In Global Tilt, Ram Charan shows just how little Western business leaders understand the shifts in global economic power.
FORTUNE — You think you know all this: Global economic power is shifting from North to South. Emerging-market middle classes are surging; they’ll be increasingly urban and young. Governments worldwide are asserting stronger control over their nations’ key industries and resources. Business will never be the same. You’ve heard it before.
The great virtue of Ram Charan’s new book, Global Tilt: Leading Your Business Through the Great Economic Power Shift, is that it shows you how inadequate your understanding of these trends probably is. Yes, you know about them, but so did the many business leaders from North and South who failed to take advantage of them or who even got steamrollered by them. We all understand this shift is big; Charan demonstrates that it’s much bigger than many of us realize and will demand far more drastic changes to the way we run our businesses than most managers have dreamed of making.
While the shift affects virtually every business on earth, Global Tilt speaks mainly to managers from the North who have no conception of how deeply they must transform their business lives. The South, Charan shows persuasively, is a different world. (The dividing line, he notes, is about 31 degrees north latitude, which runs more or less across the tops of Mexico, Africa, and India.) Businesses in the South tend to be managed for cash, not for GAAP earnings per share; capital costs are high; companies are mostly private, not publicly held — all opposite of Northern norms. Social networks are radically different; cultural values governing loyalty, goodness, and advancement are unfamiliar; government’s role can be baffling.
Charan does more than just point out such differences, though he does that with strong examples. He also shows how successful companies are winning in a tilted world by changing the way they’re managed and led. He shows, for example, how Bharti Airtel, the Indian telecom giant, is building a dominant business in 17 African countries, and how CEO Manoj Kohli is doing it by mastering the local context in each one — social, economic, and governmental differences that require business model changes from what worked in India.
Most Northern organizations aren’t tuned to succeed in the South. Budgets and goals don’t match the boss’s lofty stated aspirations for winning in new territories. Performance appraisals aren’t aligned with what really wins in the South. Critical decisions aren’t made in the right places. Charan explains the inevitable failures that follow and the ways well-run companies are avoiding them.
Most sobering is Global Tilt’s extensive taxonomy of all the ways Southern companies are humiliating competitors from the North. Many people know how AB InBev BUD , with origins in Brazil, grew through energetic global acquisitions and eventually bought America’s sadly unprepared Anheuser-Busch. Far fewer people know about GMR, a multi-billion-dollar Indian company that is beating out Northern competitors for huge infrastructure projects worldwide because it can scale faster than they can. China’s Haier Group, uniquely among Chinese companies for years, focused on quality and brand; it’s now in 161 countries and is the world’s No. 1 appliance brand. Northern managers know these guys are good, but they suffer when they don’t appreciate just how good they are.
As in all his books, Charan tells and shows us how we must change, speaking with an authority few can match. He long ago established the virtuous circle of a top global consultant: Everybody calls him because everybody calls him. As a result, he knows more about these issues than any individual CEO. Charan isn’t bashful about telling managers what to do. Managers shouldn’t hesitate to do it.