The Frustrated CFO

The Trade Finance Prison

Theoretically, you can imagine an international business operating without a trade finance facility - no letters of credit, document negotiations, confirmations, etc. Your suppliers would be more than happy if you always pay in advance. On the other side of the equation, there are some desperate for product customers that you may be able to coerce into pre-payment plans, but, if you want to grow your volume, you will most likely end up extending them unsecured credit terms instead.

Let's pretend for a minute that we don't see the elephant in the room - the cost of working capital, which, under this stretched cycle of paying way before the product is received and collecting long after, turns into a painful burden on the profit margin. Let's ignore it and agree that yes, it is possible to conduct business in this way, especially if the company is cash-rich. It's possible, but dangerous and stupid for reasons too numerous to elaborate in one blog post. I'd say that the top 5 hazards of such modus operandi are as follows:

1. Risk that a foreign supplier will not deliver the product at all.

2. Risk that he doesn't comply with the terms of the purchase contract and delivers wrong goods of unacceptable quality and origin, in random quantities, too late or too early.

3. The danger of not receiving sufficient and correct set of documents that would allow you to claim the ownership.

4. Customer non-payment risk, which is always there when you give open terms, but especially if the payment is anxiously expected to come from abroad.

5. The overwhelming difficulties and costs of international litigation to recover your losses.

To mitigate these risks you need instruments that will protect you and an intermediary that will defend your trading fort. And that's when the trade finance divisions of various banks and financial institutions come into the picture with their Letters of Credits and related services. They can step in and be your guardian against the risks.

A Letter of Credit defines all conditions of purchase/sale, including documentary requirements; and only if these conditions are met, or when discrepancies are accepted, the money will exchange hands. So, the reality is that, you can have $100 million of free cash on your operating account, but if your business has an international exposure, you will end up engaging in Trade Finance relationships one way or another.

The trouble is that the banks know you need them and their benefits come with a price and many strings attached. Even if you only accept your customers' LC's, the cost of advising and processing services may be as high as 0.5% of the transactional value. If you buy product with LC's, then the costs could be as high as 2% (banks love this lucrative business). Yet, that's not the most strenuous part of the arrangement.

When a bank issues a Letter of Credit on your behalf, it takes an obligation to pay to the supplier even if your company goes bankrupt. Therefore, trade finance facility is essentially a credit line (most are utilized by LC's and advances alike). Obviously, to obtain any sizable credit line you must go through a grueling due diligence and you have to pay for it too: field exam, the bank's and your own attorneys' charges, closing fees - $10-12 million facility may end up costing around $150-$175K.

And even that is not the most painful part of the deal. The trade finance Credit Agreements are full of covenants and conditions that restrict your capital distribution, debt acquisition, treasury, operational management, and even dictate how the business is conducted. The banks demand collaterals and guarantees, including personal pledges from owners and their spouses. There are strict and voluminous reporting requirements.

And yet, we work very hard to get ourselves into the Trade Finance prison in order to facilitate our employers' commercial activities. The only thing we can do to ease the pain is to bitch and moan about the banks - a regular exercise of international-business CFO's around the world.

Ten Reasons Why "CFO Techniques" Is a Must-Read for Small-Business CFOs

Reason #1.

"CFO Techniques" was NOT written from an academic perspective, such as of a typical university professor with a consulting-for-large-business on the side.

On the contrary, it WAS WRITTEN by your fellow CFO, who utilized her postgraduate degrees in the small-business trenches. During more than 20 years of this hands-on experience, with the last 18 in CFO and Controller positions, she was fortunate to gain exposure to all facets of financial management and organizational administration. Just like the most of you, she knows only too well what it means to wear many hats at the same time.

Reason #2.

Yet, the author did not loose a constructive touch of a theoretician. In writing the book, she employed her:

• in-depth knowledge of the fundamental principles that govern all areas of corporate accounting and finance,
• methodical approach to all tasks that compile ever-expanding scope of a CFO's responsibilities,
• and ability to dissect the cause and effect relationships of various concepts.

The result is the crystallization of the vast experience into a streamlined functional system, easily adaptable to various types of businesses and industries.

Reason #3.

