Being the CEO is not easy. Today, I reminded a really good one that he’s got lots of room for growth. He’s got a clear opus, a strong core, and tons of energy for executing his unifying strategies. He’s missing one key strategy, however – He doesn’t know his numbers like a stone cold CEO has to.
R – E = P
I wrote this little formula on the board and asked him about a number of the numbers that contribute to generating revenue and eliminating/managing expense. He’s just a little too loose in his response to some of my curious questions around the drivers of his different divisions. He knows the num’s to some degree but not to the degree of mastery. You don’t have to be financial genius to be an effective CEO, friend. You do have to understand capital allocation, however, and be a master at deciding when it’s time to pull the plug on one and double down on another. You’ve got to make hard calls before the market makes them for you. The effective CEO understands that they alone are on the hook for deciding how and where to allocate capital.
You gotta know your numbers cold, leader. Do you?