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What the CEO wants you to know (2023)
- sonicanatidae 3y agoServing Customers has been the last thing on most companies minds for the past decade or 2. Dewey, Cheatum and Howe is a better example of the current "business" model of most companies. Source: I live in the real world, not the world of fiction painted in this book.
- stemlord 3y agoIt's what the CEO wants you to know not what you objectively should know
- maximinus_thrax 3y agohttps://en.wiktionary.org/wiki/Dewey,_Cheatem_and_Howe https://en.wiktionary.org/wiki/Dewey,_Cheatem_and_Howe Thank you for this, TIL. Also, I agree with your point, but the title of the book is still accurate, the content of the book is literally what the CEO wants you to know, not what you should know.
- sonicanatidae 3y agoDewey, Cheatum & Howe, was a common trope in The Three Stooges, which I watched a lot of as a kid. :)
- verifex 3y agoAlso a common trope on Car Talk, RIP Tom Magliozzi.
- sonicanatidae 3y agoTo be fair, the Tappet Brothers were probably around when the stooges were recorded. ;) I do miss the show though. It was one of the few that could still be labeled, good fun.
- TeMPOraL 3y agoOn the contrary - they are serving customers, the same way I serve dinner for my family. Diced, sliced, with juiceless bits thrown away, and leftovers given to chickens.
- sonicanatidae 3y agoIf you served dinner like they served customers, you would be apathetically serving cut up pieces of your family to the members that remain, while charging them an exorbitant price, then taking them to court if they dare post a bad review.
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- jimbob45 3y agoA sales rep who negotiates a 30-day payment term instead of a 45-day payment term is cash-wise. The company can get the money sooner and is able to put it to use elsewhere. Well yes but at the cost of the customer’s goodwill. Now you’ve potentially lost the customer in the long-term for an extremely low short-term benefit. “Premature optimization is the root of all evil” should apply to business as much as it does coding.
- hef19898 3y agoWait until you hear of full pre-payments for some B2B sales.
- nradov 3y agoThat really depends on the customer's liquidity and cost of capital. Some customers will be happy to take shorter payment terms in exchange for other concessions. Everything is negotiable. And many customers will agree to net-30 terms in writing, but then refuse to actually pay that quickly and dare you to cut them off.
- DonsDiscountGas 3y agoDeals with customers are always going to involve tradeoffs like this; if the 30-day payment term is standard but you offer an increase to 45-days that will earn some goodwill at the expense of those 15 days, for example. If a customer has a very different time-value of money than you do, giving them a discount for prompt payment could end up working well for everybody. It's also not a short-term benefit if they are a recurring customer. I can't seem to find the article now, but I remember reading about somebody buying food for their restaurant and getting 50% discounts for paying immediately instead 30 days later. There are some obvious drawbacks to this, but it's also easy to see how the restaurant can come out ahead with a discount that large.
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- HumblyTossed 3y ago[flagged]
- dang 3y agoOk, but please don't post unsubstantive comments to Hacker News.
- AndyKelley 3y ago> Charan makes a rather controversial assertion in the introduction to this section: if your company isn’t growing, then it is dying. The argument goes something like this: in a world that grows every day, a company that is standing still or doing ‘just fine’ is falling behind. A company that is overtaken by a competitor eventually gets boxed in. It loses many of its advantages over time. Charan’s conclusion: growth is imperative to business Counter proposal: how about we don't destroy our own planet.
- umeshunni 3y ago[flagged]
- throw10920 3y agoYou're right - GP comment is lazy and uninteresting, and frankly probably violates the HN guidelines. It shouldn't be here.
- kogus 3y agoIf I could change one thing about corporate culture, I think it might be this attitude of "success necessarily produces growth". There is nothing wrong with reaching a successful size and staying there. A good company charges money to solve a problem. The company only needs to be as big as the problem. Anything beyond that is just an exercise for investors. There is nothing wrong with that per se, but it should not be viewed as the only way to be successful. Having said all that, I don't think Charan's assertion is "controversial" at all. In fact it seems to be the default assumption in virtually every publicly traded company.
- skeeter2020 3y agoNot weighing in on either side of this debate, but from a systems perspective it can be incredibly difficult to keep a complex system in a fixed state. Businesses are no different, so if something is working to get you "up" to the local maxima (let's say this is the "right" size) it's really hard to predict when & how to keep you there, and instead keep doing the same thing that seems to be working. It's hard to find examples of companies that are static, outside of the largest public or government enterprises; most are cycling between growing and shrinking.
