by Megan Jewell
I recently read What the CEO Wants You to Know , and would recommend it to anyone involved in the business arena, whether looking from the inside out or the outside in. It discusses important things such as cash flow, velocity and how to view a business like an investor.
The book shows how to use the bigger picture to view a business and teaches how a company functions. Like a car engine, a business has many interconnected parts one has to understand in order to fix or improve upon it. Below are some brief notes from the book about mergers and acquisitions applicable to your focus on community and business growth. It gives you ways to recognize the signs of movement by companies already in your area, and insights into how those companies run and what can be done to keep them operating at optimum capacity, therefore benefiting your community as a whole.
Mergers and Acquisitions
- Most are based on synergies…mergers can combine or eliminate such things as duplicate departments
- Implementation of these synergies usually means cost reduction- which affects everyone personally
- Human cost is high, which is why many companies are moving into automation
- Implementation of these synergies usually means cost reduction- which affects everyone personally
- Healthy mergers hinge on consistent, predictable, profitable growth, sustainable sources of cash flow (generation of cash) and velocity (how quickly you can get inventory out the door to invoice)
- Diagnosis of problems keeps companies healthy
- Example of “consumer-driven 6-sigma” tool developed by Ford to help workers systematically diagnose root cause of problems that prevent the company from achieving its goals (i.e. customer service goal, any phone call should be answered within 1 st 3 rings; otherwise customer feels dissatisfied)
- Company’s business priorities must be clear and achievableDelivering results is what gives an organization energy, builds confidence and generates the resources to go forward
- No matter what your position in a company is- you need to be a leader of business and people
- duplicate departments
- Leader of business knows what to do
- Leader of people knows how to get it done
- harness the efforts of other people, expand their personal capacity and synchronize their efforts to get results link people’s actions and decisions to the right priorities
- recognizing the positive work that an employee does encourages them to continue to grow and expand their skills
- synchronize people’s efforts and link them to business priorities
Your Personal Results
- How do you get results?
- Link your own priorities to the big picture
- Look at “total business view”, this starts by knowing challenges your company faces
- What were sales during last year?
- Are sales growing, declining? What about growth picture?
- How are company profit margins? Growing, declining?
- How does your margin compare with competitors? Compare with industries?
- How about the company’s inventory velocity? Asset velocity?
- The company’s return on assets? Return= profit margin x velocity
- Is the company’s cash generation increasing or decreasing? Why that pattern?
- Is the company gaining or losing against competition?
- Don’t forget to look at external realities…things that could affect money-making ability
- CEO-share business priorities with employees; they can then do the work to accomplish them
Charan, Ram. What Your CEO Wants You To Know. Random House, Inc. New York . ©2001.