The Business Disaster Zone…and how to avoid it…

Before being seduced by the bright lights and glamour of the accounting profession, I did a Law degree. That taught me the single most important thing I’ve ever learned, and I’m going to tell you what that is in just a moment.

It’s how I’ve been able to create great businesses as a CFO and in other C-Suite roles.

As a CFO, I know that keeping your accounting records straight is an important, and legally-required, activity. It keeps you out of jail, but it’s rare this adds a lot of value to any business.

There is, however, one thing I do which always adds value. And you’re about to discover how to do it too, making you smarter than a Nobel Prize winner if you do it right.

It’s something I learned it in the second year of my Law Degree.

The wise old professor who took our Company Law class looked at us over the rim of his glasses one morning, mid-lecture, and told the class-full of aspiring young lawyers… “Never forget there are always two sides to every legal argument…there’s often more than two, but there’s always at least two. It’s your job to work out the other side’s perspective and why that might be different from your client’s so you can develop a way of counteracting their claims.”

There’s always at least two sides.

Especially when you think there isn’t.

To run a great business you don’t need the smartest people in the room. In fact, sometimes that’s a hindrance rather than an asset, as we’ll see shortly.

What you need are different experiences and different perspectives. Someone exploring the side of the story nobody else is.

And in case you think that’s an unnecessary luxury or a waste of time, here are three quick stories of how some of the smartest people on the planet got things spectacularly wrong because that’s exactly what they thought…followed by the steps you can take to make sure your business doesn’t suffer a similar fate…

To screw things up really badly, you need a Nobel Prize winner

To screw things up really badly, you need a Nobel Prize winner. But to bring the financial world to its knees, you need two.

Improbable, you might think, but in 1998 that’s exactly what happened, largely behind closed doors and with the minimum of publicity. For a time, unknown to most of us, the international financial system was only a heartbeat or two away from collapse.

And we got there thanks to two Nobel prize-winners and a room full of PhDs in Greenwich, Connecticut. Some of the smartest people on the planet.

Robert C. Merton and Myron Scholes won the Nobel Prize in economics for developing a financial model which untangled the arcane world of pricing options on financial markets.

So when Merton and Scholes became partners in Long Term Capital Management (LTCM), a hedge fund set up by some of Wall Street’s biggest names of the mid-1990s, surely nothing could go wrong?.

LTCM used the principles developed by Merton and Scholes (and Scholes’ co-developer Fischer Black…together, creators of the Black-Scholes Option Pricing Model which is still used in financial markets today) to devise an unusual investment strategy using highly-leveraged financial derivatives.

LTCM’s approach was hugely successful for a time, returning unprecedented 40%-plus annual gains on its portfolio.

But, soon after, this secretive, closely-held hedge fund controlling highly-leveraged off-balance sheet derivatives worth an estimated $1.25 trillion…roughly the GDP of an economy like Australia or Spain…came crashing down in spectacular fashion as their models stopped working and their luck ran out.

The reason for this collapse? Insiders at LTCM were so wedded to their “magic formula” that they couldn’t see any other possible strategy. People who didn’t “get” their genius were shunned or ignored. They were the smartest people on the planet, after all, so everyone who didn’t see things their way must be suckers or idiots…right?

LTCM stuck by their strategy even as the markets moved sharply against them because they were so convinced the market was wrong and their formulas were right.

As we know now, it turned out the market knew exactly what it was doing after all and LTCM disappeared in a cloud of dust as quickly as it had arrived on the scene just a couple of years earlier.

The Federal Reserve twisted the arms of the big Wall Street banks to bail out LTCM at a cost of $4 billion or so and save the international financial system from potential ruin.

But, to the very end, some of the partners at LTCM believed so firmly in the models the firm had developed and the strategies their data had led them to believe were “true” that they almost went down with their ship.

And nearly took all of us with them.

History doesn’t repeat, but it rhymes

10 years after LTCM went belly-up the financial crisis hit.

The rot started when sub-prime mortgage specialist New Century Financial Corporation went into Chapter 11 protection in April 2007. 18 months later Lehman Brothers spectacularly imploded and nearly took the global banking system down with it.

The Federal Reserve and governments around the world pumped billions into their economies to prevent the global banking system collapsing altogether.

While there were many contributory factors, at the heart of the financial crisis were the “Quants”, or Quantitative Analysts…Wall Street’s developers of complex spreadsheets and financial models.

These backroom specialists thought they’d developed a way of taking sub-prime mortgages…essentially the dodgiest loans in any lender’s portfolio…and converting them into AAA investments.

In fairness, the maths is quite interesting and the broad concept is not without entirely without merit but, as we now know, those loans were not as attractive as the Wall Street sales teams would have us believe. It turned out they were largely worthless.

Even at the time, some investors held the view that, to put it as politely as possible, no amount of effluent could be endlessly repackaged with a range of other sources of effluent without it remaining anything other than 100% effluent.

But the Quants had their models and their spreadsheets showing just how valuable their securities were.

There was plenty of “proof”, plenty of data, plenty of financial models developed by top-end PhDs from the very best Ivy League schools. These were smart people. And the numbers never lie…right?

On the way up, everyone did very nicely out of this financial alchemy. Few people asked awkward questions while they were busy filling their own bank accounts.

Like Long Term Capital Management, the strategy worked absolutely fine until…virtually overnight…it didn’t, and the biggest financial crisis the world has ever known got fully into its stride.

I’d like to buy the world a Coke

Sometimes called the “hilltop ad”, the mighty Coca-Cola Company shifted plenty of their products on the back of one of the classic TV ads of all time.

Even the jingle was adored, a rare event in the tough world of TV advertising. It was so popular The New Seekers took a re-worked version, which they re-titled “I’d Like To Teach The World To Sing (In Perfect Harmony)”, to the UK Number One spot in 1971.

The Coca-Cola Company had long been one of the world’s most profitable and most successful businesses. Until one day in the early 1980s, when they had an idea which has since been used as a case study of corporate failure in probably thousands of MBA classes.

Coke was concerned about their main rival, Pepsi. They’d been making ever-greater inroads into Coke’s dominant market share since the end of the Second World War.

The pressure ramped up in 1975 when, with the warm feelings of the “I’d like to buy the world a Coke” commercial still fresh in soft drink buyers’ minds, Pepsi launched their hugely successful “Pepsi Challenge” campaign.

Consumers were invited, on camera, to sip Pepsi and Coke side-by-side in a blind taste test and choose their favourite. When the big reveal came, their preferred drink was almost always Pepsi, even among people who described themselves as long-term Coke drinkers.

Perhaps understandably, this caused consternation in Coke’s headquarters.

The New Product Development team was whipped into action. Make us a drink that performs better in blind taste tests than Pepsi, they said.

After spending a rumoured $4 million in new product development costs (Coca-Cola has never confirmed the actual number) that’s exactly what they got.

Almost 200,000 blind taste tests were carried out to reformulate Coca-Cola’s century-old recipe. As many as half of the testers preferred New Coke to both Classic Coke and to Pepsi. It was just what the top brass had been hoping for.

Certain of their strategy after analysing the data from those 200,000 taste tests, overnight Coca-Cola retired the recipe they’d been serving for 100 years and introduced New Coke in a blaze of publicity.

There was just one problem.

Despite the extensive pre-launch testing, in practice consumers didn’t buy New Coke in the shops…or at least not more than once.

There was plenty of speculation about why, but that hardly matters. When it came to voting with their wallets, consumers didn’t buy New Coke at the tills. The 100-year old Coca-Cola Company was on the brink of a meltdown.

Only 77 days after withdrawing what was now called Classic Coke from the shelves, the Coca-Cola Company re-introduced it and consumers started buying their products again. New Coke’s market share dwindled to almost nothing and it was quietly withdrawn, and an estimated $30 million of unsold concentrate written off in the process.

At the press conference to announce the hurried back-tracking on their strategy Coca-Cola’s then-President, Don Keough, uttered probably the most honest assessment of an internally-created disaster any business leader has ever given…

Some critics will say Coca-Cola made a marketing mistake. Some cynics will say that we planned the whole thing. The truth is we’re not that dumb and we’re not that smart.

Don Keough, Coca-Cola President, 1985

Where did it all go wrong?

These three business disasters…and there have been plenty more…share one common characteristic.

Nobody in the business was taking a different perspective to everyone else.

The same Kool-Aid was being quaffed by everyone involved in the decision-making and, if there were any dissenting voices, they quickly got the message that their input was unwelcome to a career-threatening degree.

In every case, there was nothing wrong with the mathematical calculation of the numbers all these businesses relied on. The basic premise was flawed, but the maths just faithfully reflected that initial premise.

Put enough scientific-sounding formulas together and throw in some huge computers churning through terabytes or petabytes of information and very few people are going to challenge the answer the magic box throws out.

None of these ultimately fatal decisions lacked data. But data alone wasn’t enough to protect those businesses from disaster.

In every case, each business allowed itself to be seduced by their own brilliance, convinced of their invincibility, secure in their position at the top of the world.

Because of their brilliance…those Nobel Prize winners, rooms-full of top PhDs, expert new product development teams…those businesses suckered themselves into believing they had an edge they didn’t really have.

The more data they had, the more they believed everyone else in the world…Wall Street, the Federal Reserve, soft drink buyers…were completely wrong.

Those businesses forgot their data was just a model…an estimation, an approximation, a best guess at a point in time.

Data was elevated from the status of “potentially helpful aide to decision-making” to the status of “nobody dare question the all-knowing, all-seeing Oracle”.

Strong opinions, loosely held

If you can’t rely on your data what do you do?

I’ve always liked an idea I’ve heard Marc Andreessen, of top Silicon Valley VC firm Andreessen-Horowitz, talk about.

When his fund makes investments, he thinks in terms of “strong opinions, loosely held”.

What he means by that is the firm is completely committed to whatever strategy they’ve decided, but they’re always testing out other options, considering where their initial model may be off-base to some extent, and they don’t shy away from having to completely re-invent the business model if that seems the right thing to do.

In the 10 years since the firm was founded, Andreessen-Horowitz has grown from nothing to having $10 billion under management. So it’s probably fair to say there’s something in that approach.

If you’re not lucky enough to have a top Silicon Valley VC on board, what do you do?

No matter how well you’re doing, you need to be able to take a completely different perspective on your business.

Just as the darkest hour is just before dawn, the biggest risk to your business comes when things have never been better.

LTCM enjoyed a succession of stellar years before going belly-up in the matter of a few months.

Wall Street was buzzing, bonuses were flowing, markets were booming…right up until the point where the sub-prime crisis hit and a succession of major financial institutions imploded overnight.

The Coca-Cola Company was still the world’s number one soft drink maker when it decided that it needed to be more like its less-successful competitor even though the race was Coke’s to lose.

Taking a very different perspective sounds easy, but it’s really hard. The odds are stacked against it to a large extent.

If you ask one of your managers for a report on something, odds are they’re not going to put something forward that shows them in a bad light. Even if they have to stay up all night to find a glimmer of positivity, they’ll include some data to suggest they’re doing at least an OK job, even as their world collapses around them.

That goes double if the report relates to a part of the business where the CEO or the Board has been quite specific about how they want it to run.

How the business interacts with customers, both its current customers and its future potential ones, is a common area for CEOs and Boards to take a particular interest. Ditto how it interacts with employees. And, occasionally, how the technology that underpins the business works.

That doesn’t mean any of those strategies are wrong. But over time, the market might move in a different way. To give a current example, the Daily Telegraph reported at the weekend that Facebook usage is down by one-third in the UK due to concerns about their data privacy policies.

Money-making machine though Facebook is, it’s in real danger of being caught on the wrong side of a sudden market move away from sophisticated, some might say manipulative, advertising-funded income strategies and towards a world where there are greater concerns about protecting privacy.

Their strategy worked until it didn’t. Just like LTCM’s. Just like Lehman Brothers’. Just like the Coca-Cola Company’s.

That’s why a different perspective is so important.

And, in a lot of businesses, that’s the job of your CFO. Even though they will be just as committed to your business succeeding as you are, the worst thing you can expect them to do is drink the same Kool-Aid as everyone else.

A good CFO should be good with numbers, without being a slave to them…especially when those numbers come from somewhere other than the Finance Department.

They should be supportive of the company’s mission, but challenging about the best way to get there.

They should help make sure any major decision…even one taken for the best of reasons with more data than you can shake a stick at…doesn’t bankrupt your business if it should turn out, with the benefit of hindsight, to have been a move in the wrong direction.

To paraphrase Scotland’s national poet, Robert Burns, into modern English, “the best-laid plans of mice and men often go awry”.

One of the best ways to make sure your plans don’t go awry is to have the right Finance Director or CFO in your business, someone who’s going to bring a perspective nobody else is bringing..

When the rest of the business is zigging, you want your CFO to be zagging. Not necessarily because they’re right, but just because that’s how you bring a different perspective to bear. That’s how you end up considering some issues you might not have considered otherwise.

And remember, there’s always at least two sides to everything. You need to give someone the job of finding the perspective everyone else has missed.

Your CFO is usually a great choice.

(Picture credit: Leio McLaren (@leiomclaren) on Unsplash)

The last thing your business needs is more metrics

The problem with metrics is that smart people try to game them, and dumb people try to achieve them.

You know the sort of person I mean…the one who dogmatically insists on continuing to do something they get measured on, all the while turning a deaf ear to the legions of customer complaints, wielding their weapon of choice… “company policy”… as the excuse for disappointing paying customers..

Difficult though this dynamic is for any business, the problem is more acute the more metrics, targets and KPIs your business has. I once ran the division of a multinational business where we had 42 different metrics to track and report on every month.

Each of these numbers had some degree of relevance…they were interesting, up to a point…but with 42 metrics to keep on track, that gave me about an hour a week on each of these apparently equally-important metrics.

Not that I actually had an hour a week to spend on any of those things. My experience is that businesses with lots of metrics also tend to have lots of meetings where the metrics they’re tracking are discussed, analysed, picked over and post-mortem’d.

Every metric had a manager somewhere who was responsible for that particular measure across all the divisions of the business, who in turn reported in to someone pretty important in the Head Office management structure.

Because each metric’s manager reported to a senior person at head office, each of them insisted on their own battery of meetings and reports…separate from, and in addition to, the corporate set of meetings and reports through the existing reporting structure…so each metric’s manager knew what was going on well enough to pass on their own reports through to their own bosses..

If you think that sounds like chaos, you’d be right. Very little ever got done to move the business forward. All our time was spent reporting on history or having meetings about it.

Here’s a new initiative – let’s make sure we’ve got some metrics in place

Part of the problem in that business was every time a new idea was sanctioned by the CEO or the Board, a raft of new metrics was brought in to make sure this new idea could be measured and tracked in minute detail across all the operating divisions of the business.

Thankfully, as you might have realised by now, it wasn’t very often that a new idea was actually implemented. That would have required us to stop talking about things that had happened in the past for long enough to have an idea or two about what we might like to do in the future.

As a Finance Director and CFO, this approach used to drive me crazy, (although I wasn’t the FD or CFO in this particular business, so just had to go along with it).

The amount of unproductive time spent in senior managers meeting with one another was beyond astounding. I reckoned the costs of measurement and reporting was possibly the single biggest cost the business had, even though resources were being starved from the front line at the time on the grounds of “cost pressures in the business”.

For every new XYZ Initiative Manager appointed, we could probably have put four people on the front-line where they were desperately needed. But the Chair, Board and Chief Executive of this business could never see things that way.

I’ve no doubt they were well-meaning. But they’d all taken on board the sort of thing people are taught at business school somewhat too literally, which made the whole thing unmanageable.

As a principle “what gets measured, gets managed” has something going for it, but carried to the extreme, all it does is seize up the inner workings of a business.

Of course businesses should have some basis for deciding whether the initiatives they’re implementing have some positive benefit to the business and its customers. But there are often simpler ways of achieving that objective.

After all, when you break it down, all any business is trying to do is bring in enough income from customers to cover their costs and leave a profit.

Since profit is calculated as a balancing figure, you’re only really managing two dimensions here – income and cost. Profit is what’s left over after deducting one from the other.

In most businesses, costs are either fixed (that is they don’t wary much from month to month, like salaries or rent) or variable on some predetermined formula (X per hour, Y per item produced, Z% share of income generated) or a mix of both, again on some predetermined basis (eg some permanent staff paid on a salary and some temporary staff paid on an hourly rate)..

Off-hand, it seems to me that the optimal number of metrics and KPIs to measure those mathematical relationships is some number a long way short of 42.

You might say…”that’s all well and good, but what about non-financial measures that matter to stakeholders?”

Fair point – how many of those do we need?

Treat people fairly, without bias, based on gender, ethnic background or belief systems? I’m all for that…

Ensure your people are safe from harm at work? Seems reasonable…

Buy your products fairly, without supporting exploitative labour practices in third world countries? Yup…

Reduce our impact on the planet? Another tick…

Operate according to the principles of good corporate governance? Yes to that one too.

There may be some industry-specific concerns over and above those. If you’re disposing of radioactive waste from a nuclear power station, I’d expect a few additional metrics around how you might do that without destroying half of the nearest town, for example.

But those should be pretty rare. There can’t be many businesses which need to track more than six or seven key metrics in detail. And even if you could, that doesn’t mean you should…especially when you consider the cost of collecting all the data you need for a never-ending round of review meetings about the latest metrics or KPIs.

The cost of measurement

You’d probably come to the same conclusion if you did what very few businesses bother to figure out – the cost of measuring and reporting on each initiative you think is important.

In the business I described earlier, pretty much every measure had its own manager to track each metric, so there was probably a 60-80 grand salary just in that.

But it gets worse…

Some of these people had their own departments to help them with their analysis and reporting. One, I recall, had a department of six, in addition to the manager, all on 40-50 grand salaries.

Measuring this particular feature of the business probably cost the thick end of £400,000 just in salary costs…maybe as much as half-a-million when you add in IT costs, facilities, travel and the costs of the conferences these people always seemed to be going to.

And that’s just the more obvious measurement and management costs.

On top of that there was my time, time spent by the other divisional heads, time spent by our respective teams collating the information in the first place…which, in some cases, required an investment in bits of kit or software where human beings just couldn’t collect the data quickly enough or accurately enough..

