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Management guru Ram Charan on leadership

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Business author and consultant Ram Charan lists the qualities successful leaders possess in Know-How: The 8 Skills That Separate People Who Perform From Those Who Don’t. Here is an excerpt.

The greatest psychological challenge in setting and acting on priorities has to do with resource allocation. Whether in a group meeting or through conventional budgeting and capital approval processes, you have to demonstrate judgment and courage in making resource allocation decisions that reflect your business priorities and in following through to ensure that the things that should be happening in fact are.

You have to do the analytic work to separate out the facts and assess the opportunities and risks, but you also need to call upon your inner strength and judgment as John did as CEO of his company.

“You know I’m always behind you, John, but I think you’re making a big mistake on this one,” Art, one of the division presidents, told John during the usual bottom-up, top-down budgeting process.

“My division contributes 65 percent of the company’s profits and our brands need advertising support. If you think we’re fighting for market share now, just watch what happens six months down the road when consumers forget who we are and we can’t get on the shelves.”

John listened intently to all that Art had to say. After all, Art was experienced, respected, and the strongest leader they had. It was true that Art’s division brought in the lion’s share of revenues and profits. The problem was that the division was not bringing in what the company needed most: profitable growth.

All of the divisions had been hurt by soft markets and currency fluctuations, but Art’s business was faced with especially intense competition that was pushing prices down, and it looked as if revenue and earnings would decline for the foreseeable future.

Cara’s division, on the other hand, had good margins and was growing. John had combed through Cara’s business plan and believed she had positioned the division well to grow faster than the market, but she would need ample resources to keep growing at the current rate.

Then there was Peter. He had already been to see John twice to try to impress on him the importance of continuing the development of the SAP initiative. The company had already spent some $50 million on it and Peter needed another $100 million spread over the next three years to bring it to fruition.

John knew that the decisions he made would seriously affect the future of the company and the lives of people who had put their hearts and souls into the business.

But with earnings down and the price of the company’s stock depressed and only limited capital available for investment, he knew that he was about to make some of those people very unhappy, so unhappy that they might even leave the company.

Relying on the goals and priorities he had thoughtfully established to guide his decisions about where resources had to be deployed, how they might be generated, and where they had to be extracted, he prepared himself to withstand the fallout from those decisions.

Building a presence in growth markets was a top priority for the business so he increased Cara’s budget. He made the business judgment that Art’s division was on a downward slide that didn’t look as if it would be reversed any time soon, and cut Art’s budget.

To free up more cash to pursue the opportunities in Cara’s business, John pulled the plug on the SAP project, even though he knew it meant the loss of jobs for people who had been dedicated to it and a write-off of $50 million.

John’s decisions were realistic, well reasoned, and anything but personal, but Art was deeply offended by what seemed to him a loss of power, and he began to consider his next career move. As hard as it was, John stood by his judgment to withdraw resources from places they had always gone.

Six months later, the sales numbers for Cara’s division came in weaker than expected, and John dug in to see what had caused the weakness. He realized that the numbers were low because of currency swings, that the business was on the right track, and that the growth prospects were as bright as ever. Even when the numbers went off track, his judgment told him that the priorities and resource allocations he had made were still correct, and he stuck with them.

Slideshow: 8 Skills of People Who Perform

Build a foundation for your business by homing in on customer needs.

Manage the social system of your business to control how employees collaborate.

Judge employee’s potential and find those who can be developed into leaders.

Bring leaders that complement each other together to form great teams.

Determine what your business can become and what it can actually manage to accomplish.

Use a list of priorities to find a path to achieve your goals.

Face the market forces and trends in society that affect the business.

The Man Behind the Culture Code

While anthropologist, Dr. Clotaire Rapaille, is out there preaching the gospel of indelible cultural imprints, some critics argue that his methods stereotype cultures. In this in-depth interview, we uncover the culture code as well as some of its criticisms.

From: | January 2007 | By: Adam Hanft
While it seems we’re living in a time of homogenized cultures — a Gapified, Starbuckian world of creepy familiarity — Dr. Clotaire Rapaille is out there preaching the gospel of indelible cultural imprints. Rapaille, a French-born anthropologist, believes that culture is destiny, and that we are conditioned by early archetypes that shape and sculpt our “reference systems.” So a French child and an American child see the world through vastly different optics — such as Barbie versus Brie. And they always will. So why in the world would a company’s marketing plan target them in the same way?

Related Content
Crack This Code
G. Clotaire Rapaille has guided Chrysler, Procter Gamble, Boeing, and other enraptured clients through the “collective unconscious” of dozens of cultures. Now he’s taking on India. Is he a sage–or a charlatan?
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Rapaile’s new book The Culture Code demonstrates how code can explain national behavior, and the marketing consequences that spiral out of it.

Do Jerry Falwell and Chris Rock share the same cultural code?

