Ram Charan - Most influential consultant alive

FORTUNE 500   The strange existence of Ram Charan What he does is hard to describe. But the most powerful CEOs love it enough to keep him on the road 24/7 and make him the most influential consultant alive. Fortune's David Whitford reports. David Whitford, Fortune writer April 24 2007: 9:12 AM EDT (Fortune Magazine) -- The Al Manzil Hotel in Dubai has been open for business all of 18 days on the Saturday night in January that I show up with Ram Charan. The lobby is strangely quiet; there doesn't seem to be anybody else staying here. The surrounding neighborhood is called Old Town, but in fact it's a construction site from which are rising what will one day be the world's tallest skyscraper and the world's biggest mall. Soulless and kind of creepy, I'm thinking, but Charan's thoughts are elsewhere. Already he has claimed an overstuffed chair in the center of the lobby and is talking on the phone. After 12 hours of isolation on the flight from J.F.K., Charan is back in business, deep in private conversation with a client in New York City. He looks tired, and no wonder. He began his day with a 4 A.M. Friday wake-up call in Richmond (he did a Squawk Box live remote on CNBC), and he has a head cold. But he is in no hurry to go to bed. Charan doesn't care what time it is. He doesn't care what day of the week it is. And the last thing he cares about is where he is. As long as Charan is with a client - or can get one on the phone - he's home. Thirty years ago this month, Ram Charan (pronounced "Rahm Scha-RON") quit a tenured professorship at Boston University to devote himself full-time to consulting. Today he's alone at the top of his profession - not a consultant so much as a guru, a corporate sage, with unparalleled access to boardrooms across the globe and intimate, enduring relationships with an array of powerful CEOs. Among them: Jack Welch, formerly of GE (Charts, Fortune 500), who says of Charan, "He has this rare ability to distill meaningful from meaningless and transfer it to others in a quiet, effective way without destroying confidences"; Dick Harrington of Thomson Corp. (Charts) ("He probably knows more about corporate America than anybody"); and Verizon's (Charts, Fortune 500) Ivan Seidenberg ("I love him. He's my secret weapon"). "He's like your conscience," says former Citicorp CEO John Reed. "Just when you sort of think you have everything done and you're feeling pretty good about yourself, he calls you up and says, 'Hey, Reed, did you do this and that and the other?'" There's another aspect of Charan, not unrelated to his success, that sets him apart from his peers, if not the whole human race: what Jack Krol calls Charan's "strange existence." "When I was chairman and CEO of DuPont," says Krol, "he'd show up at the house Sunday morning at nine, and we might spend three or four hours, and all of a sudden he'd disappear. He would go anywhere at any time that you asked him to meet with you. Business is his whole life." That sounds like an exaggeration, but it's not. Having uploaded himself into the global economy, Charan circulates, continuously, with something like the speed and efficiency of capital. Consider the itinerary he sketched at dinner one night a few months ago in New York. He had just agreed - for the first time in his career -to let a journalist travel with him and watch him work. "I should tell you where I've been the last few weeks," he began in heavily accented English. "I go to India on the Friday of the week before Thanksgiving. I am Sunday morning in Bombay. Monday morning I am in Delhi. Wednesday I'm in Bombay. Thursday I'm in Bangalore. Saturday I'm in Trivandrum. Wednesday I'm in Johannesburg. Friday morning, at seven, I am in New York. I have a two-hour meeting with a CEO who has flown in to see me. I have two more meetings and I fly out that night to Dubai. I am in Dubai on Sunday and Monday, then I come back here. On Thursday night I fly out to Jubail, Saudi Arabia. Then I come back here. Tuesday morning I have a whole-day schedule in New York. Tuesday night I go to Milwaukee. I came from Milwaukee last night. They diverted my plane so I had to stay in Pittsburgh. I had a meeting this morning in Philadelphia. I had three meetings here in the afternoon. And I'm here tomorrow, with GE. Then an hour-and-a-half phone call. Then I'm going out tomorrow night to West Palm Beach. Monday morning I have a breakfast meeting in New York. And then I'm flying out to Perth, Australia." At least he flies first-class. Now consider what comes next: more of the same. Charan never stops. He sleeps in a hotel every night ("Professor Charan, welcome home," is how the doorman greets him at the Waldorf on Park Avenue), except when he's sleeping on a plane or, rarely, in someone's house, which can happen when a client takes pity on him. "I got in the habit of having him over for Christmas because he had no place to go," says Reed. "He was going to sit in a hotel room. That's hardly right." Before he was a consultant, Charan lived in dormitories. Before he was a professor and a student, he lived in YMCAs. Now he doesn't live anywhere. Charan's one nod to a conventional rooted life is the office he rents on North Central Expressway in Dallas (that's the address on his passport - he is a U.S. citizen), but he can't tell you anything about it because he's never been there. "I really thought the two ladies I interviewed with six years ago were just yanking my chain," says Cynthia Burr, who manages Charan's hideous schedule. "I said, 'Where does he keep his stuff? Everybody has stuff.' It's really hard to wrap your arms around something like that, but it's true." Three days a week - on Monday, Wednesday, and Friday - Burr and a colleague pack a cardboard box with shirts, underwear, and socks, perhaps a clean suit (there is a tailor at Neiman Marcus who has Charan's measurements on file), and maybe a V-neck sweater or a pair of khaki pants. They toss in toothpaste, razors, shampoo, a shined pair of 9½ EEEE shoes, whatever he needs ("He doesn't buy anything himself," says Burr), and send it by FedEx to Charan's hotel, wherever that may be. The box comes back two days later filled with dirty laundry. Charan doesn't own a car because he never learned how to drive, and besides, where would he keep it? A plane, perhaps? With a day rate that clients say can top $20,000, he could afford one. "If I was Ram, the one thing I'd have is one hell of a nice plane," says his friend Bill Conaty, senior VP for human resources at GE. But Charan is not Conaty. "I use the time sitting in the terminal," he says. "I have never missed an appointment in my life. I don't want to get lost in this private-plane business." (He does regret, however, not accepting an offer from American Airlines in the 1970s to buy a lifetime first-class upgrade for $100,000.) He trundles through airports pulling a mismatched pair of black canvas rollers, one held together with maroon duct tape. His watch is a Timex. Given all the hours he spends in transit and his lifelong passion for the Indian vocalist Lata Mangeshkar, I suggested once that he might enjoy an iPod. The idea seemed to upset him: "No, I don't do that, I couldn't do it. Would just distract me. Music can make you very sentimental. Couldn't do it." Have I mentioned that Charan has never married? That he has no children? And still I haven't come to possibly the most peculiar aspect of his personality. I mean that which sets him apart from virtually every person he comes in contact with, none more so than his overachieving CEO clients: Charan has no goals. He never set out to become a globetrotting consultant, any more than he dreamed of attending Harvard Business School, or becoming a professor, or even so much as one day earning a living beyond the small city in India where he was born.

Charan's weird and wonderful life is an unintended byproduct of dedication, he insists. Dedication to learning and teaching and service, to the whole set of Hindu virtues embodied by one of Charan's favorite phrases, "Purpose before self." "People used to ask me, What is your ambition?" says Charan, who turned 67 this past Christmas. "I say I have none. My dedication is going to take me where I'm going to be."

"Tell me his three God's gifts"

Charan follows his driver out the door of the hotel in Dubai on Sunday morning. "We'll see how it goes," he says, then sneezes. "The nose is not running." With that he's off to an all-day meeting at Emaar Properties, the Persian Gulf behemoth that's developing both the skyscraper and the mall. The limo zooms along on newly built freeways, past a string of galloping mounted camels at Dubai's Nad Al Sheba racetrack, through a dusty desert landscape cluttered with cranes, cement mixers, and rebar. ("Look at all that skyline," Charan murmurs.)

Once inside the gated Emaar compound, he is led upstairs to a conference room overlooking a vivid green golf course. Tom Bartridge, Emaar's American HR director (who thinks "Ram" rhymes with "bam"), is here waiting, and after a few moments V.K. Gomber, strategic advisor to the chairman, walks in. Charan shakes hands all around ("V.K., good morning, sir, how are you?"), says yes, thank you, he'll have tea, then heads to the whiteboard.

Ten-year-old Emaar is growing like crazy in the Persian Gulf, in South Asia, and with its recent acquisition of California builder John Laing Homes, in the U.S. Its top challenge now, in Gomber's view, is execution. Can Emaar capitalize on the marvelous opportunities before it? That's largely a people question, Gomber believes, and therefore people will be the focus of Charan's work with Emaar's management team in the months to come. (Charan is flying back to New York tonight but will return to Dubai for a total of 22 days in 2007.)

"Can we bring up the maximum number of people within the organization," says Gomber, "or can we go through the networking that [Charan] has and go outside the organization and identify people? If we can get such people, I think the money is well spent."

For the next five hours Charan walks his charges through a detailed analysis and discussion of Emaar's draft succession-planning template. "A leader who does not produce leaders is not a great leader," he says. "If you agree, I'd like to put that in." (Gomber nods.) Charan is trying to help Emaar construct a document that will help its managers discern in others what he calls "natural talents," or "God's gifts." "Each of us has to be the best calibrator of natural talent of the people who work with us," he says. "What are the three to five most crucial natural-talent items that each person has? It has to be specific" - he taps the whiteboard for emphasis - "and very clear" - tap - "and repeatable" -tap!

"By the way," says Charan, "the last time I talked about Steve Jobs, remember? I've now verified from two directors of Apple, and they say it's right on the button." Gomber and Bartridge perk up their ears. "I asked, Well, tell me his three God's gifts. And they think about it, and they say first thing, this human being has a talent to figure out what the consumer really wants. This is a very valuable thing! No. 2, he has the will and the talent to find - no matter where it is! - the right technology that will deliver what they want. Nobody said he invented one! And third, he has the talent to create demand at the right time. I say, Where do you find those human beings? But he is one."

Throughout the afternoon Charan discreetly shares from his store of anecdotes. For example, the time he was sitting in Andy Grove's cubicle sometime in the late '70s when Grove got a call from a Tektronix (Charts) engineer who wanted to work at Intel (Charts, Fortune 500) and was willing to take a 10% pay cut. "And they were a $200 million company at the time," says Charan, "very small. Tektronix was $5 billion. That's brand!" GE has a similarly powerful brand, says Charan. So does P&G (Charts, Fortune 500). So can Emaar, is the idea.

I don't care if I flunk

Later that evening I meet Charan for dinner back at the hotel. Western music plays softly, disconcertingly, in the background. (Eric Clapton, John Lee Hooker, and a cover by someone I can't place of Lowell George's highway traveler's classic, "Willin'" - "I been from Tucson to Tucumcari, Tehachapi to Tonopah.") Charan has a plane to catch at 2 A.M. He has three appointments in New York starting at 9:30 Monday morning. Monday night he flies to Madrid, Tuesday night to Frankfurt, Wednesday morning to Miami. After that, he doesn't know.

Our waitress is a guest worker from India, one of many now in Dubai. "May I call you beti?" Charan asks politely. She nods, blushing at the portly gentleman seated before her, with his backswept gray-streaked hair, smooth round face, and sparkling eyes. "It's an Indian custom," Charan explains after she leaves. "I took her permission first. I may not in India. Even though she has never met me, and I address her as beti" - "daughter" in Hindi -"it's like I am telling her that you will be treated like my own daughter. All threats are out. You see the face changing right away."

Charan's roots are in a small city near Delhi in the north Indian state of Uttar Pradesh. (I can't say which city because Charan has relatives there and worries about kidnapping.) His family (he is the sixth of seven children) lived on the second floor of a two-story house they shared with his uncle's family. Together they were 17 people under one roof. "And then a portion to keep the cows," says Charan. "I personally took the cow dung and made patties out of that for burning in Mother's stove. We cut the fodder in the fodder machine for the cows. My brothers and my uncle did the milking." While they had everything they needed to survive, they had no more than that. No plumbing, no electricity, no luxuries of any kind. The children pumped water from a well. They did their nightly homework on the floor in a flickering circle of light from a mustard-oil lamp.

Fortune 500: Best companies to work for

There was intense fighting between Hindus and Muslims in Charan's city during the struggle for Indian independence. He remembers when he was 7 years old in 1947, watching from the roof of his home as flames destroyed the cloth shop belonging to his father and uncle. After the fire the brothers started over with a shoe shop. Charan was in the shop every morning before school to help open and every afternoon after school until closing. He counted the rupees in the till at the end of the day, inspiring a lifelong appreciation for the "blood" of business. ("Any company I go to, the first thing I check is cash. How's your cash? Where's your cash flow? No blood, you got a problem right away.")

In the lulls between customers, Charan studied. Using a system of his own devising, he condensed onto a single unlined page the essence of what he had learned that day in each subject. (Today he provides similar one-page summaries for his CEO clients.) "Am I going to get good grades?" he would ask himself, knowing there was only one right answer. "Am I the master of this subject?" He knew from Sanskrit teachings that "fear, anger, laziness - these are the downfalls of human beings"; that peace of mind alone is worth striving for; that dedication and mastery are their own rewards.

One by one, most of the older children left school to work in the family business. Charan was an exception. His teachers visited the shop to beg his parents to let him continue his education. At 15, he enrolled as an engineering student at the elite Banaras University in Varanasi, a 250-mile train ride away. He was two years younger than his classmates, a humble member of the trading caste surrounded by "students whose fathers were big business people." He kept quiet because he was self-conscious about his "lousy English." He excelled, graduating third in his class. "Oh, incredible growth!" is how he describes those years. "Incredible learning!"

After college Charan was invited to participate in a work exchange program in Australia. His grandmother pawned her jewelry to buy him a plane ticket. (Charan recorded that debt, together with every cent his family spent on his education, and paid it back within a year. "This is a return of capital," he wrote on the note accompanying final payment.) Charan ran into a problem at the passport office. The application asked for his first and last names. Like most provincial Indians, Charan didn't use a family name. So he split his one name in two, and Ramcharan became Ram Charan.

It was winter when Charan arrived in Sydney. He had never been so cold in his life. A kind woman in the placement office at the University of New South Wales arranged some interviews, but job offers were hard to come by. You can always try gardening, she said. "I'll do that," Charan said. "But I can't go home because I don't have any money."

Finally he found a job as a draftsman at a utility company. He worked days and attended classes at night. Charan soon attracted the attention of his bosses, one of whom invited him one day to his office. Did Charan have any questions he wanted to ask? As a matter of fact, Charan did. He had been studying the financial statements in his spare time, attentive as always to cash flow, and had concluded that the company was borrowing money to pay its dividend. Was this true? Charan's boss was sure it was not. Until he checked with the CFO. Oops. The young Indian's standing rose accordingly.

Encouraged by his bosses, Charan left Australia after four years to attend Harvard Business School. MBA students in the early 1960s had to read and be prepared to discuss as many as three case studies a day, six days a week. One of Charan's more practical section mates suggested they divide the cases, then get together every night to share notes. "I'm not going to do that," Charan said. "I'm spending my own money. I don't care if I flunk. If I learn something, I'll succeed." Charan did not flunk. He completed all the reading and, as was his habit, summarized the notes for each case on a single sheet of paper, which he brought to class for reference during the discussion.

His roommate, Boston real estate developer John Joyce, remembers seeing Charan's grades at the end of the first trimester second year, when Charan took advanced statistics, a class normally reserved for doctoral candidates. "They were all distinction-pluses," says Joyce. "Kind of a stunning achievement."

While at Harvard, Charan worked summers for a gas company in Honolulu. Again, he took it upon himself to study the books, and again he discovered a looming problem with the dividend. This time his boss asked him to solve it. Charan came back six weeks later. "The pressures in the pipes between 10 P.M. and 4 A.M. are too high," he reported. "You take them down, and your gas leakage will go down, and you will make the dividend."

Charan knew this because he had been down to the plant in the middle of the night and read the gauges. He had also noticed that the man in charge of production was not talking to the man in charge of distribution; hence the leakage. In other words, he combined financial acuity with engineering know-how and an eye for the role played by interpersonal relationships to solve a vexing problem. Charan says now, "That's where this whole consulting thing really began."

Charan graduated in the top 3% of his class, a Baker Scholar with high distinction. He stayed to earn a doctoral degree, then joined the faculty. His students nominated him for a best-teacher award, an award he later won at Northwestern. But Charan never excelled at the academic research that leads to tenure at a top-tier school. He was interested more in cause and effect than statistical correlation. His aims were practical: How can I solve this problem? How can I help this person? This company? He began taking on more and more consulting gigs. Most B-school professors consult on the side; in Charan's case, it was his calling. Within a year of arriving at BU, having finally achieved tenure, he concluded, "This is not for me," and stepped into the void. He rented an office in Dallas, in part, he says, because the climate reminded him of India, but really for its central location. Not that he's ever there.

"Don't you ever, ever do that again"

What does Charan really deliver? Some people wonder about that. He is very good at unpacking complexity, at paring business challenges down to their essential elements, often with reference to lessons he learned years ago in the family shoe store. "I've been around Mike Porter and Gary Hamel and every strategy guy in the world," says University of Michigan business professor and Charan friend Noel Tichy. "Many of them get into this look-how-smart-I-am mode. You will never see that with Charan." If you're V.K. Gomber ("I am a strong believer that the businesses are simple"), you value that quality.

But there is a line between simple and simplistic, and some have questioned which side Charan stands on. Skeptics liken him to Chauncey Gardiner, the simple-minded hero of the 1979 film classic Being There, who gets a lot of mileage out of utterances such as "First comes spring and summer, but then we have fall and winter. And then we get spring and summer again."

If Charan is a fake he is an amazingly successful one. What defines his career, even more than the quality of his client roster, is its stability. This is his 37th year working for GE, his 33rd for DuPont. He worked with John Snow for 15 years before Snow left CSX (Charts, Fortune 500) for the Treasury Department; he has been with Ivan Seidenberg at least 20 years, and with former West Virginia Governor Gaston Caperton more than 30 years. Caperton met Charan at a Young Presidents' Organization (YPO) function in the mid-1970s and has been huddling with him ever since.

That is, through the sale of Caperton's once-tiny insurance company in the early 1990s after it had grown to become the tenth-largest privately held brokerage in the country; through Caperton's two terms as governor, during which Charan led talks with business, government, and union leaders on developing an economic strategy for the state; and now in his job as CEO of the College Board. "He's helped me in business, in government, and in the nonprofit," says Caperton.

One of the reasons people keep coming back is Charan's extraordinary devotion to his work. Years ago Charan was leading a workshop at Crotonville, GE's training center in Ossining, N.Y. It was after the merger with RCA in 1987. The employees were mixing for the first time, and things were a little tense. One of the GE guys found out that it was the birthday of one of the RCA guys and hired a belly dancer to mark the occasion. "The dance was just before lunch," says Jim Noel, formerly of GE, now a consultant. "She came in, did her little thing, and left. As we were walking to lunch, Charan came up to me and said, 'Jim,' and he was really serious--at first I thought he was joking. He said, 'Don't you ever, ever, ever do anything like that again.' And these were his exact words: 'Don't you ever defile the classroom in that way.'"

