What the CEO wants you to know
The ability to translate complex issues into understandable terms is a talent possessed by few people. One of those who have found a way to grasp the essence of an issue is consultant and author Ram Charan.
Once in a great while, a business book appears whose usefulness springs from its simplicity. In What the CEO Wants You to Know: How Your Company Really Works, Charan contends that all businesses, from a street vendor’s stand to General Electric, operate on simple principles. He says anyone can understand them. It doesn’t take a high-priced business degree, and your boss really wishes you would act as if these principles matter. They do.
In public companies, you can get the information fairly easily by studying the organization’s annual reports for the last few years. In private companies, Charan says management is usually willing to share this information. They don’t do it only because they believe people are not interested.
To understand your company better, Charan says you should be able to answer these questions, or be able to find the answers:
· What are your company’s sales?
· Is the company growing or declining?
· What is the company’s profit margin? Is that growing, flat, or declining?
· How does your margin compare with those of your competitors and with other industries?
· What is your inventory velocity? Your asset velocity?
· Is your cash generation increasing or decreasing?
· Taking all of this into consideration, is your company gaining or losing against competition?