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managing books

The Attacker's Advantage

By Ram Charan

(Public Affairs, 228 pages, $31)

When top CEOs aren't sleeping at night, many turn to Ram Charan, a globe-trotting counsellor to senior decision makers. They are probably hoping he can tell them how to defend their empires from unrelenting challenges and dismaying uncertainties. But his message is they must take the offensive rather than think defensively, even if the right path is difficult to discern.

Taking control of uncertainty is the fundamental leadership challenge of our time … " he writes in The Attacker's Advantage. "The advantage now goes to those who create change, not just learn to live with it. Instead of waiting and reacting, such leaders immerse themselves in the ambiguities of the external environment, sort through them before things are settled and known, set a path, and steer the organization decisively onto it."

It can be a scary notion, and your initial reaction may be that he is dramatizing the situation. After all, we have heard calls for change many times before, including from Mr. Charan in his string of books. But he insists what's different today is structural uncertainty. The forces at work can explode upon your company, putting it at dramatic risk. We have seen companies whose scope has been drastically diminished relatively quickly – indeed some have been completely eliminated.

He suggests the structural uncertainty is both global and minute – "atomistic." With technology, in theory there are seven billion people – the entire population of the world – who can be developing an idea that can put you out of business. That is exaggerated, even if technically true, but he shows that the decline of Dell and fall of Nokia demonstrate the mighty can be hurt.

The single greatest instrument of change, he argues, is the advancement of algorithms and other mathematical tools that take advantage of modern technology. "Companies that have the new mathematical capabilities possess a huge advantage over those that don't, even those that have been highly successful in the past. They are not just digitized – they are math houses, as I call them, and they are creating structural uncertainty for all industries and the companies with them," he observes.

Google, Facebook, and Amazon were created as math houses. Apple became one after Steve Jobs returned to the helm. Those companies can take advantage of a detailed understanding of customers and a rich interactivity with them. Companies that don't join the trend risk everything, he contends.

But Mr. Charan isn't prized by CEOs for raising alarms. He points CEOs to the best strategy for moving forward and his books offers both broad, conceptual approaches and specific tactics. Here he argues for perceptual acuity, the radar for seeing through the fog of uncertainty. It involves noticing or sensing events, trends and anomalies that can have an impact on your organization.

Change doesn't wait for your annual planning cycle. He notes that Monsanto's executive team holds off-site strategy sessions 10 or 11 times a year, discussing what is changing in their competition or their food-production chain, from fertilizers and farming to eating habits.

Another possibility is to devote the first 10 minutes of every staff meeting to discussing anomalies in the external landscape. You might ask a different person to research a past, present or future structural uncertainty in another industry, to understand how such crises can affect other companies – and later, perhaps your own. This sensitivity to the seeds of radical change prepares you for the future.

He also urges you, like Jack Welch, to ask everyone you meet, "What's new?" Mr. Charan once replied: "Zero working capital." Mr. Welch was wary, asking whether he was just being sold some consulting, but was told about a manufacturing company that had managed that feat while competitors were using roughly 20 to 40 per cent of working capital to produce a dollar of revenue. Mr. Welch visited that firm to learn more, set a similar goal of zero, and when he retired, had saved GE several billion dollars in cash, which could be used instead to fund growth. Mr. Charan notes another CEO always asks others, "What's the most difficult thing you're experiencing?"

One of the positive examples he gives is Thomson Corp. (now Thomson Reuters) which in the mid-1990s realized its newspapers' revenue challenges resulted from long-term, structural change rather than the recession of that era and decided to shift into information services that could be delivered electronically, ideally by subscription, and eventually exit the newspaper business. They demonstrated what he calls a "mindset for offence," which can be rare. "Even with good intentions and a sense of urgency, going on the offence in the face of uncertainty is a stretch for many people," he observes.

But you need to be conscious of the blockages that prevent you from going on the attack – fear or the feeling you don't have the right people to tackle new fields – and find the courage to act. The book, with its zeal and the clearly explained, practical tactics it offers to gain the attacker's advantage, may help you build sufficient courage.

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter