Really Simple Book Review: What the CEO Wants You to Know by Ram Charan

What the CEO Wants You to Know by Ram Charan guides both employees and entrepreneurs on the best financial strategy for growth. It is an essential piece for a business leader intending to transform an organization's fortunes. There are several strategies that this book will present to you. Some of these strategies include;

· Universally accepted business language

· Insight on how best to run a business

· Improve your implementation of business strategies

· Transform your agenda

· Ability to tackle complex projects

You can use many formulas in gauging business growth. The best among these formulas is the P/E ratio that helps in unpacking the process of business growth. When the P/E value is high, then it points towards enhanced growth prospects for the business. It is also an indication that the buyer will have to pay more when buying from such a company. It is the best decision that one can take with the given information. In case the P/E is inconsistent, then it must be investigated through revalidation of the fundamentals.

A company's P/E ratio has an actual multiplier effect - It really can turn money into wealth.

There is also the need for the CEOs to ensure that both employees and shareholders make wealth when they connect with the company as opposed to just making money.

The book also illustrates that for correct business operations, then the right people have to be placed on the job. Coaching is also an essential tool in the execution process.

The CEO has to understand the business' fundamentals. It will help in establishing the present status of the business, which is essential for future planning for the company.

The four fundamentals are Cash generation, ROA, Growth, Customers.

1. Cash Generation

Cash generation refers to the differences between cash inflows and outflows within a business within a predetermined period. The company is supposed to maintain its finance team appropriately. In small organizations, maintaining a financial sheet is very easy. However, in large organizations with several stakeholders and credit systems, this might not be possible. 

2. Return on Assets

ROA is similar in concept to ROI, and ROE. This usually details information concerning the amount of money obtained from the business' assets. It also describes the amounts invested in the company and shareholders' values. It would be best if you also gauged the velocity of inflows and outflows.

3. Growth

From the book, you are supposed to understand the importance of growth in a business. The business has to be profitable and sustainable. To be able to get an accurate outlook of growth, you have to understand how cash occurs for the company and the number of returns obtained from assets. This book also directs CEOs on how they can make their businesses profitable when others cannot.

4. Customers

The CEO must understand his customers. When there is understanding, the CEO will be in a position to design the best services and products for the customers. The products must be able to meet the needs of every customer. You can achieve this by interacting with the customers directly. It explains why companies usually organize conferences with their customers.

The book also directs you on how to be the best manager in your organization. There are three key areas that you should consider.

1. You have to ensure business focus by making priorities known and repeating them often

2. You also have to build a formidable team. You have to assign duties to your staff depending on their qualifications.

3. It would be best if you channeled all the efforts towards the priorities of the business.

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Author: Ram Charan

Ram Charan opines that despite the size of a business venture, there is always a shared secret to success. It only takes a few business insights to be able to understand both small and big businesses. However, form the inward perspective, Charan states that companies are all the same. For all businesses, the CEO is driven by the same urge to generate cash. Other interests include Return on Assets (ROA), marketing, growth, and customers. When one studies all these aspects of a company, then he will be able to tell where it stands.

The process can be done by anyone when assessing the business. Experience is necessary for understanding how these fundamentals work effectively. These tools will help simplify complexities and make the assessment outcomes clear for all.