Absolutely, although they would think I’m crazy for saying it. And that dichotomy is a unique expression of the AMERICAN CODE. You see, a cultural code is not a simple box. It is a complex system — what I call a “reference system. ” It is imprinted at an early age, and contains within itself many tensions. So can we say that we are the land of the free, and at the same time be the land of prohibition and political correctness? Absolutely.

We seem to be sprinting towards homogenization. MTV and Starbucks everywhere. Immigration is churning the social architecture. Globalized companies are spreading consistent values that are country-agnostic. Are cultural codes getting weaker in a so-called flat world?

We are not speaking of countries, or nations, which are obsolete concepts, but of cultures. In that context, cultures are becoming more and more aware of their uniqueness, and are ready to fight and die to protect and preserve them. And when some die in the service of that culture, their deaths have a special meaning, which in and of itself is also a cultural imprint.

The Kurds, who are dispersed in several countries, still preserve their culture, as do the Shia and the Sunnis. Quebec is going to fight again to become independent. The French are actually (and unfortunately) more French than ever.

The Japanese will return to being a military power, following their code, and despite half a century of pacificism. The Russians have snapped back to their code, which combines elements of a Tsarist structure and deeply seated religious beliefs. Culture-codes are enormously resilient, capable of surviving incredibly hard times. In fact, the more they are attacked, the stronger they become as they wait patiently for their time to come back.

People have said that your codes are cultural stereotypes. Can a complex country like the U.S. really be reduced to a bumper sticker?

Reference systems are a complex construct of tensions. The code is a simple way to access this system. But if you just look at the code without knowing the system, it looks like a cliché, or a stereotype. A better way to think of a cultural archetype is as an empty structure, a magnetic field that organizes new content, for generation after generation. A “stereotype” is just an expression of the cultural archetype.

For me, the question is not about the validity of these stereotypes, but about their very existence. They cannot be denied. They cannot be ignored. We should use the culture code to understand them. So we need to ask: Where are they coming from, what do they reveal about the collective unconscious that puts them to use?

America, you maintain, is an adolescent culture. Isn’t that a post-1960s phenomenon? The so–called “Greatest Generation” who marched off to World War II wasn’t wearing backwards baseball caps and refusing to grow up.

Oscar Wilde said that Americans are obsessed with their youth, and he was right. We have been obsessed by it for about 300 years now, way before botox existed. What changes is the temporary expression of the code, but not the code itself. The so-called sexual revolution of the 1960s has been followed but the “say no to sex” boomerang. This is the tension I speak of.

So like adolescents in general were are obsessed by sex. But that doesn’t mean we have a sexual culture. We’re like impulsive adolescents; we never read instructions. Of course not all of us. I am describing what the culture code offers to people in order for them to function and be accepted in a given culture.

Hold on. Aren’t there many dimensions of American life that are far from adolescent? Take our love of self-help and our fixation on germs. Adolescents reject touchy-feely self-improvement and see themselves as immortal.

Yes, of course, adolescents are complex. One day they are invincible, the next day they are depressed and want to kill themselves. For the same reason, we cannot understand the sleeping giant, without the superman archetype.

So these adolescent tensions stay with us as we get older. We have a long-term perspective when it comes to principles — we believe our Constitutional principles are self-evident, universal, and valid forever and ever. Contrast this with our fascination for the “now time,” the quick fix, the easy solution, the microwave metabolism. Both sides are, again, part of the American code. We have the oldest written constitution still operating in the world but we are obsessed by short-term results. Up and down all the time, that is the adolescent mind driven by hormones.

You say that cultures move at glacial speeds. Would you tell that to a 70-year-old black woman or gay man who lived through the difficult years of the 1950s? They’re living in a radically re-structured world.

The times have changed but the tensions haven’t. Here, it’s between our obsession with new (new world, new man, New York, New Orleans, etc) and at the same time creating a place where we can be as rigid and conservative as we choose. We are not tolerant. We just created a new world where all the intolerant people can live together.

“America has never produced a world class classical composer,” you opine in your book. Is Aaron Copeland chopped liver?

Sorry but nobody will ever compare Copeland with Mozart. Most of the people around the world have no idea of who this guy is, but they all know Mozart.

Do companies have Codes? How about religions?

Yes. We have done the code for General Electric, Procter and Gamble, and General Motors. I’ve never tackled religions, but they definitely have deep and resonant codes.

Are there some cultural codes that pre-determine a nation for wealth and success? Or is it the other way around…does economic success shape the Code?

Of course it does. Max Weber is the cultural North Star on this question. Quebec is a good example of a code working against prosperity; it’s a Catholic culture unable to lift its people out of submission and poverty. Confucianism, on the other hand values success. See Joel Kotkin’s books about tribes, identity, and resultant success. Look at the Jews after the Diaspora; the Chinese, Indians and Brits. Their success is based on some basic code elements that they share: tight family structures, a belief in education, and a flexible but powerful network.

Written by Bhushan Kulkarni

February 1, 2007 at 6:50 am

Posted in Management

Tagged with ,

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