Beyond the 360: Identifying Our Next Leaders. Ram Charan Presents the 8 Skills of “Know-How”.

Evergreen leadership advice from Ram Charan. He spoke at a previous CSHRP Executive Forum (www.cshrp.com). The event focused on practical ways to identify leadership talent.

Fortune Magazine calls Ram Charan “the most influential consultant alive,” thanks to a reputation earned through more than thirty years of wise counsel to the top companies, CEOs, and boards of our time. Drawing on this experience, Ram has become one of the most popular business speakers/consultants in the world, speaking to distinguished audiences in a variety of venues. He is praised for being practical, entertaining, relevant and highly actionable—the kind of advice you can use Monday morning.

Mining the real ore from a team of leadership candidates requires more than the usual 360 assessment, according to Ram. It requires listening for essential leadership capabilities such as the ability to position and reposition a business and build a team, not just personal traits such as passion for the business or a divine discontent with the status quo.

“There’s nothing wrong with the process of the 360 but you need to take charge of the content of the 360,” said Charan, author of "Know-How: The 8 Skills That Separate People Who Perform From Those Who Don’t".

“One size does not fit all,” Charan said. “HR leaders are in a very critical position to influence the company by defining the specifics. The job of a business manager is not the same as other jobs, and one leadership job may be different from another.”

Charan advised to go beyond commonplace descriptors and be clear about the leadership abilities that are specifically called for in this era of rapid marketplace change. HR executives should be carefully influencing the content of candidate interviews, he said, watching carefully for evidence of the required skills and traits.

“We hire the leaders of our company, so we need to understand what critical leadership skills the company needs,” Charan said. “Then observe. You have to observe. You're not looking for a perfect person here – just the light, the interest, the natural inclination that comes out in conversation. If you see some inkling of a person’s talent in meetings, ask Is this person in the leadership queue? Can this person improve this natural ability?”

In Know-How, Charan laid out a comprehensive and practical approach to choosing and assessing members of a company's leadership team based on skills and capabilities. He identifies eight specific skills, saying that few leaders will have them all:

? The ability to position and reposition a company to make money. (Think of companies whose leaders have done it well, like Apple.)

? Connecting the dots by pinpointing and taking action on emerging patterns of external change. (Especially important in fast-changing industries like technology. Think Alphabet.)

? Getting people to work together by managing the social system of your business.

? Judging, selecting and developing leaders. (Work hard to continually improve your judgments on people.)

? Molding a team of leaders.

? Determining and setting the right goals.

? Setting laser-sharp dominant priorities.

? Dealing with societal forces beyond the market.

These skills are influenced by personal traits such as self-confidence and openness to new ideas, he says, but personal traits alone do not define a leader.

Identify What You’re Looking For; Then Watch For It

“What is it that you're looking for in a potential leader regarding the external environment?” he asked. “What is the skill, personality, and judgment you're looking for? How do you identify this potential in a human being?” Looking at the country’s successful companies, he noted that adaptability to external change is a central premise for a company to continue into perpetuity. Leaders must have the skills to see the pattern of change and position the business to make money in the emerging circumstances. “Companies with longevity are somehow able to get the right leader in the right job to make those shifts ahead of others.”

There is a need for a leader to be able to make connections with both people and concepts. They must have mental agility and continually build their knowledge base. “I would be interested in knowing their methodology of building a knowledge base. What is the nature of their curiosity? Is it to go deeper in a narrow path or to go broader? With that observation, you have a better sense of what is in the person's DNA.”

Some traits are easier to observe than others. Do they like change?

“That's an observable trait. Go further: Do they push for change?” Charan asked. “That's an activity we should be able to see in the early stages. The key is the divine discontent with the status quo. This is very observable in meetings. When someone says this business model is going to be obsolete in three years, what is the reaction of the boss? This new person has just challenged the inner security of this boss.”