I couldn’t give a definitive picture of what that cost might add up to, but I guesstimated it at about half again of the costs incurred running the official “measuring departments”. And I’m probably being kind at that.

Although the 6-person measuring department was the worst example, multiply that guesstimated cost by 42…one for each metric which was “vital” to the business…and add on half again for our “in-house” costs at divisional level. You’ll quickly see why the cost of measurement was easily one of the biggest costs in this business, even though nobody ever thought of it like that..

It’s been a while since I worked at this business. They may have changed since…although I wouldn’t bet on it. Some behaviours become too deeply ingrained to be changed under anything other than the most severe existential threats.

Don’t measure it, do it!

That business was the first thing going through my mind at the weekend as I read a succession of articles about changes people felt should be made to the business world.

These were changes for the good, let me add.

The articles suggested encouraging more women and minorities into senior roles, emitting less carbon from company vehicles, providing opportunities for young people trying to get onto the job ladder and so on.

I wouldn’t argue against any of those things.

However every article demanded additional metrics, tracking, targets and KPIs against each of those inherently worthy objectives.

But, thinking back to the place I used to work, I imagined the impact on that business if they picked up any one of those and started to carve out a six-person department to track progress and report to head office about it.

What would you rather have – £500,000 spent on measuring the recruitment of women and ethnic minority candidates into senor level posts or £500,000 spent giving women and ethnic minorities within the business the training, support or coaching they might need to be a credible candidate for the next senior role?

Which one is more likely to create the positive result you’re looking for…measuring it or doing it?

To quote one of the world’s foremost quality and efficiency experts…

…measurement of productivity does not improve productivity.

W Edwards Deming, “Out of the Crisis”, p15

I’d rather spend the money actually doing things that lead directly and tangibly to the outcome being sought, instead of spending the same sum measuring whether we’ve done it or not.

In fairness, I don’t think this is a position most people would argue with. The problem is that very few businesses know the true cost of their back office activities…including things like measuring and reporting on information, and the costs of managing those who do.

And, admittedly, while it’s not impossible to work out, it is tricky…and sometimes fairly approximate unless you have everyone in the business fill in time sheets all the time (which would, of course, require a Time Sheet Manager and a raft of people to collate, do the data entry and report on whatever the time sheet data told them…rather defeating the point!).

There are times when the cost of getting more accurate measurements just isn’t worth the cost involved. Intelligent approximations, consistently applied, will often get you close enough for most decision-making purposes.

When is the cost of measurement too high?

It’s hard to be dogmatic about this. If you’re servicing aircraft engines or conducting open heart surgery, you might think it was important to do a bit more tracking than you might for a business making black plastic refuse sacks.

But my personal “concern meter” goes off when the costs of administration are more than 5-10% of the project concerned.

On that basis, a budget of, say, £500,000 should have no more than £50,000 spent administering it and reporting on it. The rest should be spent doing whatever the objective might be.

In a large corporate environment, £50,000 doesn’t get you very far. It’s a small fraction of a C-Suite executive’s time. It might get you an Executive Assistant, or half a departmental manager…maybe most of a front-line manager.

When you approach measurement and metric setting from that perspective, it forces you to think about what you really need by way of metrics, KPIs, dashboards and whatever else you use in your business.

When you’ve only got a few grand to do your measuring with, you’re forced to concentrate only on the metrics that really matter…not every metric a full-time department of six might come up with between them after an all-day brainstorming session..

And in case you think this is impossible, I assure you it isn’t.

I once took a major organisation through an environmental certification process, which was important to them at that point in time for reasons I won’t go into here. I did it with a budget of zero and just little scraps of people’s time.

We invested every penny we could leverage out of existing budgets to support the process as best we were able and, in just a couple of years, went from being one of the sector’s poorer environmental performers to gaining a prestigious certification from an independent awarding body, which, in turn, helped boost our market positioning and ultimately our revenues.

We only had one metric – achieving, and subsequently sustaining, that accreditation.

I led meetings about once every two months, for a couple of hours each time, so we could catch up with the dozen or so people across the business who might be able to impact on this initiative.

At that meeting we identified what cash had been freed up from existing budgets and prioritised where we would spend it to make the fastest progress possible towards one or more of the certifying body’s assessment criteria.

In the three years or so I ran this initiative, I made one report to the Board, about 18 months in, to explain what we were doing and how we’d spent the money we’d found in pursuit of the objective to gain that certification. We did another session when we’d achieved the accreditation. That was it – maybe an hour in total over three years.

That apart, I refused to set up meeting cycles, reporting sessions, KPIs to track what people were getting up to or any of the usual stuff that people do in this situation.

There was no need for any of those things as I could manage it all through the bi-monthly meetings. So we spent little or nothing on administration, measurement and management. We spent everything we could achieving the objective.

Now I’ve got my good points, but there was nothing I did that nobody else couldn’t do with a bit of trust and some room for manoeuvre. There was no financial risk as everything we spent still had to be signed off through the normal approval processes.

My experience is that, given the will, and given an understanding of just how much management and monitoring costs the average business, there are very few projects which can’t be delivered the same way. You might surprised how quickly you can make progress, if anything.

But we can’t trust our people to operate like that…

When I tell this story to business leaders, I’m often told that they could never do things the same way because they can’t trust their people enough to operate without lots of reports and meetings.

I find this very sad…but this perspective raises an interesting question…

Who hired these people in the first place?

Well, it seems that was the same business leaders who claim they can’t trust the people they hired themselves!

Seems to me the solution to that problem is entirely in their own hands. Hiring people you can’t trust doesn’t sound like the smartest recruitment decision I ever heard.

“Oh, but the people we could trust are too expensive,” people sometimes respond, “so only have the budget for entry-level people.”

Again, the solution is in the hands of leaders. Running the business on cheap labour is often the most expensive way to run a business.

On the surface it looks cheap, but by the time you add in management, reporting, tracking and measurement systems sufficient to give at least a reasonable level of assurance that nothing is going badly wrong, this approach is often the most expensive option.

But this response is also an illustration of why the measurement, tracking, reporting process is fundamentally flawed.

Despite all the measurement, tracking and reporting they already have to regulate the behaviour of people they employ, those business leaders still don’t trust their staff.

More metrics isn’t the answer. They’ve got plenty of those already. But none of them do the job they really need doing.

Metrics won’t give you trust. At best they protect your downside a little, but they’re not infallible – many a formerly market-leading business has gone into administration even though all their metrics and reports were pointing in the right direction up till the moment the bank pulled the plug (Patisserie Valerie, anyone?).

Trust is an emotional construct, not something governed by the laws of physics which you can measure mechanically and improve in a factory.

If trust is what you want to create, don’t imagine traditional reporting mechanisms will help. They won’t.

Instead, work on trust (pausing to reflect, at least briefly, on whether the problem might be with you, rather than with your people).

Get that in place, and redeploy most of the resources (keeping back a reasonable 5-10% so you can do the tracking that really needs doing) spent on managing, reporting and tracking things into making your overarching objective happen.

From the moment you do that, your business will march towards your objectives faster than you can imagine. You’ll get where you want to go faster, more profitably and with a lot less stress and strain on your life and your calendar.

And if you think this is just my own personal opinion, no less an authority than Dr W Edwards Deming, the father of modern quality control, had as part of his famous 14 Principles “Eliminate management by numbers and numerical goals, Substitute leadership.”

Go on. Give it a go. You might be surprised how good your business can be when you don’t measure things.

(Picture credit: Tyler Easton on Unsplash

“Dear Abby, My CFO won’t listen to me. What should I do?”

My friend, Samuel Brealey, works in marketing. He was interested to know what marketers could do to get their Finance Directors or CFOs on-side when it came to marketing.

We had a good conversation and Samuel ended up writing a great article on the subject which was published by Econsultancy.

But he got me thinking. It’s not just the marketing department which struggles to communicate with their finance department. Most other departments struggle with this too.

So I took the questions Samuel had asked and answered them, not just for marketers, but for other professionals too. Hopefully there’s some food for thought in here for you….

What are CFOs’ biggest frustrations when dealing with non-finance people?

Financial people like certainty, or at least some broad rules which work most of the time.

This makes it easier for, say, engineers to have conversations with their finance colleagues because that process-based life of relative certainty is pretty much their world too. Yes, there are some specifics and explanations to sort out, but usually engineers can explain what the outputs will be for a given set of inputs because that’s the way they think about what’s going on too.

Great news for engineers, but what if you work in a department like marketing, customer services or HR?

Here, although some elements can be expressed as a process, outcomes tend to be more random. The marketing strategy you never thought would work turns into the campaign of the year. The “dead cert” employee engagement policy you developed has people more disenchanted than they were before.

That’s not necessarily because the original proposal was an inherently bad idea…although sometimes that’s undoubtedly true. But it just reflects that in the less-predictable world away from finance and engineering, outputs can be a bit more random.

There’s an old army saying that no plan survives the first contact with the enemy.

By the same token, no strategy developed in a conference room somewhere completely survives the first contact with its intended audience.

So what can you do?

Firstly, try not to go “all in” with whatever you’re proposing. For naturally cautious people, like the typical Finance Director or CFO, this seems foolhardy and unnecessarily risky.

Try things out first – pilot them in a remote office somewhere with a shoestring budget, then roll your new initiative out if it’s successful. That will look like a sensible, well-managed, low risk approach to your average Finance Director or CFO so they’ll be more likely to support it..

Secondly, be very clear about your assumptions. If what you’ve proposed doesn’t work, but you can explain back to your CFO which one of your assumptions…with the benefit of 20:20 hindsight, admittedly…was a little off-base and what you’re going to do to put it back on track, this makes it much more likely your CFO will listen to what you have to say.

You’ve opened the door for a conversation about “what do we need to do to get our conversion percentage up?”…or some other specific element of the plan…and demonstrates you’ve thought things through. The rest of the plan might well remain pretty much “as is”, but some element just needs tweaking a little. We’ll be much more inclined to listen to someone who can explain what happened in those terms.

If it just doesn’t work and you can’t explain why…or worse, if your explanation sounds like the sort of non-specific nonsense that your CFO has heard from too many people already in their career…next time you put a case forward, you’ll have a much higher credibility hurdle to get over with your CFO.

The key here is not that everything has to work all the time. We know that’s unlikely. But can you analyse and explain why it didn’t? If you can, we’re much more likely to support you next time you want to try something out.

How can non-financial people work more strategically with their CFOs?

In general, you’ll have better luck with your CFO if you engage them at the strategic level.

Explain why what you’re doing matters to the business. After all, good Finance Directors and CFOs are there to bring value to the business. No finance person worth their salt would turn down value-enhancing propositions on a whim.

Don’t just present us with a campaign or an initiative, seemingly on a whim.

Loop round to discuss the strategic background before illustrating why this particular proposal represents your best professional view of the most effective way forward.

Try not to sound like you’ve picked up the latest issue of your professional body’s monthly magazine and are just regurgitating its contents to us. We read the press too.

If all you talk about is “employee engagement is a good thing because the CIPD says so” or “influencer marketing is the way forward, according to the Chartered Institute of Marketing” we’ll quickly form the view that you don’t know what you’re talking about.

Not that either of those things is necessarily the wrong approach to take. But explain how that works for our business. Where does it add value? How will it improve our operations? How does it reduce costs or increase revenue?

Answer those questions and whilst we might still say “no”, at least we’ll give you a fair hearing.

But, and I can’t emphasise this enough, always loop around to the strategy. Maybe the expense of hiring and training new staff is getting out of hand, so your employee engagement strategy is designed to sort that out.


Be specific about that, explain what level of reduction in employee turnover means the programme pays for itself, demonstrate that you’ve found a way to pilot at least some of the key planks of your new initiative to make sure the data supports your conjecture and we’ll be all ears.

You don’t need to turn up with all the answers. Just be upfront about what you do know and what you don’t, what’s relatively certain and what’s a punt and we’ll have a debate with you just like we do with every other department with a wishlist.

But whatever you do, don’t just say what you think we want to hear so we say yes. You’ll only get away with that once…

How can we work with our CFOs to build and improve metric tracking, KPIs and reporting systems?

The key element here is the “work together” bit.

We’ve all got our own professional knowledge and specialisms to draw on. Accountants clearly don’t understand marketing or HR, say, in the same way an expert in those professions would. And vice versa, of course.

But we do understand tracking, measurement and reporting systems better than most other professionals. Working together means we stand a chance of coming up with something sensible that works for us both.

To kick things off, you need to have a very clear idea of your own department’s objectives and business processes, how they knit together and what different steps are involved in making sure your department hits its targets..

“We’re going to do some influencer marketing” doesn’t come close to doing that. Don’t tell us about Kim Kardashian’s influence unless you’re proposing we work with her. We get the general idea, just tell us how what we’re proposing to do will add value to our business, not businesses in general.

How will we know if it worked? How will we know if it didn’t? How will we control for other variables – for example if the upward bump in the sales line might have been caused by, say, a new salesperson starting at around the same time as the influencer marketing campaign kicked off?

Now we’re ready for a conversation. And now we can help build reporting systems we both understand.

That benefits us as CFOs because now we understand what you’re planning to do. And it benefits you and your department too because if you don’t do this, we’re very likely to impose some reporting processes or KPIs on you, over your howls of protest if necessary..

We don’t do this out of malice, or because we’re control freaks…well, not always anyway…but because we have to answer to the board for substantial budget spends.

If the business spends a million bucks on an employee engagement initiative or a marketing campaign, you can bet the board is going to ask how that’s getting on and so you can bet we’ll be all over it. We’re the ones on the spot answering the questions, not you, so we need to do what we can to make sense of your area of operations, with or without your help.

So work with us on the reporting systems, ideally as early as possible in the process and before we’ve started building our reporting templates so we can develop a set of metrics that work for us both.

Since people outside the finance department don’t tend to have those conversations with us very often, anyone who does will quickly be seen as a trusted partner of the Finance Director or CFO, not someone whose word we’re not entirely sure we can trust.

Given a choice, believe me, you want to be in that first group…

In an ideal world, how would non-financial people work together with finance day to day?

Always think about the process perspective. Everything we do in a business…every unit of input…is trying to get a unit of output of some sort. That’s the whole reason we do anything at all…to get whatever that unit of output is.

It’s not always a purely mechanical process, of course, for the reasons stated above, but the key here is we’re not doing things randomly, in abstract. We’re doing things for a purpose.

And probably more of a shared purpose than you might imagine. We almost certainly both want to build the business we work for, and make it more successful in the future than it’s been in the past.

So think about the process you’re running, even if it’s not absolutely quantifiable in scientific or engineering terms.

For example, we know not every sales call will result in a sale. We know there is a measure of good luck, timing and Act of God in determining which sales call turns into a client and which ones do not.

Maybe you can’t predict exactly which targets will become clients. But out of 100 or 1000, we’d expect you to have thought through a process which is designed to turn, say, one in three of the sales calls made into clients.

And if it’s not working for some reason, highlight the specific area that’s not working – are we seeing the right number of new prospects, but our conversion rate has dropped dramatically, or are we converting the right number of clients but their average order value has dropped?

What we’d do to put things right might be very different depending on what caused us to under-shoot the department’s target in the first place. So tell us what’s gone awry and how you believe you can get that part of the process back on track again.

Most CFOs are fairly pragmatic so once we know what problem we’re trying to solve, we’re in solution mode. But if nobody can explain what the problem is, or what we can do to put things right, we’ll rapidly lose patience.

If, heaven forbid, something doesn’t quite work, don’t put your head in the sand. Let us know…as specifically as possible…what’s not worked and why. We’ll happily work with you to try to turn things around.


CFOs are there to help the business succeed.

Good CFOs want to help each individual, and each department, in the business succeed, because that’s how the business as a whole gets to where it needs to be.

So we’re always up for a conversation about how to make the relationship between Finance and other departments better.

For a pro tip, things get pretty hectic in Finance when we’re sorting out that month’s accounts or doing the year end. Usually these are times of intense pressure which means there’s not a lot of room left in our heads for anything else.

But reach out. Ask for a chat at a time when we’re not busy with month-end and explain what you’re trying to do.

Any decent CFO will be up for that…and you never know, we might even be so excited that someone cares enough to have a proper strategic conversation with us that we offer to pay for the coffee…

( Photo by Austin Distel on Unsplash )

How to remix your way from good to great

Change programmes. Meat and drink to the red-braces wearing, MBA-toting, PowerPoint-wielding 25 year-olds the big consulting firms send in to tell you what’s wrong with your business.

Nearly always, the answer to whatever’s wrong is a “change programme” of some sort. Mainly because when you’re 25 and don’t have any business experience of your own to draw on, you do what the partners back at Head Office tell you. And they like change programmes, because there’s big money to be made by locking a client into at least a year’s-worth of fees.

So when a partner in a big consulting firm tells their 25 year-old associates to say the answer to their client’s troubles is “a change programme”, that’s exactly the prescription they’re going to write.

What the big consultancies don’t tell you is that all change programmes suffer from the same problem.

They throw out everything to start again. Some things deserve to be thrown out – after all, they caused all the problems in the first place.

But the vast majority of things in the business probably didn’t need to be changed just to fit in with some corporate visioning piece the aforementioned big consultancy has also told the client they needed.

The hardest part in a change programme isn’t throwing everything out and starting again. Any idiot can do that…and quite a few idiots do every year.

That’s one of the reasons change programmes only rarely deliver on the promises made upfront. Even McKinsey admit that 70% of change initiatives fail every year.

Frankly these aren’t a whole lot better than the odds you’d get sitting round a Las Vegas card table. Maybe there’s a way to improve those odds a little….

If the hardest part isn’t throwing everything out, what is?

No, the hardest part isn’t throwing everything out with a single stroke of a red pen and starting again.

The hardest part is deciding what bits to keep.

What’s working now? Don’t change it.

What do customers like? Don’t change it.

What do staff enjoy about being part of your team? Don’t change it.

There are usually lots of things you shouldn’t change, if for no other reason than you’ll be upsetting a large proportion of your workforce (80%…90%…?) who are doing just fine already.

The likelihood is whatever the change programme comes up with won’t be any better.

It’s more likely to be worse because those staff members already doing a great job will be demotivated by being told to do something clearly insane by someone wearing red braces who doesn’t know what they’re talking about.

Even if the change programme develops a new way of working that’s some tiny fraction of a penny cheaper every time an individual staff member cranks the handle at their workstation, the loss in motivation means you might not really be saving those fractions of a penny after all.

Instead, you’re losing some of the productive capacity you benefit from now, without realising it or paying for it, because motivated staff work better and harder than unmotivated staff. This doesn’t look like a cost in a bookkeeping sense, but the difference between motivated and unmotivated staff in a business is one of the biggest costs there is.

You’re saving fractions of a penny and you’re giving up pounds or dollars or euros to do it. That’s poor economics.

Except for the consulting firm you’re paying millions to. Their economics on the deal are pretty sweet. They’re quite happy about the way things worked out.

And, in fairness, you’ll feel pretty good in the short run too.

The high-end consultancies know you want to feel good about your decision to pay them millions of dollars, so they’re going to gather plenty of evidence about how you paid them, let’s say, $5 million but they’ve worked out a plan to save you $20 million in return.

They know sooner or later someone’s going to ask, so they make sure to give you the answer before you’re asked the question. That way you look like someone who’s in charge…and if your boss is doing the asking you look like a person destined for promotion by giving an immediate answer.

Being able to parrot a quick metric about superficial short-term cost savings usually chokes off most questions about why the business is doing catastrophically stupid things. Especially so the further away from the shop floor the person asking why changes need to be made has their office.

And of course, the big consultancies will write you up in glowing terms on their website. You’ll be in the glossy printed magazine they send round all their CEO contacts. You’ll be invited to ask to speak at their conferences.

They’ll make you feel on top of the world.

But odds are you’ve sown the seeds of your own destruction. Previously loyal employees start “exploring opportunities to develop their career elsewhere”. Some of your best customers don’t seem quite so enthusiastic about sending orders your way. Some of your key partners and suppliers start citing contractual terms to you, rather than rolling with the punches like they used to do, knowing if they scratched your back today you’d scratch theirs right back again tomorrow.

On the surface, especially with the PR machine of a big consultancy behind you, there might be a good enough story to tell for a couple of years. But somehow the magic has started leeching away from your business. Once that starts, the direction of travel is usually set. The only question is how long it takes to go from change programme to basket case.

How do you know what to keep?

Knowing what to keep is tricky. That’s why it’s a lot easier to throw everything out and start again as that requires no critical or analytical skills whatsoever.

The best analogy I can give you is from the music industry.

If a song’s not working for them, they don’t throw out every note and start again. They work with what’s already there to build a new, and hopefully better, end product than they had before. That’s called a remix.

But this is the key bit…

The record companies actually change very little of what they started with for a remix… 5-10% tops.

The challenge is to change as little as possible, not as much as possible.

They don’t write a whole new song – that would be more like the traditional change programme approach where everything is thrown out and you start again..

Even the term “change programme” or “change management” implies “everything is going to be different around here”.

When record companies sanction a remix, the expectation is that most things won’t change at all. But some new elements will be introduced to try and create the magic that wasn’t quite there the first time round.

Perhaps weirdly, changing as little as possible on tunes nobody cares about can turn them into worldwide hit records.

In case you doubt that, here’s three quick examples…

3 hugely successful remixes

In 1997, a obscure British indie-rock band just about limped into the music industry’s consciousness when their song “Brimful of Asha” asthmatically climbed all the way up to number 60 in the singles charts before being quickly forgotten.

Except by Norman Cook (perhaps better known under his stage name of Fatboy Slim). His remix…almost identical to Cornershop’s original…shot to the top of the UK singles charts in February 1998. The extra few percent Fatboy Slim added made a record nobody had ever heard of into a platinum-selling Number 1.

(For any music fans reading this, the original version is here…nice enough but a bit insipid. The Number 1 remixed version is here.)

You might never have heard of Cornershop…at least before their Number 1 record…but I can virtually guarantee you’ve heard of Elvis Presley. The “King of Rock and Roll” is the best-selling solo artist in the history of recorded music and a 20th Century cultural icon.

But even Elvis had some duds…until the remixers came along.

The King had recorded a song called “A Little Less Conversation” as the B-side for a 1968 single that went absolutely nowhere. This was before his Comeback Tour. These were the lean years for Elvis when the record-buying public stopped caring about his music as much as they used to.

That obscure B-side had been long forgotten, except among die-hard Elvis fans, by the early 2000s.

At least until JXL remixed “A Little Less Conversation” in 2002. Then everybody knew about it.

The remix was a UK Number 1 single for four weeks and a cut-down version of the remix was chosen for that year’s World Cup theme tune as well, boosting its popularity even further..

If you listen to the two versions side by side, the surprising thing again is how little changed. But a sprinkle of remix magic made a long-forgotten B-side recorded 35 years earlier by the King of Rock and Roll into a Number One hit record 25 years after he’d passed away. That’s a pretty neat trick however you look at it. (Original here, remix here.)

And finally, just in case you think this trick only worked decades ago, one of the biggest hits of recent years was Mike Posner’s “Ibiza”.

You’ll have heard it hundreds of times even if you don’t remember the singer’s name or the song’s title. “Ibiza” was never off the radio for much of 2015 and 2016. It was Number 1 in the UK for four weeks, and hit the top of the charts around the world.

But the smash-hit version you’ll have heard is a remix. I can virtually guarantee you’ll never have heard the original.

That’s because the original disappeared down a rabbit hole pretty much as soon as it left the recording studio. Almost nobody was interested, except Norwegian remixers Seeb, who thought they could do something interesting with what was at the time a rather glum acoustic guitar-based song.

Their extra couple of percent made a record nobody wanted to listen to into a 5-times platinum record in the UK alone, and a platinum-selling record around the world. (Original version here, Seeb’s remix here. Please note there is a parental advisory on the lyrics for this song, so don’t listen if you’re likely to be offended. Strong language apart, it’s a great song.)

What does this mean for your business?

I could go on, but I won’t. I’m sure you get the idea. Countless hit records have been created over the years as a result of taking a record nobody liked very much and changing just a few percent of it.

Changing that few percent was all it took to take those songs from good to great…or perhaps more accurately “completely unknown to worldwide number one”…

Think about this. The record company made million-selling hit records out of material they had already recorded by changing very little and spending little or no money.

And they did this even though all remixes, including those cited above, are by definition the same song in both “hit” and “non-hit” versions.

The melodic structure doesn’t change. The chords don’t change. The lead vocal doesn’t change.

What changes are the subtleties…the feel, the ambience, the rhythm, the instrumentation…mostly things you only notice subliminally. Together they change how you feel about a song and make you want to put your hand in your pocket to buy a copy.

For a skilled remixer, knowing what to leave the same is at least as important as knowing what needs to change.

So it is in your business.

If things could be better, perhaps you don’t need a change programme at all. Maybe you need to think in terms of a remix, where most things stay the same, than a change programme where you throw everything out and start again.

Perhaps think about the business subtleties as the place to start and leave the bulk of things just as they are, like a remixer would.

Leadership, customer experience and employee engagement are often great starting points. All of those alter the look and feel of your business, just like Seeb, JXL and Fatboy Slim did for those unloved songs gathering dust in their record companies’ vaults.

And, at the risk of over-extending the metaphor, doing a remix is also several orders of magnitude cheaper than recording an original song from scratch.

Your high-end consultancy-driven change programme is like recording a song from scratch. It’s a major investment that might go nowhere.

You might even be worse off than when you started in the pretty likely event the change programme doesn’t achieve its objectives, a fate which you’ll remember even McKinsey admits befalls 70% or so of change programmes.

A remix is the investment of a few grand in your business…actually often nothing at all except some salary time you’re already paying for…tinkering around with the bits that don’t quite work and putting them right, often for little or no cash investment.

So next time a freshly-minted MBA with a business card from a big consultancy turns up and tries to persuade you to embark on an ambitious change programme which involves throwing everything out and starting again, just remember these two things.

Firstly, whatever he or she is proposing is very unlikely to do anything close to what they’re telling you (since that’s the outcome 70% of the time, you’ve got less than a 1-in-3 chance that you’ll be one of the lucky ones).

Secondly, remember that you might not need a change programme at all. Try a remix first. You’ll be surprised how far a few grand well-spent can take you.

In a musical sense, it can give you a worldwide Number 1.

In a business sense, a remix really can take you from good to great..

(Picture credit: Leo Wieling on Unsplash )

Is Uber Wall Street’s New ‘Great Vampire Squid’?

(As this article relates to an impending NYSE listing, please note the disclaimer at the foot of this article.)

In one of financial journalism’s most memorably descriptive pieces, Rolling Stone Magazine’s Matt Taibbi described Wall Street investment bank Goldman Sachs in these less-than-flattering terms…

The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Matt Tiabbi – Rolling Stone Magazine

I have no particular views on Goldman Sachs…then or now…but if ever I thought any business deserved to be described as a “great vampire quid”, it’s Uber, whose business practices appear to plumb the depths of an uniquely deep pool of poor conduct in the technology sector..

