What the CEO Wants You To Know: Comprehensive Summary - Commoncog

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What The CEO Wants You To Know

By Cedric Chin

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This is a summary of a great 🌳 tree book on the basics of business. This book is rather unusual because it acts as a condensed guide on business for employees looking to advance in their careers. Regardless, because it is not a long book, I recommend that you buy it for reference. Read more about book classifications here.<br>Ram Charan’s What The CEO Wants You To Know contains a remarkably concise explanation of how a business works. It is incredible. It took me five years to truly grok some of these ideas; Charan takes all of that and squeezes it into a handful of chapters: a cool 100 pages in the paper edition.<br>Charan’s book also plays into one of my longest-held biases: he thinks that an understanding of business basics is necessary for a good career. In my case, I didn’t have much of a choice: my career was heavily-weighted towards startups from the beginning. This meant that I had to evaluate potential employers as actual businesses, not merely as places to find a job. I had to know if a company would be around in a year, or three; I could not coast on brand-name recognition the way my friends could with larger companies.<br>Charan goes further, however: he argues that employees of all companies should have an appreciation of how their business works. If they do so, he writes:<br>People feel more connected to their work and have greater job satisfaction when they really understand how their organisation 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. (…) 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 organisation but the world around you.<br>This sounds a tad wishy-washy, but there are tactical advantages to this. In the past, we’ve discussed how you can’t ignore business models in your career. Understanding the fundamentals of business is but an extension of that idea: if we assume that incentives drive organisational behaviour, then understanding business thinking is a surefire way to align your work with your company’s underlying incentives. It’s the sort of thing that should lead to better career outcomes over the long term.<br>The good news here is that there really isn’t much to grok. Charan explains that every business is the same inside, and that there are really only four principles that you must understand. These principles apply to fruit stands and noodle stalls; manufacturers and multinational service firms.  They do not require special knowledge to learn.<br>This book summary focuses on these four principles. At under 200 pages,  What Your CEO Wants You To Know isn’t a very long book; Charan spends the second part after the four principles on execution details — things like hiring well and creating process and putting the principles to practice. This second half is much weaker than the first half because Charan has limited space for nuance. We’re going to skip that entirely.<br>This is ok, I think: if you want to learn business, you’d understand that nothing you can read in a book beats actual experience. Charan’s guide is merely the skeleton on which you may organise your learning. It was written with the beginner in mind.<br>Every Business Is The Same Inside<br>In every business the basic building blocks are always the same. This can be boiled down into four parts:<br>Satisfying customer needs better than the competition<br>Generating cash<br>Producing a sufficient return on invested capital<br>Growing well<br>That’s it. There’s all there is. But Charan writes:<br>Most people know how to do one or two of those things really well. True businesspeople understand all four parts individually as well as the relationships between them. Businesspeople have an insatiable desire to cut through to the fundamental building blocks of moneymaking.<br>It’s that last part that’s key.<br>Everything about a business flows from a nucleus of customers, cash generation, return on invested capital, and growth. This includes the little things that you — in your capacity as an individual employee — care about, like promotions and hiring, product development and inventory management, employee compensation and marketing spend. If the four-part core is unhealthy, the...