Wednesday, July 18, 2007

Ram Charan, Know-How and Early-Warning Signs

Consultant and former Harvard B-School Professor Ram Charan is the subject of an interesting recent Fortune profile, “The strange existence of Ram Charan,” saying “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.

His latest book is "Know-How: The 8 Skills That Separate People Who Perform From Those Who Don't." I've just started reading it. He spends a good part of the early chapters on positioning, and the issues, challenges, and skills sets necessary to correctly reposition companies.

I thought his list of early-warning signs that a company needs to consider repositioning itself was worthwhile, and includes:
  • Nontraditional competitors entering the market.
  • Competitors repositioning themselves. (In a very competitive space, a major competitor's change, even if wrong, will affect you, and you should at least monitor the change before deciding whether to adjust your positioning.)
  • New consumption patterns.
  • New customers.
  • Decline in current customer sales.
  • Changes in cash flow, particularly negative cash flow.
  • Declining margins.

I haven't gotten to the part, yet, about how to respond to these early-warning signs. I suspect the answer entails having the Know-How to succeed. But some of these issues are important for PR and marketing people to know so they can adjust marketing accordingly.

If new consumption patterns emerge, such as customers with more money looking for more stylish products, as opposed to rock-bottom prices -- well that becomes an issue for Wal-Mart and for Target (an example in the book). And sometimes the answer is not just more emphasis on media relations (as PR people tend to think) but a more systemic issue that needs a deeper internal response.

No comments: