Ram Charan 0:00 

You can have great ideas. If you don't execute, you won't succeed. So we say execution is a discipline of getting things done.

David Novak 0:12 

Welcome to how leaders lead, where every week you get to listen in while I interview some of the very best leaders in the world. I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. Well, welcome to the 200th episode of how leaders lead. I'm so grateful for your support of the show. I learn a lot talking to these leaders week in and week out, and I hope you do too. You're the reason we've made it to this milestone, and you're the reason we're going to keep on going. And this week, our guest is Ram Sharan. He's a renowned business consultant and author whose books have sold over 4 million copies. Fortune magazine calls him the most influential consultant alive, and is easy to understand why when you listen to this episode, he knows how to get right to the heart of an issue. And as you'll hear today, it starts by asking really smart questions. Asking incisive questions is a superpower of every great leader, and I know it's going to spark big growth and change for you. So here's my conversation with my good friend and soon to be yours, Ram Sharon.

You know, Fortune Magazine has called you the most influential consultant alive. That's high praise. What process do you use when you take on a new assignment?

Ram Charan 1:44 

Yeah, so David, the way it happens to me is that people call me. I don't call them. I have never made a cold call. And so when they call me, there is a fundamental rule of life. You try to help somebody, to help somebody, try to find out what is somebody's challenge or somebody's problem. So I don't have a prepared solution, and say, Here is my solution, what's your problem? I like to find out what is your problem or challenge that if I see if I can help you solve I'm in. If I get I won't waste your time.

David Novak 2:26 

How do you go about cutting through the complexity that is and so many of the problems and businesses that are out there so that you get at the core of a business problem?

Ram Charan 2:37 

Yeah, see what happens. And you've done it many, many times yourselves, that over a period of roughly 50 years, I've been doing that in almost all industries. And so you start with learning, asking what's on the mind of the client or the team, and you start looking at from different angles, until you are able to grab hold, what the problem of the challenge is in many cases, it is not the same what I have been told and what we actually get to

David Novak 3:13 

you know the the late Jack Welch, who is I know, a friend of yours and a friend of mine as well. He, he said, you have the rare ability to distill meaningful from the meaningless. Can you give us a story of when you've done that?

Ram Charan 3:28 

Yeah, I think the he's been kind the key point that all of the most CEOs, they're able to crystallize what to focus and how to operationalize now the one of the things I did, I don't know why I did it. I was teaching at Northwestern in the master's program, and I was a number one teacher in the school, so I decided to get my class to write the strategy of a company in one page, and I will personally grade it. And they love that, because they were forced to crystallize what the real issue is, where to focus, not to focus, and that has helped me quite a bit in my career after that. So one day, I was asked by AT and T to design a program. And this is 1978 and so the lower level people took me to the chairman, and the chairman heard the pitch by the lower level people that took me with him. And then the chairman asked, why don't you put this in one page? So I took a page out of my satchel. I said, Sir, this is one page. Maybe it will reflect what you're looking for. He did and signed it right on the spot. Program approved.

David Novak 4:49 

That's a great story. You know, it takes leadership to get CEOs and companies to see the world the way how it really is versus how they want it to be. It's. You're brought in as a consultant because people are struggling doing that many, many times. You know, how do you get people to confront reality?

Ram Charan 5:08 

There is no specific formula that I can get you, but you can start number of ways, and you have to work with the individual. You can start first from the individual. What is the anxiety, if any? What is the over confidence, if any? And what is happening recently? Recently mean around the time I'm talking to somebody that, what is the change in the external environment? What is happening to the performance his or her company, or competitors company, or new technologies coming in. So we have to put some facts in front and see what is happening. And often I'm able to predict what is likely to come in two to three years to be able to see what's really likely to come. And the idea here is that that people want to do the right thing, but they have to be shown sometimes, because all of us, including myself, have blind sites. So if you can cover and open up the blind sites, then you are able to show what the reality is. I'll give you an example. So I'm sitting with an executive from the telecom companies like Verizon, AT and T and quest and so on. So he's a friend. They'll be having dinner. So discussion moved and I said to him, why should your industry be allowed to survive? I didn't say your company, and that took a big pause. Now that question opened up other questions in his mind. I said the industry will not be allowed to survive. And so what would you do if I were right in doing that? And then we talked about why it will not be allowed to survive.

