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Leadership in the Era of Economic Uncertainty
Book

Leadership in the Era of Economic Uncertainty

Managing in a Downturn

Ram Charan
McGraw-Hill, 2008

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Editorial Rating

8

Qualities

  • Comprehensive
  • Analytical
  • Applicable

Recommendation

This short, pointed book by one of America’s leading management thinkers offers a checklist of to-do steps for managers who are coping with the economic crisis. Ram Charan covers all the bases: the board of directors, chief officers, operations, sales, research and development, and more. He offers direct, unambiguous, actionable advice for managing at each level, including: manage for cash, watch the numbers, know which customers to fire and recognize that annual targets make no sense when demand is unpredictable. Charan’s record as a coach to CEOs and as an author of best-selling business books speaks for itself. In this book, getAbstract finds that he more than lives up to his reputation, avoiding jargon, generalizations and lofty theoretical pronouncements to focus on what managers must do now for their companies to survive.

Summary

When Crisis Strikes, Covet Cash

In the midst of an economic downturn, monitoring and managing cash are among your most important responsibilities. Know your company’s liquidity level every day. Track your daily cash flow and weekly changes in working capital. Make sure that every executive who needs such information can get it. Calculate your cash break-even point and try to lower it. Centralization or decentralization of operations may help, depending on your company’s needs. If need be, cut your employee headcount prudently but expeditiously; don’t wait for a steep decline in revenue before commencing layoffs.

In the global slump that began in 2007, cash is king; managers confront an unprecedented lack of liquidity. The fate of the American auto industry should be instructive: Major carmakers basically ran out of money. Avoid that kind of wreck. Carefully manage working capital, considering ideas for asset sales and other means of generating cash.

Crisis Leadership

Boldness is a virtue not to be underestimated. Opportunities always exist in economic downturns. Take time to identify and protect your core businesses, customers and assets. Continue...

About the Author

Ram Charan is the co-author of Execution and Confronting Reality, and the author of What the CEO Wants You to Know. A noted expert on business strategy, he has coached some of the world’s most successful CEOs.

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    C. H. 1 decade ago
    Obviously a book intended for specific economic conditions, but it has some key points that are particularly important to us, such as managing cash carefully through many different practices. Charan does make sure that management knows not just to focus on the short term though with topics such as innovation and customer management both for the short and long term.
    Several points he makes align well with Constellation's Premiumizing the Overall Portfolio goal:
    1. Cutting products that are contributing only marginally to profits; this simplifies operations but also simplifies other less glamorous functions such as demand planning, customer service, inventory management, etc.
    2. Innovation as a way to prepare for better business conditions supports Constellation's strategy to build brands and business organically. Reserving the money and manpower to make this possible even in tough times helps companies recover faster and take better advantage of improved conditions before the competition is recovered enough to respond.
    Overall, I think this is a good basic review of strategies we should employ to keep Constellation financially strong enough to weather the current economic situation while preparing for economic improvement when it comes.