He's like a monk, suggests Caperton. Or a missionary, says John Mahaney, his editor at Crown Business (Charan has written 11 books on management; see "Charan in Print"). GE's Conaty jokes that while his company has extremely high expectations of its employees, "we do allow people to get married. We do allow them to have kids. We actually allow them to live in homes - even multiple homes, once they make some money with us - and we do allow them vacations and most of their weekends off."

Charan, however, has no discernible personal life. One longtime collaborator has dinner with him whenever Charan is in town. Charan's friend's wife used to join them but stopped. "My wife got to the point where she couldn't stand it anymore, because Charan could not get out of talking about business." Does Charan ever laugh? "Probably," says someone who has spent hundreds of hours with him, "but I can't remember. I pull back from my own appreciation of irony in his presence."

Charan had triple-bypass heart surgery in 1999. After the operation he took it easy for 11 days, then went back to work. He couldn't fly for a while but that was fine - he loves trains. Most of his clients never knew he was sick. Welch, who has had his own bypass surgery, did know, and worried. "Ram, what the hell are you doing here?" he said when he saw him soon afterward. Charan, though pale, was dismissive. By then he had already been to Europe and back once.

"He isn't doing anything"

Generalizing about what Charan does for his clients is tricky, but that lack of definition paradoxically is at the heart of his success. His method is no method. He is wary of abstraction and belongs to no school of management theory. "Converting highfalutin ideas to the specifics of the company and the leader - that's the trick," he once confided to me in an elevator. "The other part is working backward to define what the need is, and then searching for what helps. Then you bring it to common sense, and common sense is very uncommon."

That means no ready-made solutions. Instead, Charan brings observation, curiosity, and care. He lets his clients decide how to use him. Sometimes all he does is ask the right question. "I remember the first time he came to see me," says Caperton. "We were driving to the airport in Charleston, W.Va., and he said to me, 'Why are you trying to grow this thing so fast?' I was sort of shocked by the question. Three weeks later my financial guy came to me and said, 'We don't have money to meet payroll.' Charan realized we were growing too fast, that's why he asked me that question. That was a much better way to teach me, wasn't it?"

Or he might teach others which questions to ask themselves. Nick Taubman and Garnett Smith heard Charan speak at a YPO event in 1978. Advance Auto Parts (Charts, Fortune 500) was not a big company at the time - fewer than 200 outlets, less than $200 million in sales - but Taubman, the president, and Smith, his operations guy, had big plans. As the company grew, Charan was always reminding them not to lose touch with the stores. ("You just can't allow this to happen!")

At Charan's suggestion they began hosting regular Tuesday meetings at headquarters in Greensboro, N.C. They'd fly in a handful of store managers from all over the country, put them in a room with the leaders from corporate, and run down a three-item agenda following a script devised by Charan: What unique thing happened in your store last week? What issues did you face that kept you from serving your customers better? How can we fix those issues right now? Says Smith: "He made sure as we grew that we didn't lose sight of what was really important."

When Bill Conaty moved to GE headquarters as senior VP for corporate human resources in 1993, he picked Charan to lead his new-leader assimilation program. Charan brought two dozen of Conaty's new reports to GE's guesthouse for six hours, asking them, What do you know about Bill? What do you want him to know about you? What advice do you have for him? Charan summarized the feedback for Conaty, then offered some of his own, then followed up repeatedly. "Charan really pushed me on the whole business-partnership piece," Conaty recalls, meaning no more HR initiatives for HR's sake, "and the function as a result is much more credible and visible in GE today than it was."

Ivan Seidenberg says he goes through cycles of change at Verizon, and so engages Charan in different ways. "For a while we were trying to figure out how to reengineer work," he says. "Another time we were looking to design new management programs to have people focus on a different way of thinking about running the business: How do you forge a growth culture, as opposed to one that's been focused on productivity for many years? New-product introduction - I talked to him about that. He always whips out this nice little pen he uses, real thin ink, and he starts drawing diagrams. He constantly is helping to provide depth to issues, not only answers. All of it is useful."

