Some people have worry beads. Others have framed photos of their kids, a Bible, or a comforting CD as their touchstone when they’re out on the road, away from everything they miss and love. But for Ram Charan, one of the world’s most renowned management consultants and authors, the symbol that all is right with the world is exactly the thing that can send most people’s blood pressure soaring. It is the small wheeled black suitcase, lurking just outside his frame of vision, waiting patiently to be transported once again. It is this suitcase that is Charan’s closest companion as he crisscrosses the globe in search of the next vexing business problem, the next needy executive.
Ram Charan is a knight errant of the 21st century, choosing to live nowhere and go everywhere in his quest to help businesses solve their thorniest conundrums. He does not own a home–or even rent one–has no nuclear family or significant material possessions, and he has his assistants FedEx his clean clothes to him. He doesn’t play golf or vie for the best tables at power lunch spots. Irresistibly drawn to the corporate world’s danger zones, he is in perpetual motion, working for the largest and most powerful companies seven days a week, 365 days a year. Most people would call such an existence bizarre, but for Charan, it’s the ideal life. “I tell you, I am a lucky man,” he says, brown eyes sparkling like his ever-present cuff links. “I get to do what I love to do.”
What Charan loves to do–what he has concluded is his life’s purpose–is to solve business problems. With his plainspoken, Socratic approach, he helps demolish organizational silos or persuade entrenched executives to change their points of view. He has written or cowritten 10 books, including the top-selling Execution: The Discipline of Getting Things Done (Crown Business, 2002), with Larry Bossidy, and his latest offering, Profitable Growth Is Everyone’s Business: 10 Tools You Can Use Monday Morning (Crown Business, 2004). Unlike most consultants, he has no Web site, newsletter, or marketing team. His business comes by word-of-mouth referrals. “He is an Indian guru who found that consulting was his life’s calling,” says Noel Tichy, a professor of organizational behavior at the University of Michigan who has worked with Charan for more than 20 years.
This almost religious devotion to the altar of commerce has brought him much earthly prominence. Charan, 64, has become an indispensable right-hand man for hundreds of top managers. After Jeffrey Immelt took over from Jack Welch as CEO of General Electric, for example, the first outside person he turned to for advice was Charan. Equally telling, he serves as a minister without portfolio; companies seek him out for his “wise man” approach rather than choosing a consultant with a narrow specialty in reengineering or organizational behavior. He’s considered such an asset, in fact, that many of his clients are willing to do something that’s awfully rare in the executive suite: to publicly acknowledge a consultant and give him the credit for helping them change their companies. “Ram will take an idea and make it better,” says John C. Hodgson, executive vice president at DuPont, which has been working with Charan in different capacities for close to 15 years. “I use him as a sounding board. I value his thinking, his creativity, and his unbiased view of the world.”
Unlike many consultants, who, as the old joke goes, will borrow your watch to tell you what time it is, Charan doesn’t reinforce his clients’ preconceived notions. Rather, he submerges his own ego, asks questions, and ultimately tries to bring the executive to his or her own “aha” moment. Although he has the stocky build and intense gaze of a prizefighter, his voice is low and unthreatening. Says Bossidy, former CEO of AlliedSignal and Honeywell and Charan’s coauthor: “Most [consultants] tell you what you want to hear. He doesn’t, but he does it in a very positive way. He’s not a ranter or a raver, but nonetheless he’s objective and honest.”
He also speaks in the language of a real person, rather than the Harvard-trained academic he is. Indeed, Profitable Growth is written so plainly that the lessons sound almost simplistic: To make your company grow, go for singles and doubles, not home runs; focus on organic growth, not acquisitions; get your customer involved through what’s called “upstream marketing” early in the process. Charan would rather distill a concept to its pure soul and put it into action than coin a lot of useless jargon. “This is nothing earthshaking,” he says. “When I teach, I start with the idea that every person in this classroom takes one idea home to practice. I don’t want to hear people say, ‘That was a great speech. What did he say?’ Conversion of learning into practice is what counts.”
Charan’s latest book is about revenues and growth, a concept that has gathered dust in recent years as companies tried to X-Acto-Knife their way to profitability. “Good” growth comes not from cost cutting or acquisitions, he says, but rather by retooling resources and improving cooperation within a company. Actually doing that is the hard part, and that’s where Charan seems to add the most value. He worked with Atlanta-based NDCHealth Corp., a health-care-information provider, to change the way it looked at a high-end product for processing electronic claims. Charan suggested starting by figuring out what exactly the customer–hospitals–needed, and then working backward from there, using the entire sales management team to brainstorm. As it turned out, the most crying need was cash flow: It took one hospital with $4 billion in billings more than 100 days to get paid. An NDCHealth offering allowed the hospital to cut 20 days out of the process, saving $20 million in cash in six months. “What we were able to do,” says Walter Hoff, NDCHealth’s chairman and CEO, “was change our attitude throughout the organization on what was the essence of the product.” By marketing its product as a cash generator, NDCHealth sold more than 400 units in the first six months of 2003, up from just 100 in all of 2002. Hoff thinks it will add as much as 20% to the company’s revenue.
Business in its most essential form–the family store–is in Charan’s blood. A native of northern India, Charan was raised in modest circumstances, part of an extended family of 13 that ran a shoe shop. One of just two children to complete high school, he worked in Australia before coming to Harvard Business School. There, he roomed with John Joyce, who 40 years later remains one of Charan’s closest friends. Joyce and others describe Charan in otherworldly, almost saintlike terms. It would be suspicious, frankly, if it weren’t so uniformly consistent. “He has a very refreshing absence of duplicity or guile,” says Joyce, who named his son Michael Ram Joyce. Even as a student, Charan was exceedingly mature and entirely rational. Joyce fondly remembers how he managed to negotiate their room rate from $375 per year to $248 because it was over the boiler room. “It was neither hot nor noisy,” says Joyce, “but the woman on the other side of the counter concluded that he was a gentlemanly fellow. His affability was a plus.”
In his second year at HBS, Charan was invited into the doctoral program. He decided it was an opportunity he couldn’t pass up, so he tailored his studies to fit the program and finished his MBA in 1965 and his PhD just two years later, becoming, he says, the first Indian on Harvard’s full-time faculty. Charan was a wonderful teacher but clearly wasn’t on the tenure track. (“I just didn’t do the research,” he says.) So he left for Northwestern’s Kellogg School of Management, where he spent three years before taking a tenured job at Boston University in 1976. By this time, his consulting career had taken off, and in 1978, he decided to pursue it full time.
And so began a whirlwind ride that, a quarter-century later, hasn’t slowed down a bit. Last year alone, Charan logged more than 500,000 air miles (a recent two-week stretch: New York, Cincinnati, Connecticut, Baltimore, Connecticut again, San Antonio, Wisconsin, Miami, and Singapore). He can’t remember the last time he took a vacation. And although he has two assistants who work for his company, Charan Associates Inc., out of an office in Dallas, it is more of a logistical hub for his frenetic schedule than a place where he spends any time. From there, they handle all of his bookings, keep him on schedule, and send him the freshly starched and folded shirts and clean underwear he’ll need for his next leg. (One of his assistants says the secret to wrinkle-free express mailing is to pack clothes in plastic.)
Perhaps because he’s unencumbered by kids’ soccer games or a wife’s birthdays, he is utterly reliable, and his equally busy clients respect him for that. A breakfast meeting on Sunday at 7 a.m. in Cleveland and a lunch in San Fran-cisco? No problem. “He’s very easy to get a hold of,” says NDCHealth’s Hoff. “I can call him anytime, or he’ll call me and say, ‘How’s it going?’ ” He is famous for never missing appointments, often scheduling several different flights simultaneously to make sure he gets out in time. Even on September 11, 2001, when he was stuck in Philadelphia, he hired a car and driver to get him to a meeting in Raleigh.
For most people, this lifestyle would be a brutal sacrifice. But to hear Charan tell it, it is his own priorities that are in order, not all those frantic executives who try to do it all and merely manage to disappoint and alienate everyone around them, from their neglected spouses, to their rushed customers and clients, to their friends who don’t bother calling anymore. “This is all vacation for me,” he says. “If you love your job, this is the juice of life.”