"CFO Techniques" doesn't try to rehash official regulations, statistical information, bits of hot technology news, results of narrow studies, and such. The book's mission is to spotlight the most important areas of a CFO's or a controller's functionality:

Reason #4.

These professional cornerstones are broken down into crucial components described in bite-size, easily digestible chapters written in a fun and lithe language. The book presents the most complex financial and accounting concepts in comprehensive forms,  which can serve as introductory aids for those who just attained their first controllership appointment and as concise refreshers for seasoned professionals.

Reason #5.

It is an unfortunate truth that millions of small businesses struggle (and frequently fail) to survive not because they are neglected by owners and managers, but because these hard-working people simply have no clue what exactly is wrong with their companies, where are the weakest points, which areas require immediate improvements. Smaller enterprises suffer the most from the lack, even complete absence, of business intelligence and performance analytics. "CFO Techniques" is a part of the author's personal crusade to help small and mid-size businesses by providing them with survival tools (analytical, budgetary, procedural, etc.) that don't require expensive and complicated software.

Reason #6.

One of the most unique and valuable devices offered within the book is the proprietary  chart

INCOTERMS FOR ACCOUNTANTS.

Originally developed by Eclectic & Dynamic Controllership Consulting (E&D CC) specifically for businesses involved in buying and selling goods, it expands the definitions of standard Incoterms to include such accounting notions as title transfer rules and description of applicable source documents, thus accommodating needs of proper revenue, COGS, and inventory recognition.

 

Reason #7.

One of the main underlying themes of the book is the necessity for small-business CFO's and controllers to raise themselves above the bean-counting stereotype and become critical thinkers, indispensable members of the executive management team. "CFO Techniques" emphasizes this pressing demand throughout every section and accentuates the tasks that may facilitate such transformation.

Reason #8.

While shedding new light on the day-to-day routines and spinning conventional accounting and finance tasks as crucial and indispensable cogs in the business machine, the author's functional system gives equal rights to new categories of CFOs responsibilities, such as company-wide Information Technology Management, Risk Control, and Strategic Planning.

Reason #9.

The book takes a holistic approach to multi-faceted positions of CFOs and controllers and supplements specific structural guidelines and practical functional advices with discussions of more general topics applicable to any senior professional operating in private-business environment. Among others, it includes observations and suggestions on how to deal with people on different level of corporate hierarchy and what changes to expect in your future, even if at the moment you feel 100% secure.  

Reason #10.

Even if you don't learn anything new, or if you'll find the book not applicable to your specific professional niche, at the very least you can entertain yourself with the multitude of eclectic cultural references and business insights from the author's personal experience woven through the book's text.

Respect Your Audience: Reflections Triggered by Matthew Good's Concert at Mercury Lounge

Let's face it - most of business professionals, including CFO's and controllers, like hearing themselves talk. Frequently, we cannot stop ourselves, going on and on about some business matter, or bitching about some subordinate, or superior, or peer. Presentations are too long to hold listeners' attention, pitches are unfocused, emails look like novellas, and meeting speeches are self-aggrandizing. There is no denying - that pervasive affliction of humanity, narcissism, is inescapable.

The sad truth is that by doing this we depreciate ourselves - people see it as overcompensation for hidden insecurities. Moreover, such behavioral tendencies give the listeners a good reason to be dismissive. They will feel disrespected and resist to be receptive.

However, even with that affliction sometimes obstructing our way to successful communications, most of us have enough common sense and professional experience not to offend our audience with outright insults. The nature of our positions forces us to be diplomatic. We are in the business of dealing with brash bosses, prima-donna sales people, sensitive customers, important bankers, strategic suppliers, valuable subordinates, and whoever else the job brings into our habitats. The words we use and thoughts we express have a potential of affecting our company's business in a positive or negative way. So, we'd better be respectful, and, most of the time, we are.

These thoughts kept popping into my head last week during Matthew Good's concert at Mercury Lounge. The whole experience was a bit strange. I've been listening to this Canadian rocker's beautiful music, channeled through his amazing vocal and guitar skills, since the 90s (God bless them!). Now, standing right in front of the tiny stage, I've observed a 40-year-old (looking over 50), kinda balding, kinda pudgy, unkempt man, who managed to down three large glasses of gin in a span of 90 minutes. 