- OldGuyInTheClub 3y agoI take Charan with a huge lick of salt. He was a consigliere to GE's C-suites for years. He is a sort-of Erdős-for-business. https://money.cnn.com/magazines/fortune/fortune_archive/2007/04/30/8405482/index.htm https://money.cnn.com/magazines/fortune/fortune_archive/2007...
- office_drone 3y agoThat just makes it sound like he knows what he's talking about
- OldGuyInTheClub 3y agoI see your point. I was thinking about his wandering lifestyle and single-track mind. Maybe "Erdős wannabe" would have been more appropriate.
- n4r9 3y agoWow, getting strong vibes of Christoph Waltz' character in The Consultant.
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- darth_avocado 3y agoI for one would really like to know why the CEO gets paid so much, why are the employees not getting paid proportionally, why RTO is absolutely necessary, why the stock buybacks are necessary when investment in the business is going down, etc.
- piva00 3y ago> why the stock buybacks are necessary when investment in the business is going down Boeing is a very recent egregious showcase to how fucked up this behaviour can get. I'd like to live in a world where shareholders' returns are not the goal, just a side-effect of good business. I still cannot understand why stock buybacks aren't limited, actually I do not understand why it exists at all but since I'm not educated enough can't really argue with substance against it, it just doesn't sit right that a company (like Boeing) can spend a lot more cash flow on stock buybacks than R&D... R&D creates something of real value, stock buybacks just enrich shareholders (and hence, a company's C-suite), it's so self-serving that I really do not understand how it's even legal.
- titanomachy 3y agoCan't comment on Boeing specifically, but if a company has a bunch of cash on hand and doesn't have enough plausible projects to invest in that could return better than the benchmark rate, then I think it makes sense to return it to investors. Even in a well-run company (Apple?) it's reasonable to imagine that cash on hand could exceed the company's present capacity for new research projects. Scaling up an R&D department could take quite a bit of time, and it might not make sense to sit on that cash while they do it.
- coldbrewed 3y agoApple is an edge case because of their incredibly strong market position, and their ability to maintain such high profit margins should be inviting a bit more antitrust investigation. But in this case, I'll accede the point for Apple's buybacks. But while there are some cases that are still able to do stock buybacks while plowing resources into R&D, there are companies that are lagging due to ineffective or underfunded R&D (Intel) or are cutting safety critical corners (Boeing) to maximize shareholder return. These are significant companies that provide critical goods and services that aren't exactly fungible, and it would build a lot more trust in them and market systems as a whole to see them take the initiative to improve their situations over plowing money into buybacks while begging for public funding or regulatory exceptions.
- neilv 3y ago> A sales rep who negotiates a 30-day payment term instead of a 45-day payment term is cash-wise. The company can get the money sooner and is able to put it to use elsewhere. I don't understand using a sales rep as the first example. Don't you just tell the salesperson how their compensation is tied to deals signed, revenue, and the speediness of payments? Doesn't that formula alone tell you what the behavior will be? Agreed on the value of educating employees about what's important to the business, but isn't sales an exception, due to convention of how their compensation is structured?
- creaghpatr 3y agoComp is typically aligned to Revenue rather than payment schedule, unless the rep is involved in the A/R process which is unusual but not unheard of. The incentive comes from deal language standards for which exceptions must be approved by senior leaders for things like delayed payments or other arrangements. In the above scenario, the more likely situation would be the rep goes to bat internally for a 45-day term so they can close a larger or more favorable deal that management will be incentivized to approve.
- xarope 3y agoI'd say it's more common nowadays, otherwise it's easy to sell tons of stuff with 90 day invoices, take your bonus, and run off 6 months later with massive outstanding AR.
- titanomachy 3y ago> The new manager believed he could gain significant market share by cutting prices. He was successful—at first. Sales grew over the next three months, and so did the unit’s share of the market. However, the competition responded in kind... all the price cutting caused revenues, profits, and cash generation to shrink throughout the industry, hurting Global Building along with everyone else. Sounds like the system working as intended to me.
- klabb3 3y agoIsn’t it wonderful when business is more anti-market than straight up socialists and everyone’s like “yeah, that’s obvious”. Feels kafkaesque for sure.
- ndgold 3y agoIn every business the basic building blocks are always the same: 1. Satisfying customer needs better than the competition 2. Generating cash 3. Producing a sufficient return on invested capital 4. Growing well