Wednesday, January 04, 2017

What the CEO Wants You to Know

What the CEO Wants You to Know: Using Business Acumen to Understand How Your Company Really Works

My rating: 4 of 5 stars

My favourite is Chapter 2 which has the title Every Business is the same Inside: Cutting through to Cash, Margin, Velocity, Growth, and Customers. I attended a seminar once on financial statements, the lecturer was very good but the allotted schedule was too short because the topic felt like basic accounting. It was a struggle to keep awake because there was all these terms and the table looks complicated for me to keep track of.

Having read that chapter I now feel that I finally get it even when I can’t remember anything after a year of non-use. Finance is not my area. In the seminar it is tables and terms I had to memorize on the other hand Chapter 2 gave me why a business makes money: cash, margin, velocity, growth, and customers. The book has formulas but it has no tables which may have helped ease my mind into it.

Ram Charan, the author, emphasizes never to lose sight of the simplicity. To make the point he adds anecdotes of street vendors some of which was his own experience in India and then he brings in anecdotes of CEOs including what seems to be his favourite Jack Welch of General Electric. Whatever the size of the business, the vendor on the street to big corporations, it will always go back to cash, margin, velocity, growth, and customers: the core. However brief a light bulb did light up in my head; complexity that scared me from understanding financial statements was designed exactly to watch the core areas.

The following chapters lost me and this I blame for the lack of experience. Individually the core areas are easy to understand they are important to the business. Understanding them collectively means to actually breathe it and I have never lived the life. The core nucleus of business is a required lens internally and externally, for self assessment and judging opportunities.

It is also worth noting that What the CEO wants You to Know advocates team. You, is encouraged to learn aspects of the entire business, know why and how money is made. Doing so I think they call it systems thinking though the term was never mentioned in the book. Points of view derived from career silos which is limiting in scope is highly discouraged. If the individuals in the corporation have a grasp of the bigger picture then they are better capable in helping to build a better one.

And speaking of not sticking in silos the book finishes by advising to never lose the human touch in reference to information sharing and management of people. Remember how to books swings between the vendor and the corporation; structures are indeed necessary to manage a growing business but never be trapped in it. Find the simplicity in complexity as it is always pointed out. The vendor and the corporation are built on the same foundations.

To use a basketball analogy a shooter is advised never to start practicing from beyond the three point arc. Doing so would teach the player awkward throws. It is more beneficial to stick where you can actually shoot even if its 3 to 4 feet away. Focus on proper release and follow through, after a few hundred shots then maybe go farther. Basics are important.

What the CEO wants you to Know is basic and I think it is important.