Ram Charan: 4 Key Thoughts For What Comes Next

At the beginning of the year, I got a call from Ram Charan. He’s a good friend of our firm, and, as most of you know, he’s a bestselling author and one of the most in-demand advisors to companies in the world. He wanted to talk about one thing: Inflation.

Not that he wanted to fret about it or even warn about it. He wanted to get people prepared for it—with a strategic view he developed working for GE at their legendary Crotonville learning center back in the late 1970s. That’s when the company—bleeding cash and worried about its credit amid the exploding inflation of that time—called Charan in to help train the firm’s executives.

What followed from that initial call was one of the professional highlights of my life, a string of working sessions with Charan that resulted in a useful, well-received cover story for Chief Executive, as well as a series of memorable online and in-person masterclasses taught by Charan to help members of the C-Suite not only survive the current inflation, but prepare for what comes next.

Now, Charan has gone further, taking all of this great thinking and putting it together in an exceptional, no-nonsense new book: Leading Through Inflation and Recession and Stagflation, which goes on sale Tuesday, Nov. 29.

It’s essential reading for anyone who is managing an organization—or even part of an organization—through this tricky time. It’s blunt, action-oriented, based on actual experience and above all else, it is trying to be right-now useful. From pricing and procurement to executive communication and leadership techniques, it sets the bar for practical leadership advice about our current moment.

As the publication date neared, I reached out to Charan for his thoughts on where we go from here and get some tips. Here’s some of what he has on his mind these days:

Modular Budgeting. Get your top people together and sketch out budgets for a deep recession with continued inflation, as well as variations—then shift through the plans from good to bad or bad to good, based on how the year unfolds. “This way,” says Charan, “you create the progressive module in your mind with the team and say, ‘We are going to start with the lowest case, and if the conditions improve, we are going to put in some more dry powder and we are going to increase our penetration. But at the same time, we are looking for acquisition of talent and acquisition of companies.”

Focus on Six People. Charan has repeatedly told me that he thinks the great underweighted risk in business right now is the potential impact of a four of autocrats: President Xi, President Putin, the Crown Prince of Saudi Arabia, Iran’s Ayatollah. “The world is being almost held ransom by these four autocrats,” says Charan. It’s also vital, he says, to closely follow President Biden and Fed Chairman Powell. Really try to deepen your understanding of all of them, their behaviors, their patterns, to help get an edge in seeing what may be coming next, says Charan. “I want every leader to watch the conversations among these six people, the coalitions they build, what good things, bad things they create, because it has an effect on currencies, it has an effect on prices of energy, availability of energy, food, and the decision-making.”

The Big Goals. “When this storm subsides,” says Charan, “you should be thinking of minimally doubling your shareholder value in a period of 6, 7 years, because the total GDP of the world will change in 7 years or 8 years to roughly 30 trillion, and its composition will change. In terms of stakeholders, you have to see the issues of sustainability. You should experiment now, you should search for talent now, you should find new technologies now, and say, ‘What are the areas we are going to focus on that will include the issues of sustainability and that which relate to climate change?’

Don’t Lose Track of the Future. “The smartest thing is mental flexibility and being able to make moves in a shorter period of time to adjust when they see either a downturn or an upturn,” says Charan. “Always keep both eyes on cash and customer and brand. And then, as the world changes, you will see some people failing, you will see some new segments emerging. Have a separate team that’s looking beyond three years and seeing how demographics change, how behaviors change, how new technology, new ideas and new research, new algorithms—how do we hitchhike and create new opportunities, new revenue growth? Keep the mind to basics, not some fancy stuff.”

It was another fascinating conversation, and I’m grateful for it—and for his new book. I hope you find it useful as well.

 


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