They’re not right at the bottom, admittedly. Facebook deserves that accolade all on its own, but Uber are certainly giving Menlo Park’s finest privacy invaders a run for their money.

And, of course, money is what it’s all about.

Stock Market listing ahead…

Uber have announced plans for a stock market listing which would value the business at $100 billion or more. However the “price” for this influx of cash from new investors is that the law says Uber now has to tell people at least a little bit about their business as a condition of being allowed to invite members of the public to buy their shares.

Everyone who’s anyone in the field of banking and finance is buzzing around the most eagerly-awaited flotation for years…including, it has to be said, the aforementioned Goldman Sachs, alongside another 28 banks and financial institutions.

Now, I’ve no problem with the basic concept behind Uber’s business.

Like a lot of traditional businesses at the dawn of the digital era, some long-established cab companies were not as responsive and customer-friendly as they might have been. In some cases, service was variable and passenger safety was not always guaranteed.

Even for those business which were at the upper end of the service and reliability spectrum, like London’s Black Cabs, for example, their initial reluctance to embrace new technology left the door open just far enough for an upstart like Uber to gain a foothold.

I also have no problem with people earning a bit of extra cash using their own vehicle to ferry people around outside their normal working hours, provided they are properly insured, trained and regulated.

So far, so good. Up to this point there was the potential that Uber might have become a service- and safety-focused personal transportation business which would provide a much-needed, safe, reliable service to a great many people, while providing an opportunity for part-time drivers to earn a bit more cash in their spare time.

There is a good business idea at the heart of this ‘great vampire squid’ of an organisation.

But it didn’t take long for Uber to show its true colours.

Away from the PR, reality bites…

Uber’s clashes with transportation regulators around the world became the stuff of legend…specifically, the legends that had law firms around the world salivating and rubbing their hands with glee.

Taking on City Hall, with their effectively unlimited legal resources, in a case funded by the deep pockets of venture capital investors with an eye on an eventual multi-billion dollar payout, is the stuff of dreams for the managing partners of sizeable law firms in every major city around the world.

And the personal conduct of Uber’s founder, Travis Kalanick, was less-than-commendable, leading to his ousting from his own business by a group of investors who felt his behaviour was in danger of getting in the way of their own financial returns.

For a short while after Kalanick’s departure, there was an air of optimism that some of Uber’s more questionable management practices would be reined in by their newly-appointed CEO, Dara Khosrowshahi.

It’s certainly fair to say that many of the personal excesses of the Kalanick era have been addressed and having the much more investable Khosrowshahi as the public face of a business heading for one of Wall Street’s biggest IPOs of the 2010s is almost certainly a plus for investors.

So everything is OK, right?

Well, not from where I’m standing.

Uber’s business model is no great shakes…I wonder if it even has a model…

Concerning though the behaviour of one of Uber’s co-founders might be, there’s worse to come. For that, you need to take a look at Uber’s business model.

All you need to do is read Uber’s Securities and Exchange Commission (SEC) Form S-1…the preliminary prospectus businesses are required to issue in advance of listing their shares on the New York Stock Exchange (NYSE).

The prospectus doesn’t start well. The very first page is proudly emblazoned with Uber’s mission statement – “We ignite opportunity by setting the world in motion”.

No doubt some swanky ad agency or strategy consulting boutique came up with this, but the only question that should be in your mind when you read statements like this is “whose benefit is this opportunity for?”.

It feels a bit like Alibaba Co-Founder Jack Ma’s description of his staff’s 996 workweek (9am to 9pm, 6 days a week) as a “blessing”. We can be fairly sure that most of the blessing from making his staff work those hours flows into Jack Ma’s bank account, rather than his employees’.

The “opportunity” that Uber claims to “ignite” is almost certainly less an opportunity for its staff and customers and more an opportunity for its early investors, the management team lucky enough to have picked up plenty of share options along the way, and the Wall Street investment banks, who have large fees riding on a successful NYSE listing.

As part of their S-1, Uber is legally required to disclose who owns 5% or more of its shares and there are some interesting names on that list who will do very well out of a successful IPO

  • First and foremost, Travis Kalanick…remember him?…who remains Uber’s largest individual shareholder with 8.6% of the business, worth a potential $7 billion
  • Garrett Camp…not a name you’re likely to have heard, but the original Uber app developer…has 6% of the business, worth just under $5 billion
  • Investment firm Softbank owns 222 million shares, worth potentially $13 billion on flotation
  • Ryan Graves, Uber’s first CEO but long-since departed from the business, has shares worth just shy of $2 billion
  • Benchmark Capital, who led the Series A funding round and participated in later rounds as well, has 150 million shares worth around $9 billion

And, of course, there are many other canny investors who kept their shareholding below the 5% level at which their interest has to be publicly disclosed. Even 5% of a $100 billion business is worth $5 billion, after all…that’s a pretty decent chunk of change.

What’s extraordinary though, at least since the go-go days of the 1999 dot-com boom, is that Uber has never made a penny from operating its business.

The business lost $3 billion in 2018 alone, and $10 billion in the last three years. The only reason it still exists in the face of operating losses of that scale is because its financial backers keep giving Uber cash to grow.

But don’t worry…there is a plan…(on second thoughts, start worrying – I’ve seen the plan…)

The basic plan is that Uber crowd out smaller, more local, operators in their chosen markets…at which point Uber can raise their rates and, having eliminated their competition through a combination of predatory pricing and slick marketing, make back the losses they incurred building the business many times over.

That’s for the long-term, though. There’s clearly still plenty of work to be done crowding existing operators out of their traditional markets first, as Uber’s prospectus makes clear… “We anticipate that we will continue to incur losses in the near term as a result of expected substantial increases in our operating expenses”.

Let that sink in for a moment. Not only has Uber lost $10 billion at the operating level in the last three years, losses, presumably the multi-billion dollar level as a result of Uber’s “substantial increase in operating costs”, will continue into the indefinite future.

Of course, fast-growing businesses with great potential can sell while still loss-making and do very well out of it. But in the long run a business valuation can only be sustained by the level of profits it makes…or, if you’re taking a purist approach to company valuation, the operating cash flow it generates.

If the future flow of profits is a number less than zero, no matter what discount factor you apply, the overall valuation of the business cannot be a number greater than zero…it’s mathematically impossible.

The only way you can sell a business which anticipates making losses into the indefinite future at a number greater than zero is by being fortunate enough to find another group of people who are prepared to keep funding the loss-making business instead of you.

Usually they do that because you…or your investment bankers or PR consultants… manage to convince those investors that immense riches will somehow be magically unlocked for the lucky people who take the shares off the early investors in the IPO. because the business will do so much better in the future than it has in the past.

In essence, that’s what Uber’s IPO is all about. We’ll return to the consequences of this in a moment…

The people who really know what’s going on are the debt-holders

Before we consider what’s in Uber’s plans for shareholders, first we need to consider the role of debt in the business.

Uber hasn’t just been bankrolled by over-excited venture capitalists. It’s been bankrolled to the tune of $7.5 billion in debt as well. And the SEC Form S-1 rightly makes potential investors aware that interest payments and capital returns to its lenders would have priority ahead of any payments to shareholders, and could take up a substantial portion of Uber’s future operating cash flow.

What’s worse, from Uber’s point of view…although undoubtedly better from their bankers’ perspective…the S-1 indicates that terms on which the $7.5 billion in debt has been provided largely prevent Uber from raising additional debt from other sources.

If you wondered why Uber are heading for an IPO right now, your answer is there.

And if you wondered why you should be concerned about Uber’s IPO, your answer is there too.

Uber’s providers of debt finance have been supporting that business, one way or another, for several years now. They have a level of access to the business’s financial information that no outside stock market investor will ever have.

Here’s why that matters…

If the people who know more about Uber’s finances than anyone else have capped their risk so tightly at $7.5 billion…an almost minuscule level of debt exposure in a business allegedly worth $100 billion, you can bet your bottom dollar that they are a whole lot less convinced about the soundness of Uber’s business model than the army of investment bankers and PR consultants walking the floors of the NYSE at the moment.

For any other business with a stock market valuation of $100 billion, a debt exposure of several times $7.5 billion wouldn’t be much of a problem.

But the providers of debt finance have not only capped their own risk, they’ve made sure that other providers don’t increase their risk through the back door by adding more debt on top of the debt the early financiers have already extended to Uber.

It’s quite normal for holders of senior debt to require that their approval is sought before, for example, additional security is lodged against assets over which the senior debt holders already have security.

But Uber’s S-1 says something subtly different to that… “Our existing debt instruments contain significant restrictions on our ability to incur additional secured indebtedness. We may not be able to obtain additional financing on favorable terms, if at all.”

That’s another way of saying that Uber’s debt financiers have wrapped their loans up in conditions so tight that using more debt to grow isn’t a practical option.

Which is odd…

There’s plenty of cash sloshing around the world’s banking system at the moment looking for a home. There’s a good economic argument that suggests loading some more debt into the business would increase returns to ordinary shareholders. And banks, usually, are generally prepared to finance…at the right rate, of course…rapid growth in a successful business with a good business model.