It was unexpected, but I really-really don't care what people look like as long as they do their job well. And I've got to say, when Mr. Good sang, it made you forget everything: his age, your age, what he looks like, and what you look like now, and all the shit that happened in 20 years since you first heard him. The trouble was the man sang only half the time.

Dana Carvey once said that all comedians want to be rock stars; apparently, and vice versa. Matthew talked after every song (literally): SNL sketches, whooping cough epidemic in Vancouver, one of his kids being a bastard, postnasal drip, Lance (his guitar Dobby/drinks server/on-the-road chef), hot dogs - what have you. I was standing there thinking, "Dude, do your job, sing. Have some fucking respect - it's midnight on a Wednesday night, some of us worked all day and have to work tomorrow."

It got worse: as the blood alcohol level was rising, his widely known political side started coming out. When he began throwing accusations regarding American government's shadiness mixed with condescending remarks like, "You should know what your government is doing" into the audience (thanks, dude, without your Canadian ass I wouldn't know how to form political opinions!), someone else voiced, "What about your government?"

But at the end, it was an issue related to his own music, with which he hit the ultimate low of disrespect. The exhausted, but still forgiving fans started throwing song requests at him; some from The Matthew Good Band's first album "Last of the Ghetto Astronauts." "There is a better chance for my starting chewing crack than for your forcing me to sing anything from that album. Common, people, admit it - that was crap written by a 24-year-old." This is to those who bought the album and listened to it since 1995, plus many members of the audience who are in their 20s now, yet know every word of lyrics you wrote when they were wearing pampers? How offensive is that?

Essentially, touring musicians are in business of selling their albums and solidifying their fan base, thus making sure that people will buy tickets again and again. In that, they are not much different from other business professionals.  The way I see it, they should be afraid to lose their paying customers the same way we do. Alas, Matthew Good thinks differently. Well, I'm not buying next time.

Audit Season Woes

As a corporate controller, CFO, and consultant, I've been on auditees' side of the table for the past 20 years. Yet, I still remember the gratifying excitement of coming to a company as an auditor and testing the depth of my expert knowledge in an unfamiliar territory, quickly absorbing the business's specifics and immediately identifying the scope of testing. Well, Ok, I've been called a "show-off" and "know-it-all" many times, so forget me. Over the years, there were other public accounting professionals (not many, but some), who impressed me with their knowledge and sharpness, but it doesn't happen anymore.

I've been complaining about the decline of the quality of work across all jobs, from customer service representatives on the phone to the cardiologists in fancy hospitals, for years. But somehow I still get very frustrated when I encounter the same trend in my own profession. I cannot even explain why. After all, I am very conscious of the managerial accountants' limitations. The main reason for writing "CFO Techniques" was the desire to fill their knowledge gaps. Just a few weeks ago I wrote about The Unimaginable Abyss of Accounting Ignorance in the small-business environment. So, I should not be surprised when I am faced with the same situation while dealing with financial auditors. Nevertheless, it still gets me.

It's audit season, so in the past couple of weeks I've been helping my client (a young company) to go through their very first independent year-end examination of books and records. It's conducted by a small CPA firm hired before my consulting engagement commenced.

Under my guidance, the client's accountants did what I always advise to do in preparation for an audit (see Chapter 30, What Guarantees Fast and Painless Audit, in "CFO Techniques"), i.e. they loaded the appointed auditor in advance with statements and schedules of data required to make all testing decisions. He definitely had time to prepare well.

The client is an importer of raw materials. So, the revenue/cost recognition and cut-off tests are very important. Accordingly, the auditor gives a list of sales and purchases he wants to test. We provide all supporting documents to verify the propriety and accuracy of each transaction. After a little while the auditor knocks on my door with a bunch of papers in his hands. "How do I know," he asks timidly, "if these invoices have correct dates?"

Inside my head I scream, "Are you fucking kidding me?" But this is not about my frustration, this is about my client. So, I calmly explain that he needs to compare the recording dates with the source documents proving the product's ownership transfer as defined by Incoterms. I go further and demonstrate with one of the selected items: this sales order states CIF (cost, insurance, freight), which means that the customer owns the product as soon as it's loaded on the transport; hence, your source document is the Bill of Lading (BL) attached right here to the Commercial Invoice and the Packing List; the BL's date is the sale's date.

