Know-How: The 8 Skills That Separate People Who Perform from Those Who Don't [Englisch] [Gebundene Ausgabe]

I'm often amused to read descriptions of the responsibilities of corporate boards: "To represent shareholder interests" and "replace the CEO" are two of my favorites. Most boards do everything possible to learn as little as they can about what shareholders favor. Boards are more likely to keep a CEO on too long than they are to find a good replacement.

Dr. Ram Charan takes dead aim at lousy hiring of leaders by sharing many examples where CEOs and other leaders made a great impression during interviews, but didn't have a clue about how to run the company better. You'll probably find yourself scratching your head, for example, about why a former CFO, CEO Rick Wagoner of General Motors, chose to gamble the company's limited financial resources on a foolish charge to gain market share that left the company virtually crippled. CEOs make those kinds of mistakes every day.

What solution does the blunt Dr. Charan propose: It's simple; find people who already know how to do what needs to be done as leaders. He explores this subject at all levels of a large company, which makes the book all the more relevant and interesting.

If boards don't know what CEOs need to know, what are those factors? I've paraphrased Know-How's key points below:

1. Pick a useful direction where the organization can succeed and help your executives to understand why that's the way to go.

2. Stay ahead of the curve on emerging changes in your business and environment by paying attention to new shifts.

3. Turn your individual stars into effective team players so that you can pull together in the right direction.

4. Develop leaders who will have these same skills.

5. Create effectiveness while encouraging candor about where you might be wrong.

6. Set goals that will stimulate improved performance by having people work on the right things.

7. Establish and stick with the right priorities to meet your goals.

8. Keep track of what public opinion is and be prepared to engage those views in constructive ways whether these are the views of citizens, consumers, customers, or shareholders.

The book's format is easy to follow. Each chapter begins with a longer example that helps you get a sense of what he's describing and then fleshes out the concept with sub-points and smaller examples. It's a nice combination of theory and practice.

The book strongly praises Charan clients like Bob Nardelli, former CEO of Home Depot; Jeff Immelt, CEO of GE; and Ivan Seidenberg, CEO of Verizon. The subliminal message is "Follow the GE way." That's a point worth considering because Mr. Nardelli didn't keep his job long after this book was written. Why? He did a poor job of improving stock price, despite Dr. Charan's assurance that Mr. Nardelli had made peace with shareholders. Also, a lot of the public criticisms of Mr. Nardelli's early days at Home Depot (such as getting rid of his most knowledgeable aisle people) don't make it into the book. Be cautious about how seriously you take the positive examples. To some extent, they are there to cover clients and Dr. Charan in glory.

The negative examples are much more interesting and informative. Look closely at those.

Think of this book as raising the bar once again for all of the things that a CEO leader must do. Even Superman only had to be faster than a speeding bullet, more powerful than a locomotive, and be able to leap tall buildings in a single bound. Other researchers like James Collins in Built to Last and Good to Great, are skeptical of the view that the CEO has to be the most competent person in the company in all kinds of areas. The contrary view is that the CEO's job is to make the company competent with a management system that builds valuable insights and actions from all directions, but especially from the bottom up. Mr. Charan, however, is of the top-down school . . . and only encourages hearing from others to you can decide to promote them or not and to coach them on how to improve (but if the CEO is really wrong, once in a while you can tell the leader).

The skills described are primarily those developed and employed by corporate planners, human resources executives, and communications consultants. That's food for thought, because those disciplines are not held in high regard in most companies today.

My own view is that successful companies need only be adept at continual business model innovation, a task that isn't included what leaders need to be doing. The omission isn't surprising: CEOs have limited roles in defining and creating new business models. CEO ideas of what to do in business model innovation are frequently wrong except when the CEO was a founder of the company and has been through that process many times. Not surprisingly, the top business model innovating CEOs appear nowhere in the book.

How relevant is the book for a smaller company's leader? Less so, I think. The list will be a good reminder of tasks to work on, but you probably won't get the amount of detail you need to learn what to do. This book will, therefore, be of most value to those who already know how to do these tasks . . . but just need to be reminded to focus on them.

But as a statement of where the GE CEO concept has evolved, this book is well done.