Book Name: What the CEO Wants You To Know
Writer: RAM CHARAN
It’s 11:00 a.m. on a workday in midtown Manhattan. To be exact, you’re at the corner of 48th Street and Sixth Avenue. (Only people who have never been here before calling it Avenue of the Americas.) The buildings that make up Rockefeller Center surround you. If you used your smartphone to call up an overhead shot from Google Maps, you would see you are a short walk from all the landmarks they show in the movies every time they want to establish that what is going on is taking place in New York City. Most of the theater district is to the west, and so are Times Square and the Port Authority Bus Terminal. The Museum of Modern Art is slightly north and a bit east, and almost due east is St.
Even if you have never been to Manhattan, you have probably encountered a similar scene where people were selling goods from tables and carts right there on the street. Anywhere you go in the world, you can find street vendors hawking their wares: Chicago, Mexico City, São Paulo, Mumbai, Barcelona, San Francisco, Tokyo, Seoul, Shanghai. If you bought something from them, you probably made your purchase quickly and went on your way. I bet it never occurred to you to think about their business. But if you do, you will notice something surprising.
When it comes to running a business, street vendors and the CEOs of the world’s largest and most successful companies think exactly the same way. The complexities of their businesses are different; their approach is not.
They never lose sight of the basics. Their intense focus on them is, in fact, the secret to their success. Like the street vendor, they have a keen sense of how a business makes money. And all of us need to learn how moneymaking tools are applied.
Remember Your Roots
Many successful CEOs have had experienced early in their lives similar to that of a street vendor, giving root to their business thinking. Leslie H. Wexner grew up working in his parents’ small women’s clothing store in Columbus, Ohio. Think of the challenges faced by small, independent retailers like Wexner’s parents. They have to decide what customers to try to attract and how to draw them in; what merchandise to offer; where to buy it and how much to buy and at what cost. Then they must figure what to charge and how to design and arrange their store.
They have to put in long, long hours because every decision matters. His parents’ small store is where Les Wexner learned the universal language of business and first tested his business thinking. In studying his parents’ accounting ledgers while they took a rare vacation, he realized that only a few of the items they offered were profitable. He kept that thought in mind when he eventually opened a women’s store of his own in Columbus, one he called the Limited because he only stocked profitable items. He still thinks the same way even as the Limited has become L Brands, a $13 billion retailer that earns more than $2 billion a year from its Victoria’s Secret, Pink, Bath & Body Works, La Senze, and Henri Bendel stores. Growing up in a small business, you can’t help but absorb the fundamentals.
How About You?
You may not have grown up in your family’s business. And chances are you’ve built your career in one area of your company, such as sales, finance, or production. These specializations, usually known as business functions, are sometimes also called chimneys or silos.
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