FT: Eight skills that make you a good leader

Eight skills that make you a good leader

By Stefan Stern

Published: November 28 2006 17:33 | Last updated: November 28 2006 17:33

Know-How

The eight skills that separate people who perform from those who don’t

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By Ram Charan

Crown Business, $27.50

Even in the crowded business book market, a new work by Ram Charan generates interest. This is the author who in 2002 (with Larry Bossidy) brought us Execution, a title that identified what was to become the most popular business buzz word of the following years. If Charan declares that something matters, the chances are that it really does.

This new book is a down-to-earth account of what it takes to be an effective leader today. And its realistic tone stems from Charan’s sober world view. He is suspicious of charismatic, superficially impressive leaders.

Leadership is hard work, he says, requires intense attention to detail and is developed over years. According to Charan, leaders are made, not born – although it helps to have a keen intelligence, psychological maturity, a wide range of interests and boundless energy.

This is a business book, and Charan makes sure to comply with one key requirement of the genre. He lists eight key skills or abilities the effective leader must be able to display. These are not skills that only a superhero might possess, although a boss who excels in more than half at any one time would be rare indeed.

First, Charan says, leaders must know how to position the business to make money. This is not so much a question of business models as whether, fundamentally, your company is “in sync with your customers and ahead of the external environment.” And, since no one positioning will work for any guaranteed length of time, it is a difficult skill to master.

The second task is to connect what is happening in the outside world to what it means for the business. “You need to expand your view, observe from the outside in, and be psychologically open to the patterns you detect,” Charan says. This will make it possible for you to “detect the points before they tip”, he says, alluding to Malcolm Gladwell’s The Tipping Point. book. Jeffrey Immelt, chief executive at General Electric, is a master of this skill, according to the author.

The third skill involves managing the “social system” of your business effectively, so that people can work together more effectively. Charan cites Bob Nardelli, Home Depot’s chief executive, as a supreme exponent.

When he arrived at the struggling DIY business he introduced a Monday morning, two-hour conference call with his top 25 senior managers. Scepticism faded as managers realised Mr Nardelli was serious about listening to them, including their ideas and feeding them back into the business.

Fourth in Charan’s list is the process of judging, selecting and developing leaders. Here is a skill that can be developed only through practice, he says. Good leaders become people experts: they know how to ask questions of potential future leaders that reveal personality and capabilities.

Following on from this is Charan’s fifth leadership skill: moulding a team of leaders. As he points out, having a team of talented people at your command is “a huge multiplier of your capability for making better decisions and getting things done”. Mark Fields, the US manager brought in to revitalise Japanese carmaker Mazda, is Charan’s poster boy for this skill-set.

Mr Fields challenged the prevailing culture of the business and, slowly, got his senior managers to open up and engage in constructive debate. He eventually created what he called “unity without uniformity” in his top team – no mean achievement in consensual Japan.

Charan’s sixth requirement is that leaders choose and set the right goals. Compare and contrast General Motors and GE, Charan says. While GE is seeking new opportunities in emerging markets, and investing heavily in green technology that it believes will win it new customers, GM is struggling on the back of a misguided ambition to rebuild its US market share. Greater profitability rather than crude market share would have been a better bet.

Choosing the right goals is vital, Charan says, because that affects the seventh key task: setting clearly marked out priorities that will help achieve those goals. Badly chosen goals cause you to pursue the wrong priorities.

Lastly, the best leaders react well when forces beyond their control make themselves felt. Today’s round-the-clock, online and interconnected business world can throw up challenges at any time.

The eight skills together constitute what Charan calls “know-how”. After four decades of studying and working with leaders, he believes it is this essential know-how that separates winners from losers. Honing all eight skills is obviously a daunting task. It might even remind you of the time-honoured variety act, in which a performer keeps several plates spinning on the end of poles at the same time.

But our sober management guru has a point. The best leaders do know what they are doing. And they never stop working at trying to get better at it.

Copyright The Financial Times Limited 2006