[HN Gopher] What the CEO wants you to know (2023)
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What the CEO wants you to know (2023)
Author : Tomte
Score : 40 points
Date : 2024-03-02 17:37 UTC (2 days ago)
(HTM) web link (commoncog.com)
(TXT) w3m dump (commoncog.com)
| sonicanatidae wrote:
| Serving 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 wrote:
| It's what the CEO _wants_ you to know not what you objectively
| should know
| maximinus_thrax wrote:
| 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 wrote:
| Dewey, Cheatum & Howe, was a common trope in The Three
| Stooges, which I watched a lot of as a kid. :)
| verifex wrote:
| Also a common trope on Car Talk, RIP Tom Magliozzi.
| sonicanatidae wrote:
| To 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 wrote:
| On 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 wrote:
| If 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.
| jimbob45 wrote:
| _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._
|
| 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 wrote:
| Wait until you hear of full pre-payments for some B2B sales.
| nradov wrote:
| That 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.
| AndyKelley wrote:
| > 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.
| kogus wrote:
| If 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 wrote:
| Not 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.
| janalsncm wrote:
| I agree with you, but it might be worth noting that a
| business which is not increasing profits in absolute terms is
| shrinking due to inflation. In other words if their costs
| increase 5% and their revenue increases 5% then a 5% increase
| in profits is expected.
| mistrial9 wrote:
| in the West this is related to money lending IMHO
| OldGuyInTheClub wrote:
| I take Charan with a huge lick of salt. He was a consigliere to
| GE's C-suites for years. He is a sort-of Erdos-for-business.
|
| https://money.cnn.com/magazines/fortune/fortune_archive/2007...
| office_drone wrote:
| That just makes it sound like he knows what he's talking about
| OldGuyInTheClub wrote:
| I see your point. I was thinking about his wandering
| lifestyle and single-track mind. Maybe "Erdos wannabe" would
| have been more appropriate.
| n4r9 wrote:
| Wow, getting strong vibes of Christoph Waltz' character in The
| Consultant.
| darth_avocado wrote:
| I 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 wrote:
| > 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 wrote:
| Can'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 wrote:
| Apple 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.
| piva00 wrote:
| > Can'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.
|
| Isn't that what dividends are for though? Stock buybacks
| distort the valuation detached from what the market is
| pricing the company, it still does not make sense in my
| mind.
| wdh505 wrote:
| Reasons for buybacks:
|
| 1)Buybacks can shake out the short term investors. 2)It can
| also signal that the company thinks its own stock is cheap.
| 3)It "has no effect assuming the market is perfectly
| efficient".
|
| And these reasons are repeated ad nauseum. I could see this
| be a thing if a hostile takeover is on the horizon, but
| poison puts are common when issuing debt, so no hostile
| takeovers have happened in a while. Basically I see a buyback
| as a way to take cheap money accessible by a company for
| investment, and the company uses it to finance shareholders
| to get a return elsewhere because the company isn't creative
| anymore. (Companies hit hard walls regarding physics when
| they keep r&d over their few cash cows over and over, and r&d
| is too risky to go to an area that they don't already have
| internal proficiencies).
| pizzafeelsright wrote:
| Why don't you tip 1,000%? Why not just a flat $200 tip when you
| dine out?
| office_drone wrote:
| > why the stock buybacks are necessary when investment in the
| business is going down
|
| The business theory answer is that buybacks are used when there
| is no better investment opportunity.
|
| Let's say the stock trades at 10 times earnings. Can you fund
| an internal project that's going to return 10% a year? [0] Can
| you buy another company that will return 10% a year? If not,
| then a buyback gives the best return to the company's owners
| (aka shareholders) because they owner larger slices of the same
| pie.
|
| [0] Plus a small cushion for risk. And not just "we project
| this will return $HUGE amount" but something that can
| realistically happen.
| neilv wrote:
| > _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 wrote:
| Comp 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.
| titanomachy wrote:
| > 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.
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