what the ceo wants you to know - david ratcliffe

Pink Elephant – Knowledge Translated Into Results

What The CEO Wants You To Know

David Ratcliffe President

Pink Elephant

What The CEO Wants You To Know © Pink Elephant, 2016. All Rights Reserved.

Agenda

§  Insert text here 1.  Introduction To Ram Charan

2.  Overview of “What The CEO Wants You To Know”

3.  How Can We Apply What We’ve Learned To IT Services

4.  The Dragon’s Den of IT Services

5.  What To Do When You Return To Work

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What The CEO Wants You To Know © Pink Elephant, 2016. All Rights Reserved. 3

About The Author: Ram Charan

According to Wikipedia: §  Charan worked in his family's shoe shop in northern India

while growing up. §  He earned a degree in engineering from Banaras Hindu

University and later studied at Harvard Business School, where he was awarded an MBA (1965) and a doctorate (1967).

§  Before becoming a full-time consultant in 1978, he taught at Harvard Business School, the Kellogg School of Management and Boston University.

§  Charan has consulted for many well-know companies such as GE, KLM and Bank of America.

§  He is the author of various popular books on business, including “Boards That Deliver”, “Boards At Work”, “Every Business Is A Growth Business”, “Profitable Growth Is Everyone’s Business”, “Confronting Reality, Know How & Execution”.

§  Charan is a workaholic, is not married and has no children. At age 67 he recently purchased his first apartment – in Dallas, TX. Before this purchase he did not have a home and spent every night in a hotel or associate’s residence. Regardless of his location, his assistants in Dallas send him new clothes via courier and he returns dirty laundry to them.

§  Charan was elected a Fellow of the National Academy of Human Resources in 2000, and named a Distinguished Fellow in 2005.

§  Charan is also a Director of Austin Industries.


“What The CEO Wants You To Know”

§  Full title: “What The CEO Wants You To Know: Using Your Business Acumen To Understand How Your Company Really Works”

§  “Once in a great while, a business book comes along whose startling usefulness springs from its simplicity.”

– Fortune

§  “One of the most user-friendly books of its kind . . . a veritable crash course in the basic fundamentals of good business, designed to empower employees at virtually any level. Clear, authoritative, and never condescending.”

—National Post


Other Books We Can Talk About Today

§  “What The Customer Wants You To Know: How Everybody Needs To Think Differently About Sales” by Ram Charan

§  “Execution: The Discipline Of Getting Things Done” by Larry Bossidy & Ram Charan

1.  Laser sharp focus & dominant priorities

2.  Know the guts of the business 3.  Right people in the right jobs 4.  Managing a social system 5.  3 core processes 6.  The habit of following through

§  “Leadership in the Era of Economic Uncertainty: The New Rules For Getting Things Done in Difficult Times” by Ram Charan - www.ram-charan.com


What The CEO Wants You To Know

1.  Overview of the book

2.  How the information & lessons described in the book can be applied in IT services

3.  What you should do when you get back to work

As we go through this 1st section think about how these lessons can be applied in IT services


Do You Understand & Speak The Universal Language of Business?

If not, it’s probably because of “silo-thinking”. You’re not a businessperson.

You need to look outside your silo.

What is meant by the phrase “Run IT like a Business?”

Business

Business Staff

IT Services

IT Staff


Some Terminology

CASH §  It’s the oxygen of any business §  In & out = Cash Flow §  Staff need to have a greater awareness of the

significance of cash flow management INVESTMENTS & ASSETS

§  Raw materials & finished goods – inventory §  Buildings, equipment, IT systems – fixed §  IP, know-how, people/training, customers, cash

reserve, etc.


Some Terminology

PROFIT MARGIN §  Gross Margin = Total Revenue – Direct Costs (Product) §  Net Profit Margin = Total Revenue – All Costs

(Business) VELOCITY

§  Turnover of goods by frequency, i.e. the number of times you can make, sell & deliver your wares.

RETURN §  ROA = Margin X (Sales/Assets) §  ROI = Margin X (Sales/Investments) §  ROE = Margin X (Sales/Equity) §  RETURN = MARGIN X VELOCITY


Relationships: Margin, Velocity & Return

Keep in mind: §  The best companies make 10% ROA §  The big mistake is to focus too much on Margin,

instead of Velocity §  The lazy product developers will look at premium

pricing as the way to get a quick return, instead of putting effort into operations (production, marketing & sales) so that velocity can be increased.

§  The cost of borrowing capital (for investments) is typically 10%+!


Some Terminology - GROWTH

What if there is no growth? §  Costs are cut §  Personal development

opportunities dry-up §  The best people leave §  Costs increase §  “Death Spiral!” What if there is growth? §  Energy & excitement §  Positive challenges §  Talent is motivated &

attracted §  Greater revenues §  More growth!

Change For Bad

Change For Good


So Far …

We’ve been told we must understand: ü  Cash ü  Return ü  Growth

But there’s one more …!


Customers ….

§  Clinical (empirical) data is not enough §  The best leaders must make direct contact with

customers §  Talk AND listen §  Then, focus on what customers have told you

they need, not what you think they need/want §  Certainty: You will be surprised at what you learn!


Business Acumen

Means understanding: ü  Cash situation ü  Profitable items ü  Non-profitable items ü  Velocity of products ü  Customers

The best business leaders demonstrate an intense focus on these fundamentals


Dragon’s Den Of ITSM

The CEO Dragon

The CFO Dragon

The CIO Dragon

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The CEO Dragon

Focus is on business objectives.

§  Do you know your current business objectives?

§  If not, where can you find out?

§  Make reference to specific business objectives in your proposal

§  Describe how the outcomes of your ITSM project will enable the business objectives

BE SPECIFIC!

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The CFO Dragon

Focus is on revenues and costs.

§  Make sure you know how much your project will cost

§  Be realistic when estimating costs

§  If the costs cannot be contained by the current budget – make sure there are very specific and achievable business benefits

BE SPECIFIC!

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The CIO Dragon

Focus is on IT resources and risks to IT performance and image.

§  Explain who will do the work

§  Explain what tools and resources will be needed

§  Explain how much time will be needed

§  Explain the potential impact on other projects

BE SPECIFIC!

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When You Get Back To Work

Key questions you should be able to answer: §  What were your company’s sales in the last year? §  Is the company growing? §  What is your company’s profit margin? §  How does your margin compare with your competitors? §  Is your company gaining or losing market share? §  Do you know your company’s inventory velocity? §  What is your company’s ROA? §  Is your company’s cash generation increasing?

When you can answer these questions you are speaking the

Universal Language of Business!


When You Get Back To Work

According to Ram Charan from “Leadership In The Era of Economic Uncertainty”

”As the leader of the IT function you should assume the IT

budget will be cut. You need to develop a strong viewpoint on re-prioritizing your projects.”

§  Projects related to compliance (interactions with the board, auditors and

the CFO) should be fully funded. §  Utility-oriented projects - Things that keep the lights on and the processes

running. §  Both of the above have the advantage of helping management sleep

better! §  Re-think all other projects - If there are still funds availabl,e focus on

those that create value, such as automation of data that can provide guidance for production, sales & marketing. This type of project helps others achieve budgets in the short-term.”


David Ratcliffe President

Pink Elephant

Email: [email protected] Web: www.pinkelephant.com

Twitter: www.twitter.com/pinkerdavid

Thank You. Questions?

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