Ram Charan, business advisor, speaker, and author of "The Leadership Edge: Confronting Reality and Executing Better Than Others"
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Ram Charan, the highly acclaimed business advisor, speaker, and author made a presentation, “The Leadership Edge: Confronting Reality and Executing Better Than Others” to 130 members of SCU's Retail Consortium For Management Education (RCME) on March 29, 2005.
A joint program with SCU's Executive Development Center and the Consortium for Executive Education. Those in attendance were executives and managers from retailing companies including Orchard Supply Hardware, Grocery Outlet, Gymboree, Gap, Williams-Sonoma, Gottschalks, Trader Joe’s, DFS Group Limited, and Mervyns.
“The yield of the social mechanism in an organization: What is it, what should it be, and how to change it? Ram's presentation highlighted this complex issue that is at the heart of execution. It is a crucial challenge for every leader today,” said Kirthi Kalyanam, the Retail Management Institute's director of Internet retailing.
“Execution is not something someone knows, it's something you practice,” Charan said in his opening remarks. “Execution is a very critical differentiator for a company to move forward.”
Charan outlined the six personal habits of leaders who execute well and how closely they tie in with the social mechanisms of an organization:
- Have clear priorities
- Run efficient meetings
- Follow-through
- Give feedback
- Reward the doers
- Right people, right jobs
According to Charan, the key to execution is really a question of corporate culture. "Is the social system the right one to deliver the numbers to you in the future?" He illustrated this concept using Southwest Airlines as an example: It takes a Southwest plane an average of 14 minutes to turn around. The competition averages 55, which means that Southwest can put one more plane in the air a day.
How'd they do it? According the Charan, Herb Kelleher, one of Southwest's founders, former CEO, and current executive chairman, observed a NASCAR pit crew one day and got to thinking how it could apply to the commercial airline business. That turned into Southwest's policy of training employees in 11 of 12 disciplines. That way, when something goes wrong, the team diagnoses the problem, instead of waiting for “higher-ups’ to step in.
‘What is the monetary value creation of the social system?” Charan asked. “For Southwest, the social system works 10-12 times a day. It got designed, it got executed.”
The key in moving forward anywhere you have globalization and multiple product lines, according to Charan, is in identifying social systems and linking them with the numbers. He outlined a minimum of four social mechanisms that exist in companies:
1. Strategic planning, 2. People planning, 3. Budgeting/ operational plan; and 4. Monthly reviews.
He also identified five social mechanisms for better performance:
1. Identify five to six dominate mechanisms required to deliver the numbers.
2. What's the leadership and composition of these mechanisms? How should it change as the mechanisms progress?
3. What are the requirements of leadership to make it successful?
4. What is the right compensation given the kind of risk the project is?
5. How often should they get reviewed and by whom?
Charan concluded by stating, “The leader today in any complex company needs to have skills in identifying these systems. Can they figure out which ones to kill, which ones to link? Your leverage is not just direct reports. Your leverage is the architecting of those social systems.”
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