David Novak 7:06 

How important is it that leaders learn how to ask that incisive question?

Ram Charan 7:13 

Well, there's one thing, data questions in my work with the boards, almost 100 boards now across the globe. This is one of the most critical qualities the directors have. They have this incisive questions. I actually measure them. They have less than 15 words in their question. You see, I'm a researcher, so I say, I want to see what are these incisive questions? How long are they? Less than 15 words. I said that's a real great director who either opens your eyes or be able to create convergence of ideas, or be able to bring some insight that nobody has.

David Novak 7:54 

How do you go about changing the mindset and companies to make big, important changes? Because when you're brought in, you know, people are languishing many, many times, and they've got to make a big move if they are going to survive.

Ram Charan 8:08 

I need to see who is or who one or two people who are really in power, without whom you're not going to change anything, and then work with them to see what's coming. So I have one. I've got a couple of examples in my life where I have got them to reverse their decisions, and that includes Jack Welch. I had him to reverse the decision that I blurted out. And I said, Jack, you're dead wrong. Blurted out, and he listened, and he said, You come to the office. This, this, this, this, this. Then I called him every week for 26 weeks, called me back and said, I changed my mind. Thank you. The purpose was he trusted me. Purpose was I could talk to him very clearly, if you have that relationship and you're not worried about your next assignment or next call, you've got to have your integrity to tell absolutely

David Novak 9:11 

and RAM when, when you find that change is necessary. What? What's the first step in getting a team back on track?

Ram Charan 9:20 

Well, the key point is, who's the team captain? This is the leadership of team. And if the leadership is not with it or inadequate, then we're going to get the team back on track. And then you got to focus on what's the burning platform?

David Novak 9:39 

You know, a lot of teams get paralyzed. They can't really take action to get them moving in direction. How important is it taking just that first step without even really knowing what the end solution is?

Ram Charan 9:50 

We cannot ignore the captain. Large part of the issue is the captain of the team. You know many of these staff, people who never run anything in their life. Is, they were great, brilliant people become CEOs. I go and pick up their chest nurse. They're not leaders. There's nothing leadership born in them. They're intellectually very good.

David Novak 10:12 

I've always said, Show me a good business, and I'll show you a good leader. But I won't, there you go. You won't see a great business have sustainable results for very long without that super leader or good leader, you know, you've got to go to the leader. When you look back RAM on your career, what do you think was the most impactful consulting role you've ever had?

Ram Charan 10:33 

Look, I was with G 40 years. How do I qualify that? Four zero Dupont, 35 years AT and T long time. Horizon, long time. So most of my assignments have been minimum, 10 years or longer across the globe, not just America, because you continue to service be helpful to them. And so some of them be more impactful. Some of them are not. Depends on the how do you define the impact or saving a company in China from bankruptcy? I'm on the board in the Chinese company, and they actually handsomely rewarded me for that, because I saved them from bankruptcy. I was able to see it coming, and so sat down and worked through the whole thing and preempted that happening. So depends. How do you how do you define the the most impactful one that I would classify is, if I'm involved, am I having this right successor to a successful CEO? That's impactful. You

David Novak 11:39 

talk about the importance of being able to look out two and three years and see where a business is really going to have that kind of pressure to say talent. Is there a process you use to get to that point where you can say to somebody, you know, in three years, you know, I think the financial industry will look like this, or three years the automobile industry will look like this. You do it yourself too.

Ram Charan 12:04 

We look at, I look at and I miss them quite a bit. Is what are the changes emanating today that will cause a structural change? So when I look at China, I'm very clear that a large number of companies from the West will be made to exit. I've no doubt about that, not all of them, but a large amount of them will be made to exit. And it doesn't matter whether President Xi is the president, or somebody else comes in his job. When I look at the whole internal anatomy of CCP, it become very clear to me. And so I have now companies, large companies, that are advising them to start phasing out later will be more expensive.

David Novak 13:01 

You know, you've seen so many CEOs in your your roles over the years consulting with hundreds of companies and boards. What attributes do you think separates the really good ones from the not so hot?

