I proposed an idea a number of weeks back that as each of us reads books or white papers on various subjects that we should post what we thought were the key points of the book and spread the wealth of knowledge obtained from the book. Many of you unfortunately were not provided the opportunity to hear this idea for reasons I will not go into.

Please note that although this is a long post I have tried to summarize a 140 page book into 2-3 pages which I feel is reasonable given the goal of what I'm trying to accomplish for book reviews.

This is very closely related to my post many months ago to hear what cool/effective ideas we are all implementing in the companies we all work for be it test planning, leading people, etc. As I read the following book I highlighted passages I felt were important and am now taking about 30 minutes out of my 1440 minute day to summarize. If even one person learns something or walks into their next job interview with questions they may have not thought of, the 30 minutes I spent are worth it in my mind.

There are many senior people on this board in leadership roles as well as individual contributor roles and there are junior-level people as well. Each of us has something to contribute to the audience of this board. Junior people may contribute ideas that a senior-level person never thought of and on the flip-side senior level people can provide ideas to junior-level people as well. The number of books and pages that all of us read each year is staggering yet keeping what you learn to yourself is a very odd practice. It would not surprise me there are 10's of thousands of pages read each year by board members. Imagine what is learned via reading?

There would be no books written if such an approach was taken in regards to spreading the wealth. Those who write books and white papers enjoy teaching others via a "push" of information rather than a "pull". Those who have to "pull" information points to a QA strategy that is not as effective as it could be. I will also note I'm using the by-the-book definition of QA. Waiting until a day or two prior to performing a task to actually understand how to perform that task is not an ideal situation yet it is very apparent this is happening quite often in our industry if we were to use this board as a gauge of the industry as it stands today.

I would again ask that as you implement new ideas or have processes that are already working quite well to inform your fellow colleagues in this industry of what works for you given your particular environment. I would bet my annual salary that people will learn and companies/department improve if each of us perform the trivial task of summarizing what we learn from books, white papers, etc.

If a variety of people on this board can find the time to pick apart incorrect grammar you can surely find the time to actually contribute something meaningful every so often. I sometimes pick apart spelling and grammar as well but I'm putting my money where my mouth is so to speak in an attempt to increase the value this board provides to the tens of thousands of people in the industry who are either members or lurkers of this board. I'm not waiting for a question to be asked and then answering but rather am pushing out information so one is informed from day 1. This is why many of us attended college, trade shows, etc. Obtain a solid foundation of knowledge in a timely manner and then execute rather than being in the middle of execution or just starting a task and not really understanding what is necessary to perform the task properly. In no way shape or form am I saying pushing information doesn't happen on this board....I think it was Smacl or Jake who posted some good papers on unit testing a long time ago....it's just that I'd personally like to see more of this on the board.

Book: What the CEO Wants You to Know

Author: Ram Charan

Ram's Background: He was one of the incredibly lucky people to be on the leadership team of GE and interacted with Jack Welch on a regularly basis for many years.

Comment from the CEO and Chairman of Dupont: This is a book that's been needed for years. Ram SHARES THE SECRET (i.e. enjoys spreading the wealth of knowledge he has obtained over the years) of finding your way in the business world and making your career more meaningful (i.e. his hope is that his experiences and lessons learned over the years can help others).

How I benefited from this book? I now have at least 5-6 new questions to ask companies I'm currently interviewing at to ascertain their business and current and future financial situation and company leadership.

Why is this important? Many of us have been in the unfortunate position of either having to lay-off team-members or even worse being asked to leave because of financial issues within the company. This is mainly caused by a lack of leadership within the company in regards to satisfying your customers while also having an eye for future industry/customer trends as well as the requests of either Board members or shareholders. Harvey MacKay of MacKay Envelope has some great words of wisdom in regards to how he's tried to run his company over the years and has some very pointed comments about company leadership and layoffs. For some unknown reason I use to read his newspaper column each week before I was even a teenager and I always thought he was someone who I felt knew how to operate a company. Search the web if you're interested in some of his ideas and approaches to business.

Having a good understanding of company leadership, growth opportunities and challenges, competitors and namely the differentiators between company <x> and competitor <y> provides you additional insight into the company during your decision-making process to either accept or reject an offer.

Points I felt were key

0. Ram feels that if the entire company has an appropriate level of business acumen the company has a better chance of succeeding and/or providing higher return on investment than if employees are sheltered from the details of the business they are in. I couldn't agree more. Within a matter of months the CEO at my previous company informed employees of the current financial situation, goals, challenges, etc. What this does is help tie together what you do and how this affects company revenue and profits.

1. Cash generation and income are different as there are many companies in the world who have accounts receivable and accounts payable. The timing of these payments affects cash generation. He gives an example of a company who was running out of cash and it seemed the only solution was to sell part of the business. Further investigation uncovered that rather than industry standard of 45-days to pay balance this company averaged 84 days. Consultants were not billing in timely manner and excuses for late payments were allowed on a very regular basis. If a company is not generating cash is it because investments are being made to grow the company, products are not selling or large inventories of product exist? A ton of money was spent to build the product yet, in this example, was taking 84 days to make a profit. This just got me thinking and my mind started rambling a bit but I'm going to start asking prospective companies how long they could stay in business if sales were to dry up. He mentions that even the mailroom clerks play a part in cash generation....the mailroom clerk must be timely in delivering payments to the Accounting department and likewise sending out bills in a timely fashion.

Why he feels this is important: When a company has its own money rather than borrowed money senior leadership are more inclined to make bold investments that have greater potential of rewards.

2. The difference between Return on Assets vs Return on Investment. I realized my previous company understood this when we had a building that could fit over 1000 employees yet was downsized and the decision was made to start renting out the building. The cost of building maintenance and upkeep was eating into profits.

3. Product Velocity. He states the faster products sells the higher the return. This is especially true in the hardware industry where computers/chipsets are often outdated within a matter of months/year. If one has built 500 computers yet the velocity of sales is a tiny fraction of inventory it is highly likely the computers would be outdated and thus competitors would have the edge on you who keep lower inventories. He gives examples of Dell and Amazon who had the notion of appropriate inventory and velocity down to a science and allowed high return on investment.

4. He mentions the centerpoint of business acumen of a CEO is those who know the difference between velocity and margins. If I were to ever work for a hardware company (computers, cell phones, etc) this would be something I'd make sure to ask.

5. He cites an example of where the sales team of a particular company was paid commission no matter if the company made money or was loosing money. This company also allowed the sales team to set the price of products. To retain business the sales team kept lowering the price of product which decreased profit margins. I started thinking to myself "Oh my goodness....I couldn't even fathom a company operating in this manner but as Ram mentions it does happen".

6. Successful CEO's get out and talk to customers to stay abreast of their needs via 1-1 talks with the customer rather than filtered reports from the Sales Team. The first thing the CEO of my previous company who worked at GE for 16 years did was go on a worldwide trip to visit customers. One of the questions I will start asking "How often does the CEO go and visit customers?" This will give me some idea of his leadership skills.

7. During an interview I'll start asking more questions in regards to the companies current financial situation. No one wants to join a company that is months away from going bankrupt or realizes those who are funding the company have had it with the company and are not interested in investing any more money. This again goes back to the layoffs or getting a pink-slip. I left my first job when my boss mentioned we were in serious financial situation and 2 weeks later paychecks were delayed 1 week. Not a good company to be working for but it was my first job and it didn't cross my mind that I should be examining the company just as hard as the company is examining me as a potential employee.

8. What are the growth opportunities and goals for the company? Is the company about to go public and make shareholders millionaires? Does the company even set company goals and it's easy to trace department and personal goals to company goals? I've been in situations at various companies over the years where this never occurred. Department and personal goals were defined but company goals were never communicated to the company.

I know this summary is starting to get really long so I'll probably cut it off at this point but reading this book gave me some very good insight into the questions I need to be asking prospective companies in order to find out their financial situation as well as some general information about the business world.
I hope this helps some of you out.....it definitely helped me in a few areas.

Who will be the next person to publish a book review?