What the CEO Wants You To Know, Expanded and Updated: How Your Company Really Works - Hardcover

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Ram Charan is the coauthor of the bestsellng Execution and Confronting Reality, written with Larry Bossidy, and the author of Know How and ten other books.  A former award winning Harvard Business School professor, he is a noted expert on business strategy, execution, corporate boards and building a high performance organization.  He has worked with the CEOs of some of the world’s most successful companies, including GE, Bank of America, Verizon, Coca-Cola, 3M, Merck, Aditya Birla Group and Tata Group.

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The universal laws of business success . . . no matter whether you are selling fruit from a stand or running a Fortune 500 company.
Have you ever noticed that the business savvy of the world's best CEOs seems like a kind of street smarts? They sense where the opportunities are and how to take advantage of them. And their companies make money consistently, year after year.
How different is it to run a big company than to sell fruit from a cart or run a small shop in a village? In essence, not very, according to Ram Charan. From his childhood in India, where he worked in his family's shoe shop, to his education at Harvard Business School and his daily work advising many of the world's best CEOs, Ram understands business as few can.
The best CEOs have a knack for bringing the most complex business down to the fundamentals -- the same fundamentals of the family shoe shop. They have business acumen -- the ability to focus on the basics and make money for the company.
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What the CEO Wants You to Know captures these insights and explains in clear, simple language how to do what great CEOs do instinctively and persistently:
* Understand the basic building blocks of a business and use them to figure out how your company makes money and operates as a total business.
* Decide what to do, despite the clutter of day-to-day business and the complexity of the real world.
Many people spend more than a hundred thousand dollars on an MBA without learning to pull these pieces of the puzzle together. Many others lack a formal business education and feel shut out from the executive suite. What the CEO Wants You to Know takes the mystery out of business and shows the secrets ofsuccess used by business legends like Jack Welch of GE.

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How This Book Can Help You

Think back to your school days and the best teacher you ever had. The one who seemed to know everything about his or her subject and had something all the other teachers lacked: the ability to boil down the complex ideas of the discipline--whether it was psychology, economics, mathematics, or chemistry--so that you really “got it.”

Other teachers may have had a great depth of knowledge, or fancier credentials, but they couldn’t turn on the lightbulb over your head. Instead of making something complex seem simple, they did the opposite--they made it harder to understand.

I’ve been in the business world for more than fifty years, beginning when I was a child in my family’s small shoe store in India, then working as an engineer in Australia. From there, I moved to America, attended Harvard Business School, taught there and at Northwestern’s Kellogg School of Management and Boston University, and have been advising CEOs and serving on boards of directors at companies large and small around the world ever since. The one thing I’ve noticed in all that time is that the best CEOs are like the best teachers. They are able to take the complexity and mystery out of business by focusing on the moneymaking fundamentals. And they make sure that everyone in the company, not just their executive colleagues, understands those building blocks of business.

You could say that in doing so they have their self-interest at heart, since the company is more successful when everyone knows how the business works. But it’s not just the CEO who benefits. People feel more connected to their work and have greater job satisfaction when they really understand how their organization works. And as the company grows profitably year after year there are greater opportunities for them to expand their careers and make more money, and the company can make a greater contribution to the community. The same applies to a nonprofit or government agency. (See the box “Wait! This Is True of Nonprofits, NGOs, and Government Agencies, Too?”) That’s why the best CEOs everywhere work so hard to explain things. And that’s why I want to share with you, in the words of the book’s title, what the CEO wants you to know, so that you can learn, grow, and make a greater contribution to not only your organization but the world around you.

This Is Far Easier Than You Think

It turns out that business is very simple and very logical. There are universal principles that apply whether you sell fruit from a stand or run a Fortune 500 company. Every organization must serve its customers, manage its cash effectively, use its assets wisely, and constantly improve and grow.

These are the basics. This is business boiled down to its essentials. And those essentials are present in every company anywhere on the globe, despite differences of cultures, dialects, or government regulations. It’s always been this way. Think once more about your school days. Once you understood that the atom was made up of protons, electrons, and neutrons, you had the fundamentals to help you solve any chemistry problem.

 
Wait! This Is True of Nonprofits, NGOs, and Government Agencies, Too?

Sometimes people are surprised when I say that everyone needs to understand the fundamentals of business. They say they work for a government agency, NGO (nongovernmental organization), or nonprofit (such as a charity or volunteer group), and this discussion can’t possibly apply to them.

But it does, although some of the terminology is different.

Let’s take just one of the four key essentials of any organization--managing cash effectively. True, NGOs and government entities usually don’t sell things to generate cash, but still they must make sure they have enough money to operate both today and in the future. For a nonprofit, that money usually comes from donations; government agencies receive funding.

Similarly, just as in for-profit businesses, NGOs and government agencies need to manage their cash well. Otherwise they will cease to exist, in the case of a charity, or be reorganized or shut down, in the case of a government agency.

The takeaway is simple: all of us, no matter what we do for a living, will be better at our jobs if we learn how moneymaking tools are applied within our organizations.

I want to show you that it’s the same with business. When you know the fundamentals, you “get” the basics for how any business operates.

My goal in writing this book is to give you the benefit of my experiences observing how some of the most successful people in business think and act. You will see what they do to make their companies--and their people--world-class.

When I Wrote That This Is What the CEO Wants You to Know, I Meant It

You might be interested in the origins of the book.

Jacques Nasser, then the CEO of Ford, wanted his employees to know more than what it took to do their jobs well. He also wanted them to understand the entire business so that they could see where their contributions fit in and how they could help the whole company, not just their particular department.

He asked me to teach a course to a couple of hundred managers. On day three he sat in at the back of the room, and when we took a break he said: “This is exactly what I want, but it is going to take too long to have you teach everyone. I want you to write a simple, clear book capturing everything you are going to talk about.”

And so I did.

The best CEOs and street vendors think the same way. They know their cash situation. They know which are their most profitable items. They understand the importance of keeping their products moving off the shelves, and they know their customers because satisfying customers is what ultimately keeps you in business.

What your CEO wants you to know is how these fundamentals of business work--and work together--in your organization. By investing a couple of hours in this book, you will. Once you understand them, there is no limit on where you can go in your organization.

Before We Begin

While I wrote this book for everyone who wants and needs a greater understanding of how their organization really works, there are two groups I will be singling out for particular attention.

The first is millennials, those 83 million of you born between 1982 and 2000, the largest cohort who has ever lived. (You outnumber your baby boomer parents by more than 7 million.) Millennials are the drivers of the digital revolution and are now firmly ensconced in the workforce. Those of you who truly understand how your business works will soon be assuming top leadership positions in your organizations.

Business is always changing, but the basics remain the same.

The second is the business-to-business (B2B) salesforce. The reason for that is simple. There is an ongoing trend that is only going to accelerate. Rob Bernshteyn, CEO of Coupa--the cloud-based “spend management” software firm--calls it value-as-a-service. It’s the simple idea that every organization must deliver to the customer something that will lead to quantifiable improvement: this much in cost reductions, this much improvement in lead generation, this much of a rise in revenue, this much of an increase in employee retention, and the like.

In the coming years, every corporate purchaser will say, “You want me to buy what you are selling? Fine. Here are the very specific, quantifiable outcomes I want. Prove to me that you are going to deliver them and I’ll buy. If you can’t, I won’t.”

If you are selling or providing services to people who have this attitude, you have to...