Ram Charan 13:15 

Yeah, I think I was very lucky David to reframe that, and I've written about it, and that is, it's not the best, it's not an A player, it's not the hot guy. It is the fit between the person and the company situation as a plus. So as you know, I do lot of interviews recruiting CEOs, and I tell them ahead of time that I owe you equally as I owe the company, that if this is a bad fit, you will suffer most, then the company will. I tell them exactly where the mismatches in my opinion, and I even tell them, this job is not for you. There's nothing wrong with you. So the match between the person's God's gift experience and so on and so on, and what the company needs, if there's a good fit, there is going to be a good thing coming out. So I have seen where a great, successful guy from a large company growth guy, very proven, goes to another company after retirement in a turnaround, and he miserably fails. He knows the industry, so the match was not there. So it is the fit between the two that we have to figure out what's really happening?

David Novak 14:41 

You know, a lot of leaders get caught on their back foot when people on their team leave, people in the company leave. How do you think leaders at all levels should be thinking about bench

Ram Charan 14:54 

Yeah. So what I'm saying, and I've been doing in India, whenever. Very, very large company that the talent before strategy. I've been writing people before strategy. Why people determine strategy? And so Jack Welch is the only one I've known. Others may be doing it. I don't know where in a calendar year, fiscal year, he did the talent first in February, March strategy, second in July period. Everybody did the opposite way. So the talent is the engine, what you have. And therefore you need to consider in a company that we need to personalize talent, building, talent development. We now have personalization of consumer, customer. We got to do personalization of the talent and nurture it, know it, and we have to cut a lot of bureaucratic steps out. If a person is ready, we are to be preemptive in moving up or moving literally or moving up in a diagonal way. So this is beginning. It has been very poor in most companies. You were very, very, very emphatical talent, and so was the previous Pepsi. Of of Pepsi, he was very, very, very strong. So was Roger King very, very strong in the talent side of it.

David Novak 16:34 

What have you learned about scaling up big ideas fast? You know, when you find that idea as a leader. What have you learned about scaling it?

Ram Charan 16:45 

Well, first thing I like what Jack Welch used to do, he will do one idea at a time, not two until it goes into the DNA. So he had nine ideas in 19 years. Very clear, very clearly articulated, got his CEC the Executive Committee, and he will then get the various business units to assign people to carry that out. He will have a Croton mill training program. He will know the team. He will put 40% of the incentive of the year on that team, or the business unit manager, and in January, he will show ranking who is ahead, who is behind, which way is it? When he got convinced this is really, gotten inside. Then he will take the second initiative he did nine of them in 19 years.

David Novak 17:50 

We'll be back with the rest of my conversation with Ram Sharon in just a moment. RAM co wrote his best seller execution with my good friend Larry bosti, the former CEO of Honeywell, let me tell you, Larry knows a lot about getting things done, including the fact that strategy doesn't count for much unless you put structure around it. And I tried to reduce strategy to something that we could be sure to do every time I went to a business and a strategy session, I had a people session the same day. Do we have the people to execute the strategy without that the dead and arrival? And secondly, we, as I said, we had in what I call an invasive people process where we evaluated the top 200 people in the company, and then we spent a lot of time in operations. We not only in the budget preparation, but on the execution of the budget. And the more more time I spend on those three things, on the people, the strategy and the operations, the better we got. Go back and listen to my entire conversation with Larry episode 79 here on how leaders lead, I

want to shift gears here for a second with the ramen, and I want to take you back. What's the story from your childhood that really shaped the kind of leader you are today?

Ram Charan 19:10 

Well, the key thing here is, for me, I'm not really a leader. I'm an individual contributor. I could have been Larry varsity told me when I was writing the book with him, he said, what you doing writing here, you should have been running a company here, because he got to know me better the way I think about things. So I'm not a leader in that sense. But here, what shaped me is I was about 10 years of age, and we have a shoe shop. My brothers ran it. I could not be taken off the shop, go to school, come on the shop, do my my homework and sell to the customers. So I learned the basics of business on the shoe shop. I used to do the pricing inventory at the age of 10. These are the same fundamental. Principles that apply to every business. I learned the concept of velocity of capital at the age of 10. So I go to the Harvard Business School within the first week, and a teacher taught me something there to all of us, and I said, My God, I learned that at the age of 10, and I'm paying $7,000 in tuition fee in 1963 so. But I said, Well, I have there more to it, obviously. So my business side of it shaped in my shoe shop.

