What the CEO Wants You to Know

RAM CHARAN

Reviewed by Jack

Like many American kids in the 1950s, I learned some basic business essentials via my paper route, such as having to collect payment from my customers before I could pay for the previous week’s newspapers. I have carried these hard-won principles of making money with me my entire career. The growing pangs I suffered at every new business endeavor could have been lessened, however, if I’d had a copy of Ram Charan’s What the CEO Wants You to Know in my bike basket or on the crowded counter of my record shop.

Ram Charan got his early education working in his family’s shoe store in India. He moved from that shoe store to working for a gas utility in Australia, then to Harvard for an MBA and also his doctorate. The author is now an advisor to CEOs and senior employees in Fortune 500 companies. As an example of his heavyweight status, Charan was the first outsider Jeff Immelt turned to for advice when he took over GE following Jack Welch’s departure. He is also the author or coauthor of many important business books including The Leadership Pipeline and Every Business Is a Growth Business.

What the CEO Wants You to Know, which runs a very readable 130 pages, offers a crash course in what Charan calls “business acumen.” The first half of the book serves as a manual, explaining a set of financial metrics that managers value, such as return on assets and cash flow. Charan then includes sections on international business and getting things done, as well as an eight-page action plan geared toward project implementation.

Charan concludes his section on business acumen with a section called “Understanding Your Company’s Total Business: How the Pieces Come Together.” Charan reasons that it isn’t enough to simply know the “elements of moneymaking” by rote. Instead, “people with business acumen don’t memorize these words like terms in a textbook. They understand their real meaning, instinctively sense their relationships to one another, and use them to create a mental picture. True businesspeople combine the elements of moneymaking to get an intuitive grasp of the total business.” Then a good leader can bravely face the complexities of the business world and set clear priorities for employees. Repeatedly, Charan warns, “Don’t let your formal education or the size of your company obscure the simplicity of your business.”

“Use this book to learn the language of business. Then put the book aside and practice until the fundamentals of business become instinctive, as they are for the street vendor.”

Many people begin their business careers in one area of an organization, like accounting or marketing, and generally move up within that silo, and may believe that basic business principles aren’t relevant to their specialty. Charan instead preaches that business acumen allows anyone to look at their organization holistically and make decisions for the common good of the organization. This is particularly important in a small business or in organizations that are committed to hiring within. So important, really, that new employees need only two things for their first day on the job: the company handbook and a copy of What the CEO Wants You to Know. JC

What the CEO Wants You to Know: How Your Company Really Works, Crown Business, Hardcover 2001, ISBN 9780609608395

WHERE TO NEXT? Here for teaching at a small business level Here for how to understand financials | EVEN MORE: How to Read a Financial Report by John A. Tracy; The Personal MBA by Josh Kaufman; Managing by the Numbers by Chuck Kremer and Ron Rizzuto with John Case