FORTUNE 500 2007  
FORTUNE 500    

The strange existence of Ram Charan

David Whitford, Fortune writer

Charan knew this because he had been down to the plant in the middle of the night and read the gauges. He had also noticed that the man in charge of production was not talking to the man in charge of distribution; hence the leakage. In other words, he combined financial acuity with engineering know-how and an eye for the role played by interpersonal relationships to solve a vexing problem. Charan says now, "That's where this whole consulting thing really began."

Charan graduated in the top 3% of his class, a Baker Scholar with high distinction. He stayed to earn a doctoral degree, then joined the faculty. His students nominated him for a best-teacher award, an award he later won at Northwestern. But Charan never excelled at the academic research that leads to tenure at a top-tier school. He was interested more in cause and effect than statistical correlation. His aims were practical: How can I solve this problem? How can I help this person? This company? He began taking on more and more consulting gigs. Most B-school professors consult on the side; in Charan's case, it was his calling. Within a year of arriving at BU, having finally achieved tenure, he concluded, "This is not for me," and stepped into the void. He rented an office in Dallas, in part, he says, because the climate reminded him of India, but really for its central location. Not that he's ever there.

"Don't you ever, ever do that again"

What does Charan really deliver? Some people wonder about that. He is very good at unpacking complexity, at paring business challenges down to their essential elements, often with reference to lessons he learned years ago in the family shoe store. "I've been around Mike Porter and Gary Hamel and every strategy guy in the world," says University of Michigan business professor and Charan friend Noel Tichy. "Many of them get into this look-how-smart-I-am mode. You will never see that with Charan." If you're V.K. Gomber ("I am a strong believer that the businesses are simple"), you value that quality.

But there is a line between simple and simplistic, and some have questioned which side Charan stands on. Skeptics liken him to Chauncey Gardiner, the simple-minded hero of the 1979 film classic Being There, who gets a lot of mileage out of utterances such as "First comes spring and summer, but then we have fall and winter. And then we get spring and summer again."

If Charan is a fake he is an amazingly successful one. What defines his career, even more than the quality of his client roster, is its stability. This is his 37th year working for GE, his 33rd for DuPont. He worked with John Snow for 15 years before Snow left CSX (Charts, Fortune 500) for the Treasury Department; he has been with Ivan Seidenberg at least 20 years, and with former West Virginia Governor Gaston Caperton more than 30 years. Caperton met Charan at a Young Presidents' Organization (YPO) function in the mid-1970s and has been huddling with him ever since.

That is, through the sale of Caperton's once-tiny insurance company in the early 1990s after it had grown to become the tenth-largest privately held brokerage in the country; through Caperton's two terms as governor, during which Charan led talks with business, government, and union leaders on developing an economic strategy for the state; and now in his job as CEO of the College Board. "He's helped me in business, in government, and in the nonprofit," says Caperton.

One of the reasons people keep coming back is Charan's extraordinary devotion to his work. Years ago Charan was leading a workshop at Crotonville, GE's training center in Ossining, N.Y. It was after the merger with RCA in 1987. The employees were mixing for the first time, and things were a little tense. One of the GE guys found out that it was the birthday of one of the RCA guys and hired a belly dancer to mark the occasion. "The dance was just before lunch," says Jim Noel, formerly of GE, now a consultant. "She came in, did her little thing, and left. As we were walking to lunch, Charan came up to me and said, 'Jim,' and he was really serious--at first I thought he was joking. He said, 'Don't you ever, ever, ever do anything like that again.' And these were his exact words: 'Don't you ever defile the classroom in that way.'"

He's like a monk, suggests Caperton. Or a missionary, says John Mahaney, his editor at Crown Business (Charan has written 11 books on management; see "Charan in Print"). GE's Conaty jokes that while his company has extremely high expectations of its employees, "we do allow people to get married. We do allow them to have kids. We actually allow them to live in homes - even multiple homes, once they make some money with us - and we do allow them vacations and most of their weekends off."

Charan, however, has no discernible personal life. One longtime collaborator has dinner with him whenever Charan is in town. Charan's friend's wife used to join them but stopped. "My wife got to the point where she couldn't stand it anymore, because Charan could not get out of talking about business." Does Charan ever laugh? "Probably," says someone who has spent hundreds of hours with him, "but I can't remember. I pull back from my own appreciation of irony in his presence."

Charan had triple-bypass heart surgery in 1999. After the operation he took it easy for 11 days, then went back to work. He couldn't fly for a while but that was fine - he loves trains. Most of his clients never knew he was sick. Welch, who has had his own bypass surgery, did know, and worried. "Ram, what the hell are you doing here?" he said when he saw him soon afterward. Charan, though pale, was dismissive. By then he had already been to Europe and back once.

"He isn't doing anything"

Generalizing about what Charan does for his clients is tricky, but that lack of definition paradoxically is at the heart of his success. His method is no method. He is wary of abstraction and belongs to no school of management theory. "Converting highfalutin ideas to the specifics of the company and the leader - that's the trick," he once confided to me in an elevator. "The other part is working backward to define what the need is, and then searching for what helps. Then you bring it to common sense, and common sense is very uncommon."

That means no ready-made solutions. Instead, Charan brings observation, curiosity, and care. He lets his clients decide how to use him. Sometimes all he does is ask the right question. "I remember the first time he came to see me," says Caperton. "We were driving to the airport in Charleston, W.Va., and he said to me, 'Why are you trying to grow this thing so fast?' I was sort of shocked by the question. Three weeks later my financial guy came to me and said, 'We don't have money to meet payroll.' Charan realized we were growing too fast, that's why he asked me that question. That was a much better way to teach me, wasn't it?"

Or he might teach others which questions to ask themselves. Nick Taubman and Garnett Smith heard Charan speak at a YPO event in 1978. Advance Auto Parts (Charts, Fortune 500) was not a big company at the time - fewer than 200 outlets, less than $200 million in sales - but Taubman, the president, and Smith, his operations guy, had big plans. As the company grew, Charan was always reminding them not to lose touch with the stores. ("You just can't allow this to happen!")

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.