John Reed started working with Charan in 1990, before Citi's merger with Travelers. The stock was languishing, the company was struggling. "I knew what I wanted to do," says Reed, "but I wasn't 100% sure how to get it done. That's a big distinction if you're in business. A lot of consultants come in to tell you what you should be doing. This was not that. This was a question of how best to get it done."

Reed says, "Ram is a catalyst in the real sense of that word. He facilitates things happening but doesn't take part in them himself. And he is an immense source of energy. When you're trying to get large organizations to do things, energy is extremely important. He forces you to tell him what it is you want to do, and he forces you to really be clear in your own mind what those things are and what steps have to be taken. Often it's getting the wrong guy out of a job. But the point is, he starts out by basically forcing you to think with him and be very clear. Then, okay, you notice that he isn't doing anything, he's just forcing you to do it. Then once you've agreed on everything you want to do, he calls you up every ten minutes and asks why haven't you done it yet."

"I am allowed to do what I love to do!"

Feb. 19, President's Day. Not much of a holiday for most Americans; certainly it means nothing to Charan. He spent the day with a client in Hartford, then flew to Cleveland on a connecting flight through Dulles. The planes were late. Charan never complained. When the airline club closed and the tired employees went home, Charan relocated to the gate and dozed in a chair until his flight was called. Now he is standing at the check-in desk at a hotel on a highway somewhere far outside town, waiting patiently for his key. The clock behind the desk reads 1:48 A.M. He asks for a 5:00 A.M. wake-up call.

"I'm a lucky man!" Charan likes to say. "I am allowed to do what I love to do!" While I still don't really understand him, I am beginning to believe him. Surely there are many ways to live fully and be happy on this earth; probably, he has found his own. Of course he knows he can't keep this up forever. One day he'll start slowing down, and then he'll begin to dispose of his money. He has long financed the aspirations of his extended family in India, by paying for their schooling and helping some of them get settled overseas. But that's it, he says. No more money for the family. ("My people are not rich, but they have enough to go on their own.") "It's going to be in India" is all he'll say about his coming serious philanthropy. "It goes a long way, a little amount there. To enable people to accomplish things."

But Charan's not there yet; he's not even thinking about slowing down. Even though - and this is breaking news - he is no longer homeless. "I now have an apartment in Texas," he tells me matter-of-factly. To say I am dumbfounded is an understatement. Why now? "I just thought I'd get one," he says. "I was in Istanbul, they're all telling me I got to cut this out. They think it's a big deal for me to have never bought a place. I said hell with it. I got tired of people talking about it." So I ask him when he is moving in. "Maybe never," he says, staring hard. Staring back, I catch a glimmer of something, a ripple that crosses his face. It may have been a smile. 

Interview of Ram Charan

STEVE SINGER: Joining me today via cell phone is Ram Charan, the author of the new book Know-How: The 8 Skills That Separate People Who Perform from Those Who Don't. Welcome, Ram.

RAM CHARAN: Thank you, Steve.

STEVE SINGER: And thank you very much for being here with us today. So let's get right into it. How can managers encourage and nurture that know-how in both themselves and in their employees?

RAM CHARAN: This is a very central question. And there are a number of premises that I have personally observed over time in a number of industries, a number of companies, a number of countries. The first one is that the 21st century is different from the 20th century. What are the differences? The first and foremost difference is transparency, that you cannot hide your performance anymore. Outside activists, inside employees-- both of these are going to demand performance.

Number two is that many people became leaders and got into leadership jobs. What are the personality traits? And they are important-- the courage, the vision, a cognitive bandwidth, a fearless move, the bold thinking. They are important. Just like an athlete has a raw talent, and that's important. But if you don't practice those talents, those personality traits into cultivating the skills, in today's environment, given the failure rate's so high, that the leaders of tomorrow are not going to succeed.