He soon comes back with another file and he is very apologetic, "I am sorry, could you explain this to me again? I never heard of those... terms... before. What did you call them?" I help him out, "Incoterms?"

Will somebody, please, explain to me, since when it's Ok for an auditor, who is responsible to lenders, investors, and other outside users to verify the correctness of books and records, to come to the client without the full knowledge required to perform his tasks? Why is he not even embarrassed to admit that? Why the hell in 2012 it did not occur to him to get his ass onto the world wide web, as soon as he heard the word "Incoterms" from me, and study them?

I guess, that would be too much to ask. Hey, he didn't even know what a "metric ton" was and asked me for the ton-to-pound conversion ratio instead of finding it by himself. He continued coming over, I continued providing him with definitions and rules. At some point he got so comfortable with this teacher-student setup, he even asked my advice on how to "test for prepaid expenses." Seriously? Did he forget that I was their from the client's side, essentially being audited?

And here I have to bring up my book again. There is Chapter 29 in "CFO Techniques" called Choose Your Auditors Wisely... Dear business owners, CEOs, CFOs, and controllers, please, read it if you want to avoid paying $25,000 - $100,000 (average range for small businesses) for low-quality accounting services.

Ten Reasons Why "CFO Techniques" Is a Must-Read for Entrepreneurs

Reason #1.

You are a part of a proud cohort of just a few millions of people who summoned their courage and said, "I will not work for the Man anymore! I will be my own boss!"

While your company is growing, it will need to keep its overhead lean. Meanwhile, you can use "CFO Techniques" as a surrogate for a seasoned executive that will provide you with clear guidelines for financial and administrative management.

Reason #2.

Don't let the title fool you. "CFO Techniques" is not a bean-counting manual. It's written with a view to achieving commercial success and places business considerations ahead of everything else.

Reason #3.

It will arm you with a flexible framework for structuring your business in a logical and sensible way.

Reason #4.

"CFO Techniques" is not an academic textbook either. It manages to shed new light on various aspects of finance and business in a fun and easy language. The book is organized into a bite-sized chapters sprinkled with familiar cultural references and illustrations from the author's professional life.

Reason #5.

Yet, it's packed with practical advice,

instructive suggestions, step-by-step guidelines,

checklists,

and visual examples.

Reason #6.

"CFO Techniques" will provide you with a comprehensive breakdown on acquisition of capital resources necessary to sustain and grow your business.

Reason #7.

An entire section of the book is devoted to assessment, reduction, and transfer of the internal and external risks your company may encounter in a normal course of business and in extraordinary circumstances.

Reason #8.

"CFO Techniques" will show you that one of the most critical determinants of whether your company will fail or prosper is the active attention to its performance. The book rejects the rigidity of the uniform approach to business intelligence and underscores the importance of selecting specific indicators that will have the most significant impact on your decision-making process.

Reason #9.

Anticipating your furture needs, the book describes the fundamental steps of strategic planning and basic techniques for explorting opportunities as well as diminishing external threats.

Reason #10.

And when you are looking to hire a CFO, a valuable member of your executive team, the book may serve you as a benchmark in evaluating the candidates' breadth of expertise and depth of knowledge.

"CFO Techniques" Technical Reviewer's Comment for Small Business CFOs

LinkedIn Groups

• Group: Small Business CFOs
• Discussion: How important is to have a Policy & Procedure for a small business?

"Marina Guzik references her recently published "CFO Techniques" book, and it truly is a terrific reference guide for savvy CFO's, containing valuable information about best practice considerations on a number of critical topics. She has done an outstanding job of writing an easy-to-read one-stop source of valuable tips on identifying and solidifying core business functions, and it was my pleasure to assist with its technical review. A must-read for those wishing to learn more about making their business the strongest it can financially be!"
Posted by Randy KRUG

HR Capitalist Believes That Operational Guidelines Are Optional

Last week (Wednesday, January 26th, to be exact), my fellow Typepad blogger HR Capitalist (www.hrcapitalist.com) posted a short musing on the subject of what he calls "Rules Orientation." Not a very clear term, it basically attempts to encompass the process of introducing new hires to the way the business is done in the company, i.e. operational guidelines. And the thesis is that it's not always necessary and the choice depends on the propensity of the candidate: if he wants the structure, give it to him; but if he doesn't like to be restrained by the rules, let him figure out his own way. The latter apparently is especially "good" for the companies that operate without rules in the first place - the mayhem kind of businesses.

