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Business

Ram Charan: Back to Basics

While in Florida earlier this week, I had an opportunity to hear Ram Chiran speak on the subject of driving profitable growth.

Charan’s presentation, building upon his book “Profitable Growth is Everyone’s Business“, focused on six key ideas:

  • Dominant psychology — It’s all about attitude. Does your organization focus primarily on costs or revenues. Where does management time get spent? If not on revenues, why not? Do your key customer contact points (e.g., call centers) think of themselves as the voice of the customer in identifying new revenue opportunities?
  • Upstream marketing — Don’t fall into the “one size, fits all’ trap. Continuously segment your markets, demand clear value propositions, and ensure that product development is linked in appropriately. He stresses that a critical skill missing in many organizations is the ability to segment markets — we all fall too easily for the simplistic view of market opportunity.
  • Growth budget — Be explicit in the P&L about the budget for growing revenues. Map the level of risk vs. time horizon for all of the growth projects. Make sure the right people are matched to the level of risk and time horizons and that their compensation is directly tied to results.
  • Cross selling — Understand your customer’s wallet and go for increasing share of wallet as the real opportunity. Learn your customer’s industry, processes, and internal decision making processes. Cited an example of the importance of increasing cash flow to a hospital organization — reducing receivables being a top priority of the CFO. A health care services provider figuring that out had unusual senior management access and receptivity.
  • Innovation — Instill the process of idea generation from both inside and outside the organization. Be thoughtful about the selection and nurturing of new ideas — again, management attitude is a huge influence. Consciously think through the commercialization aspects — but give the ideas time to develop and jell before being too demanding in that regard.
  • Core processes — Think about how the strategy, people and budget interact on an on-going basis and get the attitude right to be supportive of growth.

His presentation was very enjoyable — a reminder of how business isn’t complicated, it’s actually simple if you stay focused on the right things.

Be sure to read Jennifer Reingold’s article about Charan in Fast Company.