Probing, questioning, and digging into the psyches of others is Charan’s most successful technique. Yet when the tables are turned, when he is presented with an opportunity to hype The Brand Called Ram, the man grows suddenly mute. Few know anything about the personal side of Charan, and he clearly wants to keep it that way. “He’s a loner. He’s very reserved,” says C.K. Prahalad, the strategy expert. “A lot of people respect him, but I haven’t figured out who are his friends.” Ask him a question about, say, his hobbies, his lack of family or home, or even what motivates him to do what he does, and you’re deflected with a dismissive, or perhaps defensive, wave of the hand. “I don’t want publicity,” he says. “I’ve avoided that. This is not my purpose. The purpose here is that when I work for somebody, somewhere, can I add value?”
A reporter tries to burrow deeper: How do you know whether you can add value or not? “I don’t know,” he says, hand in the air. “That’s not me. I’m not the self-reflecting guy.” It’s rather unusual that you have no home or fam-ily. Is this on purpose? “Just leave that out,” he says. “I just have no family.” He is rumored to be taking care of his extended family in India, but that’s not an appropriate discussion topic, either. The only baggage he’s willing to discuss is the black bag in the corner of the room. His face clouds over, brightening only when he spies a copy of his book What the CEO Wants You to Know (Crown Business, 2001) on a nearby shelf. “That’s me,” he says, relieved to be on safe ground again. “This is it. That’s what I do. I love that book, because it gets to the guts of the business.”
The guts of the business. In an era when few people see much of anything that’s noble about business, Charan provides a much-needed antidote. For him, it’s about making a difference, in the same way that an athlete gives up everything to get to the Olympics or a nun renounces secular pleasures to serve a higher being. So what’s an-other lonely plane ride or a bulky suitcase, after all?
Sidebar: Getting to Growth: Charan’s Commandments
Some of the key ideas in Ram Charan’s latest book, Profitable Growth Is Everyone’s Business: 10 Tools You Can Use Monday Morning
Be a Rod Carew, Not a Barry Bonds
Charan went to his first baseball game just last year. But the metaphor he uses for sustaining corporate growth is to hit singles and doubles rather than home runs, to fund smaller projects that will bring in regular revenue. “In the past,” says DuPont EVP John C. Hodgson, who worked with Charan, “people would have looked down on a successful $50 million product, saying, ‘Why are you screwing around with that little thing?’ That is a giant change.” DuPont now gets 28% of its revenues from new products, up from 20% a few years ago.
All Growth Is Not Created Equal
Acquisitions aren’t always bad growth, but they usually are, as companies such as Daimler-Benz and Vivendi learned the hard way. Price-cutting to gain market share is another practice that hurts everyone and ultimately leads to shrinking profits and revenues. “Good” growth should be sustainable, organic, and capital efficient. That means both boosting profitability and developing new products, even if it requires a significant investment.
Productivity Goes Beyond Cutting
For Charan, the focus should be on revenue productivity, which is about boosting revenues from the same cost basis rather than reducing expenses. And to boost return on investment, the ratio of earnings divided by investment, most people slice the denominator. Upping the numerator by taking a hard look within a business and improv-ing existing practices is a much better way to go.
Build a Growth Budget
Charan thinks that in order to grow, you must create a growth budget that is segmented into short-, medium-, and long-term investments, with different levels of risk. Next, you divide them into projects that cut across silos and involve people across the organization. Finally, you review the growth budget the same way you review any budget, and kill the losers and add resources to the winners as time goes on.
A New Definition of Cross-Selling
This is not pushing more offerings on a client–the classic definition–but rather figuring out a customer’s most basic need and presenting a proposition that lets your existing products solve the problem. You start with a tool called the “market map,” which carefully segments customers into geographic, industry, or revenue groups and helps find the best opportunities. Then you can zero in on the highest-potential customers and try to tailor offerings for their specific concerns.
Jennifer Reingold (firstname.lastname@example.org) is a Fast Company senior writer.