(Side note: I cannot suppress my high cultural standards and must make a note about the inappropriateness of the "Fight Club" reference. I just cannot stand the pretentiousness of people who don't even understand what they are watching, but try to appear deep. Let me tell you, it took a lot of discipline, military organization, and RULES to properly run Project Mayhem. Remember? "The first rule of Fight Club is..." and so on - rules 1 to 8. Even The Narrator's psyche was protected from Tyler Durden within as long as the rules were followed. Once they were violated, the spell was broken.)

These kind of ideas and recommendations are somewhat surprising, coming from a career HR guru. How narrow is the employment niche of, what he calls, "low rules" candidates? In my opinion, minuscule - maybe some small haphazard consulting company with no supporting staff and a life expectancy of a couple of years, or a startup based on an IPhone App that will be hot for a few months and then lost in the sea of 300,000+ solutions.

In any other type of business, or even in the same kind but with a little bit of structural complexity, project deadlines, customer base, etc., operational guidelines guarantee faster immersion into daily duties. The only employees that should not be bound by protocol are the creative staff (designers, architects, artists, etc.); and even those need to abide by the rules of conduct, employment agreements, client-time billing, etc.

The biggest question is, who the hell can afford nowadays the unstructured learning curves of people not powered by certain procedural standardization? Especially if they are very good - you don't really want them to waste time on "figuring out" their personal ways of going about the job.

Moreover, I guarantee you that no small or midsize business, with its flat organizational structure and intense concentration of responsibilities, can let a no-rules screwball (or rather cannonball) into its already vulnerable system. Just imagine for a second someone like Susan Vance (Katharine Hepburn) running around your workplace, releasing leopards, breaking all conventions, and eventually reducing the result of long-time effort to a pile of disconnected fossils.

But I shouldn't be really surprised that this post was written. This is a typical problem with many narrowly-focused specialists, including HR gurus. They lack the ability for systematic thinking, are not capable of viewing business as an integral organism, where everything contributes to the ultimate success, and, thus, rarely make good executive material.

I am all for matching employees abilities to their appropriately assigned tasks and specifically talk about it in the last section of "CFO Techniques", but I cannot imagine trying to fit into any organization those people who cannot follow any rules.

Strategic Planning vs. Crisis Management

"Harry Potter and the Deathly Hallows: Part II" (written by Steve Kloves, based on a novel by J.K. Rowling's):

HARRY POTTER

We have to go there, now.

HERMIONE GRANGER

What? We can't do that! We've got to plan! We've got to figure out --

HARRY POTTER

Hermione! When have any of our plans ever worked? We plan, we get there, all hell breaks loose!

And that, my dear readers, in a nutshell, is the principal difference between the two action-plan extremists.

In the red corner, equipped by multipage projections with color graphs and tables, are those who believe that strategic planning is the only way of life and one must ponder and weigh every situational possibility before taking any step forward (or backward). In the blue corner, wearing their firefighting suits with confidence and valor, are those who are convinced that when the shit hits the fan they will be able to immediately assess the entire spectrum of life-threatening circumstances and successfully handle the crisis.

Any kind of extremism is bad, kids, m'kay? In religion, politics, personal views, and business management. Different situations require different approaches. Only a balanced combination of executive instruments, including long- and short-term plans as well as emergency-response methodology, can guarantee an enterprise's ability to efficiently evolve and weather any dangers that constantly arise in the volatile commercial environment.

In my book, "CFO Techniques", I have devoted an entire section (Part VIII) to strategies and planning as crucial components of CFOs' and controllers' functionality - the important responsibilities that change financial managers from bean-counters to CEOs' executive partners. Participating in analysis of opportunities and construction of well-devised action scenarios offers us a possibility to affect companies in the most significant way. Remember, that those executives who let companies run their course without looking into the future and carefully plotting their steps for further development, leave the businesses vulnerable in the face of the fast-advancing competition.