“The ego here has to be very controlled,” Charan said. A person needs to be secure enough and agile enough politically to demonstrate the need for change and to communicate it well. So the questions must be: Is the person able to hypothesize what the required change will be, and do they have the inner personal security to push for it in the right way? Do they show humility in their routine behavior? Do they search for, listen to and help shape opposite viewpoints? Note the difference in this description compared to saying someone is simply “curious,” “intelligent,” “bright” and “strategic.”

Sift, Sort, Select

A good business leader is naturally curious but also has the ability to sort out what is important. While the person continually searches for external change from any source, does he have the ability to sift, sort and select what is critical? Charan says, “Candidates need to see the connections between seemingly unrelated things to identify the opportunities and threats on the horizon.“

Noting common behaviors of champion athletes, Charan said this is a natural habit or even an obsession among top leaders. “They are constantly working it through mentally, connecting things and looking for patterns that open windows for the business. That is a huge skill. You don't learn it in the eleventh hour but it can be honed.”

They search ideas from anywhere. “You can see this tendency in a leader’s early days. Are they a closed person or do they love to have the door open and engage people? The person has to love it,” Charan said. “If they don't love it it’s not a natural talent. That's my definition. They have a passion for searching the unknowns.”

It takes courage and good judgment, especially for country and functional managers at global companies, to see where the market’s going and also to see the role the company could play in that rapidly changing global market. Does this person recognize external forces and influence them?

Financial perspectives, of course, are critical as well. Inflation is here. How will the business continue to make money? What factors come into play? What is the long-term and short-term impact of repositioning the business? What is the importance of doing the pricing at the right time? What should be the goals of my business in the short-term? How are they linked or in conflict with the long-term goal?

“The person has to re-conceive or re-visualize in concrete terms what that market could be and how the business will win,” Charan said. “It takes courage to conceive what is not obvious.”

The Power of Observation

Don't waste time talking to the boss about leadership candidates in broad, descriptive terms. Talk about what they do, and zero-in on the people whose skills can be further developed. “You can get a concrete picture of a leader by talking to a lot of people who observe him or her. Then you should be able to say ‘candidates A and B are the ones to focus on.’”

In a one-hour interview, you can figure out whether the candidate has the vision, courage and skill to figure out what the market is now, what it could be, and what is the path to get there. Is there an inner drive to discover what is wrong with the status quo? Is this a person who really thinks repositioning is a fact of life? Is she on the attack or on the defensive? Do they understand money making? “You’re not looking for a person who walks on water, but they have to have the skills to think these things through.”

Build the Social Organization

A leader also must have the ability to build the internal social machine to get the company where it needs to be. A company may be more likely to place bad bets when there is no social infrastructure to act on the opportunities that are emerging. In today’s fast-paced market, leaders need to build bridges of information, especially across the top of the organization. “The leader must be able to build a team at the top.”

Some people have great difficulty in building teams – the control freaks, the people who bring in their own familiar teams and narrow people. Specifically Charan warned against outside consultants and finance/accounting area executives who haven’t demonstrated team-building ability. In contrast, he noted that Steve Jobs had established a 100-person close-knit team to advise him. “This 100-person team was the germ of his success,” Charan said. “It’s not easy to make one hundred people function as a team. It takes a special skill. In those hundred people, the turnover is almost nil. I’ve been told it's not the money. Under his leadership these people were connecting. It's brilliant that they’re connecting in that environment. It's like a drug. People see things they did not see. How exciting that is!”

The HR exec has to go beyond narrow or mechanical descriptors to see the person’s skills on the social side. A standardized test does not measure connectedness or a person’s sensitivities, Charan said. When building a team, make the judgment in the context of where the business team needs to go, then define what the team needs to look like, and then interview to find the right people.

Succession, Succession, Succession

People with a talent for leadership don’t grow on trees. Identify them at all levels and place them where they can nurture their abilities. Think, here's a great candidate -- where do I put her where she will develop fast? You only need to nurture a dozen or so to ensure the future. If you have chosen the right ones, they will nurture the rest.

Ask yourself, what will happen to this company if we don't have the right people making decisions? I’m saying that the process for identifying and assessing leaders may be fine, but defining the content of that process is crucial. That’s your job.