Could you also cite examples of companies that missed the disruption bus?

Ans: Sony, Philips... and AOL too.

B&E: Any ground rules on implementation for players riding the disruption wave?

Ans: My book, The Discipline of Getting Things Done gives a clear idea. In short: a. Have laser sharp dominant priorities very clear. CEOs have many ‘general’ priorities. Have defined specific priorities!
b. Ensure that key performance indicators are aligned to the overall strategy.
c. Realign your financial resources to the new gain, new opportunity.
d. Align the rewards to the new gain.
e. Have right people for the right job.

B&E: But how important are ‘people’ in this whole framework?

Ans: Most! A leader cannot succeed without other leaders. Jack Welch once told me, “Ram, people before strategy!” Ratan Tata succeeds because he gets the right leaders to run his companies.

B&E: Any final words on disruption?

Ans: Disruption doesn’t happen everyday. Change happens everyday. CEOs should not go one-minded into creating or implementing disruption forcefully within their companies. Rather, understand and appreciate the constant change occurring in your company, industry, and align yourself to that.

B&E: Your all-time favourite management books?

Practice of Management, Peter F. Drucker. I still love going back to it and reading it again. So many of the principles still apply so perfectly. And My Years With GM, Alfred Sloan. Did you know GM actually attempted to stop the publishing of this book?

B&E: Your personal objectives in life?

None whatsoever (smiles!). If you try to find out what you love to do, and keep doing that, you don’t need any objective in life to get peace...

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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