I just finished reading Know-How. The 8 Skills that Separate People Who Perform From Those Who Don't by renouned management guru Ram Charan. Ram Charan advises some of the top Fortune 1000 executives including A.G. Lafley (Chairman & CEO, Proctor & Gamble) and Ivan Seidenberg (Chairman & CEO, Verizon).Here are some of the key points of Charan's book:
- Cash is King. Make sure to find out how each dollar spent translates into revenues, profits and most importantly cash flow.
- Your People are your Business' Top Asset. Recognize who your A players are. Groom and challenge these people. Find out who your underperformers are. Should you reposition these folks to get more productivity, or do you need to part ways with these folks?
- Conflict Management. Deal with your conflicts and see if there is a root cause (culture issue) that needs to be fixed. If you need to fix your company's culture, make this your priority. Take an active role in the culture change, as it will not happen without the leader.
- Make the Right Decisions. Be able to analyze your business at a macro and micro level. Understand what the numbers are telling you, recognize the external factors (competition, Wall Street, globalization, regulation, technology) that are impacting your business, know your relative strength to execute (cash position and human resources) and then make the right decision.
Reading Charan's book gives you an insight on the many challenges that a Fortune 1000 CEO has to deal with. Although the business case studies and examples and scope are very different than the challenges facing a startup, some of the advise applies universally.
Startup Translations.
- Cash is King.
Positive Cash Flow
Fortune 1000 company:
Shares rise. Company has war chest to invest in R&D and expand into new markets.
Shares rise. Company has war chest to invest in R&D and expand into new markets.
Startup company:
Against considerable odds, you have proven your business model. Ability to raise funds to expand your business through VC or private equity and charge towards an IPO.
Negative cash flow
Fortune 1000 company: Shares fall. CEO loses job.
Startup company: To be expected initially. Excess negative cash flow - company dissolves.
- Your People are your Business' Top Asset.
Fortune 1000 company:
Having a leadership pipeline can assure your ability to tackle new markets, opportunities, and competition. Without having the ability to attract, identify, nurture and challenge top talent, your business will stagnate.
Startup company:
You are understaffed. Each member needs to wear multiple hats and have a strong learning curve of different business disciplines. Having the wrong team members when each is carrying excess importance and weight is often fatal.
- Conflict Management.
Fortune 1000 company:
Comes with the territory. With tens of thousands of employees and multi-billion dollar business units, dealing with conflicts is a huge part of the job. Some of the key conflict areas are listed above.
Startup company:
Need a small dedicated team, and a good working relationship with your investors. Successful startup will have a low degree of conflict in terms of internal issues. External issues such as building a viable business, gaining revenues, and competition should be the primary focus of conflict. If the business plan or core team needs to be changed, then conflict may ensue and can be a major blow to the startup's prospects. Missed milestones or business strategy disagreements with investors can also lead to conflicts.
- Make the Right Decisions.
Fortune 1000 comany:
Information overload. Huge number of reports and versions of how each business unit is doing. Massive level in complexity as a strategic business decisions may need years to realize and is difficult to undo.
Information overload. Huge number of reports and versions of how each business unit is doing. Massive level in complexity as a strategic business decisions may need years to realize and is difficult to undo.
Startup company:
Little to no information. Flying without a radar. You are tackling a new business area without much or any historical data. Business decisions are made by gut-decisions and hypothesis and perhaps some target market surveys and studies. Due to flexibility and small size, can quickly modify business plan to adjust business to deal with real-world business conditions. Too many wrong decisions can lead to lost time, opportunity and cash.
Summary: Well written and well thought out. However, as this book is addressed to huge corporate leaders, not the best book for startups.
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