Book Value: The Ultimate Biz Toolbox

Two new books can help your staff better understand your business. And that might make you more money.

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The Ultimate Biz Toolbox

If your employees really knew more about how your business worked, wouldn't you make more money?

• What the CEO Wants You to Know, by Ram Charan (Crown Business, February 2001)
• Profit from the Core, by Chris Zook with James Allen (Harvard Business School Press, March 2001)

Stephen King -- yes, that Stephen King -- creates a wonderful image in his new autobiography, On Writing. Discussing how would-be writers can become real writers, King suggests creating a metaphorical toolbox that contains all the possible literary contrivances wordsmiths might need: similes, metaphors, descriptive language, dialogue, and so forth. By having all the tools they need at hand -- and learning how to use them correctly -- they will become better writers.

You might take the same approach with your employees. No, this isn't about helping them improve their writing. (Although if that is a goal, offer them the classic Elements of Style, by William Strunk Jr. and E.B. White, recently reissued in paperback. Or if they find that small but stern classic a bit off-putting , try Rewrite Right! Your Guide to Perfectly Polished Prose, by Jan Venolia.)

If your goal is getting them to better understand how your business -- or any business -- really works, Ram Charan can help enormously. Charan, a management consultant who has written or cowritten such senior-management books as Every Business Is a Growth Business and Boards at Work, breaks down business into its essentials in What the CEO Wants You to Know.

Charan, who holds a doctorate from Harvard Business School, writes clearly and uses easily grasped examples, referring to his family's small shoe store in India just about as often as he cites Ford Motor Co. To him, running a multinational corporation is not substantially different from being a street peddler or running a small shop. He makes the case that everyone who is in business has to concentrate on four things and four things only:

Cash generation. Is more money flowing in than out?
Return on assets. How much money is the business earning on the assets that it has in place?
Growth. Companies either grow or shrink. There is no stasis. But growth has to be profitable and sustainable.
Customers. Either they are happy with what you have to offer or they won't come back.

If your employees understand those four basic factors, as well as such related principles as inventory turnover and margins, your business will run better, Charan contends. Checks will get out of the mail room and into your corporate account faster, managers will understand the potential return on investment before they argue strenuously for a new plant, and employees will make an extra effort to retain your best customers.

Now, that may or may not be true. But it's like having chicken soup when you're sick: even though giving your workers a basic understanding of the business may not help, it can't hurt.

The second half of Charan's book, which contains standard career-building advice about how to advance in an organization, is less helpful. Still, handing this book out and suggesting that employees concentrate on the first half may actually have a big payoff.

And if any employees are searching for extra credit, have them read Profit from the Core: Growth Strategy in an Era of Turbulence, by Chris Zook with James Allen, two other management consultants. (Zook works with Bain & Co. Allen used to work there but is now CEO of a venture-capital firm.) The book makes a persuasive case that you should focus on what your company does best -- what Tom Peters and Robert Waterman called "sticking to your knitting" back in the 1980s and what Gary Hamel and C.K. Prahalad called focusing on "core competencies" a decade later. And intriguingly, Zook and Allen argue that paying attention to what you do best is the easiest way to spot inefficiencies within an organization.

If they want to learn about stocks
Your business is not the only subject of interest to employees, and you can help them learn about another valuable aspect of life: personal investing and the stock market. Direct them to the following six books to start putting together an equity-management toolbox.

Begin with the basics: The Only Investment Guide You'll Ever Need, by Andrew P. Tobias ; One Up on Wall Street: How to Use What You Already Know to Make Money in the Market, by Peter Lynch and John Rothchild; and Learn to Earn: A Beginner's Guide to the Basics of Investing and Business, also by Lynch and Rothchild.

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