David Novak 20:29 

That's a great story. And you say you're an individual contributor, and you are okay, but you happen to be the leading individual contributor, maybe in the world, in the area of consulting, and you have to use leadership skills to be as successful as you are, because you don't have all the power. How do you use indirect leadership skills or influential skills?

Ram Charan 20:55 

I did not know that I began this at the age of I'll give you an example. I think I was 24 or 25 and Harvard, I was doing MBA at the end of first year you go summer work. So I got a job in a small public utility in Honolulu, and it's a small company, and the President, his wife, picked me up at the airport, treated me to a very nice dinner, and Mr. McCandless said he got a report to me directly, starting tomorrow. So yesterday, initially he want me to report to planning guy. So he said, Look, spend a week nose around what you can find. I did and so easy access. I want to say myself, I have a feeling that you will not make dividend this year. This is month of May. So he calls the CFO. He said, lamb, this is what RAM is saying. And lamb said, yes, he's right. We won't be able to make it. And so he excused him. He said, What do you want to do? And I said, Well, I want to spend three, four nights at the plant. He picked up the phone. Called a Chinese guy from the plant. He came running up. His name was Richard Lu he said, Richard, look after this man with your life doesn't get hurt, feed him whatever he wants, etc, etc. So I spent three nights until four o'clock in the morning. By the way, this came handy for me to save the CEO in other industry. And so I came back and I said, Mr. Mcallist, we should lower the pressures between 10pm and 4am and I would like you to take the distribution manager and plant manager together for lunch, and you tell them to lower it, or fire you both. That's what he did. They lowered the pressures. They made the dividend. So finding the problem and solving it. Do

David Novak 23:04 

you remember that aha moment where you said, You know what? I do. Want to be an individual contributor. I want to be a consultant. Okay,

Ram Charan 23:11 

you know I first thing is that when I was doing master's degree, I got a note from the doctor program that I have been automatically admitted. You don't have to apply, and there'll be a scholarship, because I was in the top 3% the class. Officially, some people thought I was number one. That doesn't matter. And so I finished the doctor degree in two years. And so I got a job in Saudi Arabia to be executive VP of a company run by a gentleman whose father was, at that time, the physician to the king. And then I decided, because the dean called me up and said, You should stay at the school and teach and do the five years morally obligatory service of teaching. And I said, I'll do that. And then I never left academics, so to speak,

David Novak 24:06 

you know, and you've ended up, you never really wanted to write a book, but you've written over 30 business and leadership books sold over 4 billion copies. And one of your books is one of my favorites, and it's called execution, and you wrote it alongside, you know, somebody I admire very deeply, Larry bosti, and has spent three years on the New York Times bestseller list. You know, what's the key idea in that book, that every leader should apply?

Ram Charan 24:36 

Yeah, I think the most critical idea. And everybody knows it. They don't do it. It's 10,000 years old. You can have great ideas. If you don't execute, you won't succeed now. So we say execution is a discipline of getting things done. It is the discipline, personal discipline. And then your routines of reviews, organization, structure, talent, how they link together. That's the central idea that varsity has. Jack Welsh had then a few others followed it. Now every company has that routine these days, but they are not that disciplined.

David Novak 25:23 

You know, I suppose when you write all these books, they're almost like your babies. And so this next question is probably impossible for you to answer, but if you could pick one of your books that you think every leader must read or should read, what would it be

Ram Charan 25:40 

if you want to learn about business what the CEO wants you to know. Jack Welch wrote me a note. He said, in such a little book, you describe the essence of business acumen, I compare him with a street Hawker, and I'm saying there are so many sales people, so many technical people, so many team leaders who don't understand business in detail. This is it. And this I wrote for that purpose. Let me tell you how this book came about in the middle 90s. I was teaching at Ford, very early assignment, the CEO walked in, who is Australian and Lebanese. Last 15 minutes, he set it, you know, when you teaching a class, and the CEO walks in, something happens to the class. And so when the class finished, he puts them around me and say, I want this book. I said, Sir, what book is what you were teaching? I said, I don't write books. So he calls his CHRO from a distance. Said, David, come here, who is also Australian, get him to write the book. Give him everything he wants. And walked away. That's how I wrote the first book. That was the first book,

David Novak 26:59 

and it sounds like it's your favorite. He

Ram Charan 27:00 

did big faith. He's a close friend to this day.