Yet Uber’s debt-holders seem to have lent almost inconsequential amounts of money for a $100 billion business, and done so on terms which prevent Uber raising other external debt either. It hardly speaks of confidence in the business model from a group of insiders with unparalleled access to Uber’s financial records.

Which brings us back to the IPO as a way of finding a group of people who can be hyped-up to such an extent that they’ll buy a story of the sunlit uplands of a few years into the future when Uber will be the dominant transportation business in the world and able to garner excess profits through its pre-eminent market position.

Uber’s own providers of debt finance don’t appear to believe this, and neither do I.

How big do you have to get before you work out how you’re going to make any money?

For a business going for a stock market listing, Uber doesn’t seem to have much of a business model.

In their prospectus, Uber talk a good game, but it remains murky how they ever expect to generate a level of revenue which would cover their operating costs and leave a profit for shareholders.

In my opinion, if you haven’t worked out a way of billing revenues higher than the costs of running your business by the time you’re trying to convince potential investors that business is worth $100 billion, you’ll probably never work out how to do it.

Another astounding feature of the Uber listing is that they’re not even making a secret of any of this. It’s all there in the S-1 Form.

Uber, and their investment bankers and PR consultants, are just presumably hoping nobody reads much past the first few pages full of shiny happy people and vacuous corporate mission statements.

One of the great weaknesses of Uber’s business model is that pretty much anyone can compete with it. In fact, it’s hard to imagine a business with fewer barriers to entry, which is also why it’s hard to imagine profitability is anywhere on the near-term horizon for Uber.

In highly competitive markets, like the ones Uber operates in, if a business increases its prices to cover their operating costs…as Uber desperately needs to do to achieve economic stability…other providers with lower operating costs simply undercut the “market leader” and steal their business away.

That’s why Warren Buffet talks about the “moat” he likes to see round businesses he owns, where the barriers for entry are so high that competitors flooding the markets he owns businesses in are a very unlikely prospect.

Here’s what Uber’s own S-1 says about their “moat”…

The personal mobility, meal delivery, and logistics industries are highly competitive, with well-established and low-cost alternatives that have been available for decades, low barriers to entry, low switching costs, and well-capitalized competitors in nearly every major geographic region. If we are unable to compete effectively in these industries, our business and financial prospects would be adversely impacted.

Uber Technologies Inc, SEC Form S-1

Low barriers to entry and low switching costs aren’t the sort of things that would make Warren Buffet feel very comfortable, and it shouldn’t make potential investors in Uber feel very comfortable either.

Realistically, sooner or later Uber need to increase their rates to generate profits, and positive cash flow. But the moment they do, according to Uber’s own prospectus, existing “well-established, low-cost alternatives” are likely to hoover up their business..

We can’t raise our prices, so how do we make a profit?

If you’re unlikely to be able to raise your prices, the only other lever you can pull to generate a profit…and don’t worry, Uber, being a potential ‘great vampire squid’ of a business, has already thought of this…is for Uber to take a greater share of the revenue currently earned by their drivers.

That way, they don’t need to charge customers any extra, so there’s limited risk a competitor will move in and take Uber’s business away. Instead the increased share of their drivers’ earnings can be deployed to plug any gaps in the balance sheet.

You might think this was a particularly scuzzy thing to do…and I wouldn’t disagree with you…it’s not as if driving for Uber is an already-lucrative profession.

In London, a recent Oxford University report found that Uber drivers earned around £11 per hour on average, or only slightly above the London Living Wage.

Around the word, the reaction from Uber drivers to the company’s attempts to take a greater share out of an already small pot is fairly predictable. For example, Uber drivers in Los Angeles have recently voiced their fury about a 25% reduction in their per-mile rates in an attempt to put Uber on a sounder financial footing.

No wonder Uber’s S-1 says this…

…we continue to experience dissatisfaction with our platform from a significant number of Drivers. In particular, as we aim to reduce Driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase. 

Uber Technologies Inc, SEC Form S-1

So Uber’s business model is one where it can’t raise the prices it charges to customers due to the wide availability of competitors who will undercut any rate rises. And it can’t cut driver rates much more and still find people prepared to drive for them.

And all that is glossing over the continuing legal and regulatory disputes about whether Uber drivers are really independent contractors, as Uber claims, or employees who would be entitled to a much higher, legally-mandated, level of pay and benefits.

Were that to happen, Uber’s S-1 acknowledges their business model…such as it is…would suffer a severe and negative impact.

The ‘great vampire squid’ makes its move…

It doesn’t take a sophisticated financial analysis to see that a loss-making business, which can’t raise it’s prices or cut its costs…and which carries substantial risks that its costs will increase dramatically if various legal challenges go against Uber and lower-cost competitors step up the fight against them…isn’t a business model which inspires a huge amount of confidence.

As a CFO, if someone proposed that model to me in a business case, I’d be telling them to go away until they’d found an economic model that actually worked properly. I certainly wouldn’t be giving that business plan a penny.

With the cream of Wall Street financiers on their payroll, I’m sure Uber’s offering will get away in the markets. People will buy, the early shareholders will cash out and retreat to their idyllic Pacific islands without a care in the world.

Things might even appear fine on the surface for some time thereafter. The black arts of public relations can, in fact, defy gravity for quite a while.

But the laws of fundamental economics always wins in the end.

If a year or two from now Uber is still losing $3 billion a year, even as the business grows larger, investors might start to wonder if profitability was ever going to come to Uber.

At first nobody might sell, but people would stop buying.

Brokers would start having to mark the share price down to a level which attracted some buying interest.

As the share price fell, the more risk-averse investors would start selling their shares to make sure they don’t suffer an even greater loss.

Then short-sellers, who will be sniffing around Uber already as they can spot a shaky business case from several miles away, even in the dark, will load up on their positions.

In the history of the financial markets, we all know what’s going to happen next…even if the precise timing of the big swing downwards is harder to predict…days…weeks…months… a year or two…

The timing is uncertain. The direction isn’t.

Once a selling momentum gets behind a business which looks like it’s running out of cash due to its inability to generate a profit, the end is predictable…and usually not pretty.

Of course, even as the ship goes down, its cheerleaders will insist that everything is fine and investors’ money is safe.

But it won’t be.

It wasn’t in the sub-prime mortgage collapse of 2007 which led to the global financial crisis.

It wasn’t in the collapse of Long Term Credit Management in the late 1990s, which went belly-up despite having two Nobel Prize-winning economists on its board after it ran out of cash.

And it won’t be if Uber doesn’t convince ordinary investors that it’s got a business model from which investors can expect a solid financial return anytime in the near future.

As always, the people who suffer if Uber goes belly-up will be the small investors who buy now, not the early-stage funders who are cashing out in the IPO…and the drivers, given that Uber’s S-1 already makes clear that reducing payments to drivers will be one of the ways it’s going to balance the books in the future.

That’s why Uber might be Wall Street’s new ‘great vampire squid’…sucking the life savings out of legions of small investors, and sucking the hours out of their drivers’ lives in return for less and less cash per mile.

It might take a while for the markets to catch on. The IPO hullabaloo will carry Uber for a bit. And once the shareholders switch from well-connected insiders to ordinary members of the public, the likelihood is Uber will get a bit of breathing space while the new shareholders settle in (after all, the prospectus tells them it will be a long haul, so nobody’s expecting magic to happen overnight).

But in John Maynard Keynes’ immortal words. “the markets can remain irrational for longer than you can remain solvent”. Unless you’re a short-seller of unique bravery and deep pockets, now is almost certainly not the time to call Uber’s bluff.

But there are only two possible scenarios from here on in.

There are only two ways forward…neither of them good for Uber investors…

Either Uber will lose the confidence of its investors and fail.

Or it will change its business practices to be fairer to both investors and drivers.

The problem is, the way Uber is set up, either eventuality will be seriously prejudicial to its share price. Uber’s own SEC filing says so, which means thousands of small investors could lose out.

Until one or other of those events takes place, Uber’s continuing pressure to reduce payments to drivers might result in drivers sticking with the platform regardless in the short term, as they need to generate at least some cash to cover their car payments and running costs.

However, in the long run the many thousands of drivers working for Uber will have less money to spend on themselves and their families.

Their car leases will…for now…trap drivers into working for Uber, but ultimately thousands of private individuals are not going to keep subsidising the lifestyles of Silicon Valley billionaires by working for a level of economic return that doesn’t fully reflect the effort they put into the business. They’re all independent contractors. They can leave at a moment’s notice.

I don’t know if it was fair of Matt Taibbi to describe Goldman Sachs as as a ‘great vampire squid’ in his Rolling Stone article.

But I do believe that any business which is trying to unload itself onto an army small investors when it’s not in a position to say when, how or whether it will ever make a profit…

…while at the same time squeezing the payments to its drivers close to, if not below, Living Wage levels and planning to continue to squeeze them down still further after it’s “played nice” during the PR campaign in support of its NYSE listing…

…and indulging in predatory behaviour with the explicit intent of driving ‘mom and pop’ operators out of the towns and cities where they’ve made a decent, if unremarkable, living for many years…

…has the potential to directly affect the lives and financial futures of millions of ordinary people.

Maybe Uber will turn it all around and surprise us all.

