This is a very valuable book for all levels of business, particularly the aspiring young business person. What The CEO Wants You To Know, gives a concise, to the point perspective on what business is really made up of and how you, whatever you position, can influence the functionality and profitability of a company. Ram Charan was actually born in India where the economy is very competitive and street vendors are very common. Many of them have to use loans in order to purchase inventory and sell at very slim margins in order to make money. Ram Charan explains business using the street vendor model helping the reader understand the basic pieces of business including things like loans, inventory, margin, velocity and return on assets.
Once the reader has a good foundation for small business the reading advances to publicly traded companies, and how to prioritize a few items in order to make a positive change in enormous businesses. The basic methods of making money remain the same but communication and team work become challenging due to the number of people and specialized job duties. Mr. Charan thinks it is very important to create your own model of communication in order to keep every employee informed, and to eliminate the number of people and slug between where the businesses is happening and the decision makers. To illustrate these points he uses actual data and insight from many of the largest most successful companies in American History.
Below are several key points I highlighted in my reading of: What The CEO Wants You To Know
“The one thing I’ve noticed is that the best CEOs—the ones whose companies make money year after year—are like the best teacher you ever had. They are able to take the complexity and mystery out of business by focusing on the core fundamentals. And they make sure that everyone in the company, not just their executive colleagues, understands these fundamentals.”
“Money making in business has three basic parts: cash generation, return on assets (a combination of margin and velocity), and growth… Add consumers to these three parts of money making…and you have the core, or nucleus of any business.”
“Everyone in the company must be aware that his actions use cash or generate cash.”
“Return on assets is nothing more than profit margin multiplied by asset velocity.”
Return = Margin X Velocity
“The best companies have a return on assets greater than 10 percent after tax.”
“Many people focus on profit margin, but they overlook velocity. Here’s what makes successful CEOs different from many other executives: They think about both margin and velocity. This dual focus is the centerpiece of business acumen.”
“Business acumen helps a CEO choose the three or four business priorities (no more than five) that will retain customers and achieve all the important money making goals at the same time—all in the context of the real world.”
Purchase your copy of What The CEO Wants You To Know from Amazon by clicking the link provided.