David Novak 27:04 

You know, I've heard you say that the most important thing in your life is learning every day. Do you have some kind of daily ritual for this? Or how do you go about it?

Ram Charan 27:14 

I fail, but I search for new ideas, new things, new incidents, new events. I do same things everybody else does. Wallace, street, General, New York Times, economists, Financial Times, it's all there. Lot of coverage, lot of coverage. You know, I'm

David Novak 27:34 

sure as a as a leader, you've had to evolve yourself over years. I know you've you say you're not a leader, but I'm, I'm going to take issue with that. I do think, okay, okay, you know, what's the biggest personal insight you've ever had, and how did you evolve as a individual contributor or leader, however you want to define yourself?

Ram Charan 27:55 

I don't know. I had no goals. I still don't. No ambitions. I still don't I've been trained in Sanskrit with Sanskrit values. I observed them, except for food and alcohol. I'm a strictly Hindu on that basis. And he said, Do your best what you have. And then I learned that early in the days, that learning is the only one that will keep you happy.

David Novak 28:22 

You know, you've had so much success, and you've helped so many other companies and leaders achieve success. When you look back, do you have a something that you said, this is something that was my epic fail, or this is something that just, you know, I should have done differently? Number

Ram Charan 28:40 

of them. There are number of them. David, you know, no human being is perfect, and not only that, if they are perfect, they don't admit what you have done wrong. And we do wrong in the selection of people, you make a mistake I did in making recommendations, it is just normal, or I failed to prevent somebody doing something. And so I give you one where I think it turned out to be okay. So a board member called me up and say, We want you to go to St Louis and coach the CEO. So I went to see him. Turns out to be a gentleman from Pakistan. So I speak the same dialect, exact same dialect, and so listen to the whole thing worked all day. Around four o'clock I said to him, maybe you should resign. I'm gone there to coach. I'm telling him, maybe you should resign. I retired the reasons for him. And then it occurred to me. I said, you know the the actual Urdu word for wife is beham. So I said to me, I said, Why don't you bring beham out here? I. Which is abnormal in Muslim culture, you don't do that. So he brought his wife there. I said the same thing, and she personally, which is totally unusual in front of a stranger, you don't do that. And so he did resign next morning. Fast forward, two years ago, a call came to my office. He said to my secretary, you don't know me. My name is so and so, just give the phone number and have him call me. He said, You made my life. I'm very happy you made the right decision, fantastic. Put the phone down. You do those things that are unusual.

David Novak 30:48 

That's a great story. You know, this has been so much fun, and I want to have some more. I always do a lightning round of questions. Are you ready for this? Yep. All right. What's one word others would use to best describe you, learner. What would you say is the one word that best describes you?

Ram Charan 31:05 

I would say that total dedication to the work, no personal life.

David Novak 31:12 

If you could be one person for a day besides yourself, who would it be and why?

Ram Charan 31:16 

See, I always wanted to meet Margaret Thatcher, because I like the way she had the courage turn a nation around, and she had a wit. I would like to be that kind of a person.

David Novak 31:33 

What's something about India? You'd only know if you live there.

Ram Charan 31:36 

I think the India, if you go to the majority population, it is the deep, deep, fantastic values in the villages. What's

David Novak 31:48 

something you wish you would have learned earlier in your life?

Ram Charan 31:52 

Lot of things Indian popular music.

David Novak 31:56 

Who would play you in a movie? Oh, movie.

Ram Charan 31:58 

Okay. Where? Well, I think I would have picked Marlon Brando.

David Novak 32:07 

I see a little bit of a resemblance here. That's a good one. If I turned on the radio in your car, what would I hear

Ram Charan 32:15 

in my if I were, I will be looking for the Indian music. All

David Novak 32:18 

right, so that's the that's the end of my lightning round. I just have a few more questions. I'll let you go. You've been named the global Indian of the Year by economic times. What did that mean to you?