The growth in the world is fantastic. Look at the last five years' global growth-- new opportunities, globalization, new areas of growth going on all over the world. There is more demand for leaders than supply. At the same time, the environment for evaluation is harsh. So I am suggesting, looking at the so many companies, that get to know you as a raw athlete, as a leader, with your personality. When you're 25 or so, you know what they are. Become aware of them. And then say which area you want to go and polish them. Cultivate the skills, do the deliberate practice like the athletes do, like the orchestra leaders do. So these are the eight know-hows came in my observations.

Why do I call them know-hows? Is because a skill, until you practice, it does not become in your DNA. It does not go to your unconscious. It is not labeling you to improvise in unknown circumstances. It has to become instinctive. Your judgment improves. That's why the word know-how. You convert those skills by practicing jointly your personality traits and practicing goals with these know-how in real situations, just like all the people who become champions practice that.

Now, how do you encourage as you question leaders? The first thing about the leaders, in my definition, a leader who does not produce other leaders is not a great leader. This is going to be required going forward, that people in companies will have less chance of being promoted if they don't produce other leaders. This has begun in companies and this is going to go on the 21st century, and therefore, they have to do that.

Number two is that the leaders have to identify early the potential high-potential leaders and really try to make self-aware what their [? God's ?] gift is and now, how to polish it, how to train them, how to give feedback, how to give coaching, and how to put them in the right jobs. Right people in the right jobs is the essence of developing leadership. It is not money. It is emotional energy time. It is tailoring to the individual's development. That doesn't mean ticket punching. It means real experience, rigorous evaluation and rigorous feedback. Steve, these are the ways to go at it.

STEVE SINGER: And should those leaders who are looking out for their future, how do they go about coaching the potential future leaders?

RAM CHARAN: The first one is that the signs of a leader-- and one thing people have to come to realize, high-performance leader is different from high-performance individual. And the difference is a high-performance leader gets things done. A high-performance individual does the things in terms of himself or herself. That's a huge distinction people need to come to terms. Having said that, you will find high-performance leaders. They show signs early. These people are able to command respect without authority. These people think externally first, not rear-view mirror. These people seize opportunities. They talk, they dream what could be possible. So these are some of the signs of these people.

Now the coaching. The coaching part is in three areas. And this is what I want every leader to think as a template, not as the answer. Answer will vary from individual to individual. The template is you're coaching the human being in terms of these three things.

The first, get the person to see effectively what is happening in the external world, external change. Senior leaders can really coach people to see how to connect the dots. What are the trends? What are the patterns? This raises people's altitude of vision of what's happening on the outside. When it comes to the coaching and outside, no two people have the same view. The senior leaders need to engage the individual. How does the individual see? What are the [? ordinate ?] ways to seeing it? That's a huge coaching. It is not a classroom training.

The second coaching is in the area of people. How good is this person in reading people, judging people, selecting people, dealing with people issues.

Third is to see the person work more on expanding the person's strengths, testing them in different circumstances, and only ask the question, what is coming in this person's way to go? Not try to make a person perfect in every area. That is where the coaching fails, when they really focus on the negatives instead of expanding the positives. Steve, that's what I see, the future.

STEVE SINGER: One of the things you talk about in the book is about how leaders should go about spotting potential leadership talent. But I'd like to turn that around a little bit. If I'm a young manager, how do I get noticed by my leaders?

RAM CHARAN: Excellent point. The first thing as a young leader, be sure you work for a human being who's a good coach. If not, get out. That's the first thing. If there's a good coach, the good coach will notice you. If you have too many of you in the same place, that's the good news because it will be like the Olympic tradition. One better person will help you become better. Go for it. Good coaches are always looking for you.

The second thing is that you always think from outside in. If you think outside in, you think of new ideas, new ways to re-frame things, new ways to harness the energy of others without power.

And the final one, nothing speaks more loudly than A, accomplishments and B, helping others accomplish. Your juniors, your peers will help you push forward. Don't forget it. The right work will eventually be noticed.

STEVE SINGER: Thank you so much for being here today.

RAM CHARAN: Thank you. Bye bye.