March 18, 2015
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. Ram’s work with companies such as GE, DuPont, Verizon, GMR, and Tata Group has made him known for cutting through the complexity of running a business in today’s fast-changing environment, to uncover core business problems or unseen opportunities. He has authored fifteen books that have sold over three million copies in more than a dozen languages, and his new book The Attacker’s Advantage is published by Public Affairs. Ram recently sat down with AMA in an exclusive interview. This post is an adaptation of that interview.
AMA: In your new book, The Attacker’s Advantage, you discuss the concept of structural uncertainty – your term – and how it is a new challenge to leaders. What are some of the advantages that structural uncertainty brings to an organization? It sounds very threatening, almost like a black hole, but what are some of the advantages of taking or leveraging structural uncertainty?
RC: The key point is to understand that every single industry and company will encounter structural uncertainty. If you pay no attention, it can have a fatal blow. It has happened to the music industry, book publishing industry, and it’s happening partly in the retail industry. If you are on the attack, and you can identify the catalysts that will bring these forces, you can go on the attack and create a new game, a new way to manage, a new business model, and ride the wave of the new change. That is the attacker’s advantage. If you don’t do it, somebody else will. Borders disappeared, and Barnes and Noble is closing one-third of their stores. So this is just the beginning of a structural uncertainty.
AMA: Now, many business leaders live with this concern. It keeps them up at night that the “givens” in their industry could change overnight, could change immediately, and they’ll be late in responding to the change. What types of early warning signals should leaders look for, or where should they be looking?
RC: I think the first thing is they have to have a belief that there will be outside forces coming that will cause this structural change. That structural change, the first look at the industry, the way they did the industry analysis, is irrelevant because the industry itself will be destroyed, combined, fragmented, or just disappear. To see the early warning signs, they have to practice what we call perceptual acuity. You have business acuity and people acuity. Some people call it a “nose,” a “nose for people” or a “nose for business,” and this is a nose for sensing early warning signals.
There are many matters that are written about in the book. One of them is that, in a staff meeting, the members of the meeting should have a 10-minute practice at every meeting. Ask people to come and describe what they see over the horizon – even though it may not be very clear. By doing that, they multiply the lenses through which the organization sees. If you are doing this at every meeting, you will improve your ability much like an athlete does.
Second is to use your social networks of people who are not in your discipline or industry to multiply the perception of many people. You learn how to identify the catalysts that create these discontinuities. One of them was Steve Jobs, and there have been many others. That’s what you need to practice, and make it a high priority, because no matter how good you are, if the industry goes so do you.
AMA: Exactly. Are there specific skills and abilities that successful leaders need to possess to thrive in this environment?
RC: Yes. In terms of personality, number one is courage. The older stuff will no longer work, yet people look into the rear-view mirror and say “I have this core competence; I am number one, so I will win.” Humility is extremely important in this regard. The second thing is to look at the consumer very closely. Consumers now have power they did not have before. The consumer is asking for convenience: anytime, anywhere, in any dose, at a price they can compare. So you’ve got to organize your business accordingly. With the attack of digitization, algorithm sensors, and the internet, the whole economy is changing. So, you need to learn these things as a domain of knowledge. If you don’t, you cannot be successful.
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