The CEO mindset – Lessons Learned from Ram Charan

I had the pleasure of attending a lecture by Ram Charan at Insead. His discourse was around the CEO mindset, 5 factors to take into account:

  1. Habits and perceptual acuity
  2. Agile in the digital age
  3. Balance between short and long term
  4. Judging talent
  5. Board room dynamics

The habits and perceptual acuity.

What leaders do? Always hire better people than yourself. Your job is to act as a multiplier. What you are doing is manufacturing time. This skill comes with having an eye for talent, make space for someone to grow, delegate and empower.

Focus! What are the three (3) most important items you should work on?

Curiosity! What are the unstoppable trends?

Perceptual acuity is your human radar for seeing through the fog of uncertainty so you can act before others do.

Perceptual acuity is about having a clear vision of your surroundings. Stop looking only at your own industry. Have a diverse social professional network. Read the Economist and the Financial Times, specifically the LEX section. Begin every meeting with someone describing a radical change in another industry and who took advantage of it. This stimulates out-of-the-box thinking, creative thinking and many antennas looking outside.

The unstoppable trends

Power to the consumer. We have seen a lot of changes in online technology addressing the consumer, like social media, advertising, e-commerce, etc. Ask yourself, how is this applicable in the B2B world? The standard answer is; it doesn’t. What is the product behind your product? What changes might occur in the business model? Every B2B buyer is also a consumer. At work, he/she will have similar expectations to what he/she experience in private life.

Old industry definition. Do not compare yourself only with your own industry. Look at eco-systems and eco-partners.

And of course digital transformation.

Agile in a digital age

Make uncertainty your friend!

Have a global growth mindset. You could consider Amazon a big global player in the retail market. The reality is that the global addressable consumer market is around 24trillion $. If Amazon triples their turn-over the coming 3 years, they still have only around 3% market share.

Look at personality and skills (start at the top). These should include: tech-savvy, creative, finding a money-making formula, creating team-based organizations, focus, obsessed with consumers, multi-sector experience.

Balance between short and long term

Separate your operational financial reviews from your “building the future” project review. Your current business is your rearview mirror. It is what brought you success. It is not necessarily what will bring you success in the future.

Learn by trying. Dare to fail. Create proof of concepts for future business. Do not seek for a short-term positive return.

Look at your “building the future” project portfolio. Is there a good balance between the long term and the short term. Who is leading the long term? Do we have a system in place to support there? (ie allow failure)

building-the-future-project-portfolio-review
building the future

Judging talent

How many people have the wrong job? It is bad for people and bad for the business. Define very clearly, in full sentences, what are the 3 things that are required to be successful in this job over the next 3 years. Match these against the 3 talents in your team. Identify the gap. What is needed to bridge the gap? If you cannot bridge the gap, take action. What is the single most important knock-out criterium. Where is the weakness?

Board room dynamics

There are typically between 4 and 6 board meetings per year. Combined with the various committee’s board members have around 50hours of face 2 face time. What do you want to get out of it? Create a 12-month agenda with 4 major topics and adding, of course, the compliance items. The size of the document packages send to non-executive board members is one of the biggest frustrations. Focus on: What issues do we need to discuss, What questions do we get. What recommendations do we make? Limit the information to 5 pages narrative and 1 page with numbers. Lead the strategy discussion. Educate the non-executive board on external trends. What shift these trends have on the business. What are the alternatives? The Board – Chairman relation is key. Do you have the right set of skills on your board?

Signs of CEO failure?

  • Avoiding the question. (not knowing the answer is not avoiding)
  • Un-planned high turn-over of executives
  • Study the balance sheet every quarter.