Ram Charan 32:31 

See what they do. They do this every year. People who are successful, and they are truly operating in multiple countries. Which I am. I have board in China, 50 companies in China, Brazil, China, the 3g family, obviously United States, Australia, Canada, Japan. So that is the part that you multiple countries, and hopefully you take the broader global viewpoint when you see the perspectives

David Novak 33:10 

RAM, how do you merge spirituality in business?

Ram Charan 33:14 

That's me. That's exactly the Hindu culture from villages. And here there are simple things, no greed. There have been times in the climb shop when somebody wanted the assignment, and I gladly gave it to them. I said, Yeah, you want it more. You take it. That's very different. Every single book I have written, the other person's name goes first, even though it's not a CEO. So you deserve more. You want more. It's okay. My spiritual side doesn't demand that.

David Novak 33:59 

How have you developed such a selfless character?

Ram Charan 34:03 

No, that's a cultural given. You get trained early, because I have been trained at the age of 10. We come with nothing and we go out of nothing. I live with that philosophy. I can die today no regrets.

David Novak 34:22 

When you look at the rest of your life, what do you see as your unfinished business? Ram nothing.

Ram Charan 34:27 

I never said there is a business to be finished. It is to continue, be happy, be healthy, principles of spirituality and integrity. I've been trained to live on almost nothing. I mean, trained so living is nothing. It is what you do, what you can contribute. You do that.

David Novak 34:56 

You know you're such a great communicator you cannot. Articulate your points of views very clearly, one on one. You could write books. You're a speaker. What advice can you give leaders on how to develop great communication skills?

Ram Charan 35:11 

David, I've been doing that for some leaders who were nobodies and became CEOs. And this is a real, real incredible didn't know what I was doing it, but I picked them up very early and became CEOs, one of the America's largest companies. Until they became CEO, I remained with them. The answer is, in sports, you must practice, practice, practice, practice. So I'm now developing for a company in India that they want people to be CEOs of divisions businesses. So I'm now putting it together how to be a practicing, practicing CEO of a business unit. Why can't we do that for business units, CEOs that we do in sports, we can

David Novak 36:07 

last question for you, RAM, what's one piece of advice you'd give to someone who wants to be a better leader,

Ram Charan 36:12 

other than the integrity and trust they are all known. Everybody knows that your success is dependent on only three items. The first one is people. You cannot succeed without people. Second, learning and third deliver results. That's

David Novak 36:38 

as simple as 123, right? There. Very, very good. I want to thank you so much for taking the time to be on this podcast and to share your wisdom with others. You know, I always learn a lot every time I read your books or I'm around you. In my mind, you're an outstanding leader, because you're a thought leader in every respect, and you use your influence skills to get other people's move, and you know how to take people with you. Thank

Unknown Speaker 37:06 

you. Bye, bye.

David Novak 37:18 

Well, Ram is proof positive that you don't have to be in charge of others to be a leader. He inspires people and takes them to a better place. And let me tell you, if you do that, you're a leader. In my book, I'm sure you can apply some of Ram's principles in your own business, and certainly one of those is how good he is at asking incisive questions. When you ask better questions, you get better answers, and those insights can help you get to the heart of a problem. Try that this week. As you interact with your teammates, make your questions shorter and more focused and see how it impacts the answers you get. And if you want some bonus points, get your hands on a copy of ROM and Larry's book execution the discipline of getting things done. There's a reason it's been on the New York Times bestseller list for three years. It's one of those business books everybody should read. So do you want to know how leaders lead? What we learned today is the great leaders ask incisive questions coming up next on how leaders lead is Constance Schwartz marining, co founder and CEO of smack entertainment. And let me tell you, she has some great stories about Coach prime Michael Strahan, Aaron Andrews, Taylor Swift and Snoop Dogg himself. And I

Constance Schwartz-Morini 38:41 

know everybody hates the word authentic now it's like what synergy was in the early 2000s but if you look at a roster, if you look at the products that we build and launch, if you look at the shows we produce, the common theme is authenticity, because once you can stay true to who you are and yourself, the success, the money it comes. So

David Novak 39:02 

be sure to come back next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead, where every Thursday, you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be. You.