On the other hand, crisis management efforts applied in situations that present themselves without any warning are of extreme importance as well, particularly in small and midsize businesses, which are highly susceptible to the slightest deviations in market, financial, economic, and political environment. Moreover, these companies frequently have less than sufficient reserves to tide them over tough times. Implementation of a disaster-rescue mission requires high level of composure and rationalization. Those who've read my "About" note know that I consider my "fire-fighting" skills to be the most valuable to my employers and clients.

It is a mistake to think, though, that even a very experienced CFO can wing it without contemplating some sort of advance "what-if" scenarios. In fact, a crisis management policy is just another form of a strategic plan. On top of that, proper preparation for emergencies requires broader expertise and deeper knowledge of various commercial, marketing, technological, financial, legal, and organizational matters.

The truth is that a successful executive must be capable of devising a carefully-weighed and calculated strategic development plan with all visual bells and whistles her digital arsenal can afford, but in her special folder she always keeps a set of comprehensive tactical procedures for effective extinguishment of fires and post-disaster survival.

A CFO's Democratism Gets Tested

In most smaller companies, CFOs and controllers include general HR functions into their scopes of responsibilities - that's a given. The flat organizational structures, though, with their spatial and psychological proximity of top executives to the staff, play peculiar tricks on those in charge of the company's human relations.

Very frequently a CFO takes a role of a buffer between the owner/CEO and the rest of the company's employees. She feels obligated to soften the impact of the direct dealing with frequently harsh and hard attitudes of the boss.

I've said it before and I'll say it again: more frequently than not entrepreneurs don't have an experience of ever being in a position of an employee and, therefore, they have very little understanding of the staff's mentality. On the other hand, a CFO maybe a right-hand person now, but she is still just a salaried employee, most likely grown into her current status by climbing through the ranks. If she is a decent human with a conscience, she is sensitive to the needs of valuable employees and cares about their well-being (if they are useless, let someone else care about them).

It's likely that an excellent CFO would enjoy a comparatively preferential treatment by a CEO: more disciplinary leniency, nicer attitude, better perks, general amiability, etc. When it comes to other employees, their efforts and achievements may be remarkable, but they are not as evident to the boss, and that reduces their value in his eyes. I've had one CEO openly tell me that if I want a certain benefit (let's say flexible spending account) for myself, he would be fine with obtaining it, but he did not care about the rest of the "worker-bees."

So, the CFO takes it upon herself to protect other employees from undue tyranny and act as their speaker when it comes to betterment of the employment conditions, whatever they are: raises, bonuses, vacations, benefits, etc. Sort of like a representative of the XYZ Company's employees union. And when she discusses this situation with her friends and family, she expresses her disdain for the undemocratic ways of her boss, taking pride in her efforts to right the wrongs.

Now imagine such a CFO taking a position with a new company - small, young, still pretty much in development stage. The owners are very liberal and treat everyone like equals. Moreover, the CFO is the last person being hired. Those few other employees have been there from the start. Nobody needs protection. Furthermore, there is one person who has been there the longest, starting as a CEO's assistant. Not that she gets any special perks or something like that, but she definitely feels very secure.

This should make the democratic CFO very happy. After all, wasn't she fighting for equality of other employees all the time before? Yes, it's nice; wonderful, really; exactly what she hoped to find... Except that... Being "the chosen one" was kind of a guilty pleasure too, an enjoyable self-esteem booster. And the gratitude of others for all that blow-cushioning effort was very rewarding as well. As important as the democratic principles were to this CFO, the old tyranny is somewhat missed.

That's how we, humans, are. For various reasons and purposes, mostly subconsciously and without any malice, we create these little lies that alter our self-image and other people's perception of us in one way or another.

It reminds me of my UK friend of many years, Gerald Hamer's, revelation concerning his constant bitching and moaning about endless international traveling he had to endure throughout many years of his impressive career as financial broker and adviser. "In truth," he said, "deep inside I love the goddamn airports; the sub-par plane food; the inevitable delays; god-forsaken Yakutsk, the coldest city on Earth, with its diamond mines one week, and unbearable humidity of Bahrain another. I wouldn't want it any other way."

So, all you, democratic CFOs out there, work as hard as you can and fight for your employees' well-being with all you've got, but be honest with yourself: you enjoy being special, the Most Valuable Player in the field.

Radiohead: A Case of Strategic Mismanagement

Speaking of Radiohead (I am referring to my last "Quote of the Week" post)... 

No, let me first say that I LOVE Radiohead.  They are one of my top 5.5 (it's complicated, ok?!) favorite bands.  I have been to their shows, with pit tickets, standing for over seven hours in line to be in the first row, in front of the stage with big Ed's shoes in my face, watching Jonny Greenwood perform his musical voodoo, observing Thom Yorke drooling all over the mike, while articulating "I salivate like with myxomatosis," as if he was actually afflicted.  I saw them perform "True Love Waits" for the first time ever.  Good times!

And even though I usually religiously adhere to my own rule of separating the Artist from the Man (otherwise you end up hating everything - people, including geniuses, are nasty creatures), I agreeably pay attention to some of Radiohead members' personal principles: anti-music-establishment, free distribution, less flying, and stuff like that.  At the same time, I am very objective.  I don't idolize anybody.  If something is stupid, I'll call it that, regardless of who did it.  Plus, this is a CFO's blog, so when it comes to executive decisions I am especially vigilant.

Soooooo, the latest incident involving Roseland Ballroom (NYC) concerts really irritated me as a blatant display of a gross strategic mismanagement.  Supposedly to make sure that real fans get them and not the scalpers, the release of tickets for September 28th and 29th concerts was held off until Monday, September 26th, 10 AM.  And what was the wonderfully unique channel of distribution?  The fucking Ticketmaster!!! 

How out of touch with reality these people and their support staff are???  Don't they know that the days of conventional scalping are long gone? Today, you can be sitting somewhere in Nebraska with your little reloading software, buy tickets and immediately start electronically scalping them as PDF attachments.  

I personally clicked "Find tickets" at 10:00 AM.  The fucking Ticketmaster advised that my waiting time was 5 minutes.  Nevertheless, in 3 minutes flat, I was informed that the tickets were not available anymore.  180 seconds - God bless the electronic age!  Obediently I went to the "resale" (read - scalping) TicketsNow site (owned by the fucking Ticketmaster) - the tickets were already listed with prices ranging from $650-$1,500 for GA.  The concerts turned out to be the exclusive events for people with money.  Most of them cared more about the status of attending than about the music.

Talking about a complete failure of a business action plan!  Is there anybody around Radiohead with a common sense to suggest a more intelligent strategy?  You want to deliver yourself to your true friends? You are a super-group.  Instead of going through Live Nation, you can rent your own venue and sell the tickets the old-fashion way: at the box office, with a limit of two tickets per person.  Your real fans will sleep on the street through the night for a chance to see you!  It's really not that complicated.  But I guess, like with everything, it's too much to ask for a logical reasoning nowadays.          

Essentially, a rock band is a small business - no different then, let's say an advertising agency.  The set up is the same - there is a core creative staff and a bunch of supporting functions around it: administration, financial management, legal services, etc.   My readers know how important small businesses are to me - I believe they need to be cultivated and nurtured as the only option for saving the world's economy.  But, again, I am very sensible about it.  It's not all businesses that need support - only the ones that are well organized and have smart leadership. 

Hey you music fans, don't get mad at me (I'm on your side), but it's possible that most rock bands, after riding the initial fandom wave, eventually end up sucking because they don't know how to run their business well.  There were only five really great songs on "In Rainbows" and this last album Radiohead finally squeezed out (I did say I was very objective) is really just so-so. 

From time to time Mr. Yorke says that it "didn't jive in the studio," and I keep worrying that, after 26 years together, they will go out of business.  I don't want that to happen, because I am sure many people, including me, would be happy to see them doing OK Computer, Kid A and Amnesiac stuff on stage for another 25 years, even if they don't write anything decent anymore.   But they really need to figure out a sound business model to be able to do that.  And, please guys, get some strategic management advice about that "tickets to real fans" program.  I promise you, this will make already eternally grateful fans happy.

 
Radiohead - 15 Step (Grammy 2009)