But if they don’t, Uber has the potential to become Wall Street’s next ‘great vampire squid’, sucking the life out of millions of people even as they suck the cash out of their bank accounts.

Thankfully, Wall Street investment banks don’t spend their time making pitches to people like me. But if one of them brought along Uber’s prospectus and asked me in invest, I’d be laughing from now till Christmas.

Investing in Uber is one opportunity I certainly wouldn’t want igniting.

(Disclaimer: Just in case you’re stupid enough to act based on a blog post from someone you’ve never met, and wealthy enough to be able to afford a team of swanky lawyers, the foregoing is a personal opinion. I am not a regulated investment adviser in any jurisdiction and before making major investment decisions, you should consult someone who is. Unless they’re dumb enough to fall for Uber’s PR campaign, in which case you might want to reconsider your choice of investment advisor. And yes, that’s a personal opinion too, covered by the rights of free speech in every major jurisdiction.)

Picture credit: Rick Tap on Unsplash

Are you spending 50 quid to save a fiver?

When you’re a Finance Director or CFO people always expect you to “have a tight grip on costs”, “rigorously pursue cost-saving opportunities” and “implement tight procedures to ensure maximum efficiency”…or at least that’s how job advertisements for Finance Directors and CFOs usually describe the role.

Of course any good Finance Director or CFO will have a keen eye on the running costs of the business. The last thing they’ll want to do is make it harder than it needs to be to create the profit the business depends on to survive and thrive.

But sometimes the need to control what people are doing to make sure costs are properly managed can be carried too far. More often than you might think, the costs of control far outweigh any potential savings the control might bring you.

I call this “spending 50 quid to save a fiver”. That’s something no rational person would do, but it happens more often than you might think.

The best way I can illustrate this is by way of an example from somewhere I used to work (no, I’m not saying where…). Most people find it hard to believe this control process was ever allowed to see the light of day…but it did.

People I use this example with tend to chuckle and say something like “that would never happen in my business”. Which is true to a point…this is undoubtedly an extreme example…but versions of this, at a lower order of magnitude, can easily be found in just about every business I’ve ever worked in.

Here’s the logic which sets a business up for “spending 50 quid to save a fiver” – if a little bit of control is a good thing, surely more control has to be better…doesn’t it?

That’s not necessarily true. There is a diminishing return from every control system and there comes a point where dis-economies start to kick in – that is the business would run at a lower net cost if it took out the costs of the control process and just let people act in a sensible manner instead.

I’m not advocating anarchy…I’m a Finance Director and CFO, after all…

Simple procedures with a proportionate level of sign-off are essential in any organisation to create a sense of order and provide a sensible level of assurance about the business having an appropriate level of management control in place.

So here’s the example from my own career…just to be clear, I didn’t play a part in designing this system and spent most of my time in this business complaining about it, but the powers that be prioritised increasing control over reducing cost, for reasons I’ll leave to your own imagination.

In this business we had to send people overseas on a reasonably regular basis to work with partner organisations and customers spread around the world. Most people would never go overseas at all. A small number of people would go overseas three or four times a year.

To be allowed to travel overseas, a staff member had to complete seven different paper forms…yes, seven…yes, paper…

Each of those paper forms had 70 or 80% the same information on them as all the other paper forms, but each also had a small amount of information that wasn’t on any of the other forms.

The form that went to the Travel Office (yes, we had one of those) had the visa details on it, for example.

The form that went to the Finance Department had the costs on it, but not the visa information.

The form that went to the Head of International (yes, we had one of those too) had a risk assessment for whichever country the staff member was visiting, but didn’t have either the costing or visa information on it.

The form that went to the Group Chief Executive…yes, they all did…had an essay on it explaining why this particular trip was necessary, even though all our client agreements specified a certain number of visits each year on a relatively fixed timescale to dovetail with our own business planning cycle back home, so none of the trips should have been a huge surprise to the Chief Executive or anyone else..

And so on, and so on…

The original idea was sensible enough. No organisation wants people incurring costs on unnecessary overseas trips willy-nilly. I don’t think any fair-minded person…including the people who had to handle multiple 7-form overseas trip requests each year…would object to that principle.

There were some sensible concepts in there too…even though the execution was flawed. For example, final approval for all business trips was given by the Chief Executive in practice, even though there was a limit in the process which said if the trip was less than £1,000 it could be signed off by the divisional head instead.

The trouble with that was most of our business was in the Far East and it took at least a week or 10 days to travel out there, do the work required with the client or partner and return home again.

Once upon a time it might have been possible to do that for less than £1,000 but those days were long gone. So, although there was, sensibly enough, a limit in place to avoid involving the Chief Executive unnecessarily, that limit was set far too low to be meaningful and in practice he got to sign off everything.

From perhaps even a relatively reasonable starting point…if I give the maximum amount of credit to those involved initially…over the years, the whole process just got out of hand.

There was a sensible solution, of course. One electronic submission which went everywhere with all the information entered only once…which, ironically, we did with other decisions in the business requiring multiple sign-offs, just not with travel requests…combined with a sensible view on what the costs of a 10-day trip to the Far East might reasonably cost would have been a good start.

However, that’s not the only downside of this process. There were some significant cost penalties from this “tight system of control” too.

For starters, in general, air travel is cheaper the earlier it’s booked. And the nature of this business was that most trips could be predicted a couple of months in advance.

But it took between two and four weeks to get the necessary “live” signatures on all seven travel forms before a booking could be made. So it wasn’t unusual for air fares to have increased in the time between the trip being requested and sign-off being received, necessitating another “go round” of the process to get a higher budget signed off.

So let’s think about this process…designed to “ensure tight cost control” and “ensure robust processes are implemented”…

We had a Travel Office to coordinate many, but not all, elements of this process. They didn’t do the travel bookings, for example…that was subcontracted to a travel agent…they just handled the paperwork.

Including salaries and on-costs, there was probably the thick end of £100,000 per year just in the costs of this department…even before a single flight or hotel was booked.

The dozen or so signatures required on the various bits of paper…some required more than one signature on them…meant that a whole range of pretty senior people were spending time scrutinising the travel arrangements for someone who, in practice, they didn’t know and had no way of fully appreciating (despite the essay-style forms in some cases) precisely why someone was wanting to arrange the trip they were being asked to sanction.

Because all travel requests ultimately went to the Chief Executive, you can bet your bottom dollar that everyone whose hands touched one of those seven forms made absolutely sure they knew as much as they could in case the Chief Exec asked a question about their particular part of the process.

In practice, there was a flurry of emails and phone calls from different senior managers to the person proposing to travel overseas just on the off-chance the Chief Executive asked that particular senior manager about the trip. He rarely did, in practice, but still…just in case…

So to “save money on travel” we had a system which required a department costing £100,000 to administer.

Taking account of all the preparation time for the seven paper forms and the multiple sign-offs by senior people, up to and including the Chief Executive, that must have cost at least another £100,000…with an opportunity cost probably a lot higher than that.

And because we tended to end up paying more for air travel than we needed to, due to the delays in making bookings which this convoluted system forced upon us, we probably dropped another £100,000 there.

This was in an organisation which, whilst by most business’s standards did “a lot of international travel” but spent less than £1 million each year on it.

When the “overhead” of running a supposedly robust process is one-third of the cost of doing the activity in the first place, that’s a sure sign the admin burden has got completely out of hand.

Metaphorically, that business spent 50 quid to try to save a fiver.

There’s always a better way than that. All it takes is an outbreak of common sense.

(Photo by Alexander Mils on Unsplash )

10 business lessons from one of the world’s greatest drummers

Former drummer for The Police, Stewart Copeland, fronted a great BBC 4 documentary the other evening. (At the time of writing, still on iPlayer for another month…don’t miss it!)

I’ve long taken the view that music can teach us everything we need to know about business…but to give myself an extra challenge, I thought I’d forget the rest of the band for a change and today focus solely on the drummer.

Here’s 10 fundamental business truths courtesy of the legendary Stewart Copeland (plus a bonus at the end)…

  1. Even in a short-ish programme, there were a couple of times Stewart Copeland grated on me a little…apparently this was pretty much Sting’s experience too, back in the day. But, even as a big music fan, I learned so much I didn’t know before from watching his programme. (Moral of the story: don’t discount what people you don’t like are telling you. They always know things you don’t.)
  2. Stewart Copeland has an irrepressible enthusiasm for his craft. He’s taken the time to study it, to find out the history of it, to seek out other practitioners of it. (Moral of the story: even if you’re world-famous in your area of expertise, there’s always more to know and more to learn. The greatest drummers, and business leaders, never stop learning.)
  3. Stewart Copeland works really hard. If you watch him on a drum kit, he never stops. His drumming defined the sound of The Police, one of the biggest bands in the world. He had to work twice as hard as most drummers to fill out the sound because The Police were a three-piece band, rather than the more usual four or more members. (Moral of the story: if you want to be successful, hard work isn’t optional.)
  4. The greatest people at any task are those who think differently about the job in hand. Buddy Rich, Keith Moon, John Bonham…and indeed Stewart Copeland himself…all had a very distinctive, instantly-identifiable style. (Moral of the story: the greatest successes come from doing things very differently from everyone else, not just doing what everyone else does 5 or 10% better.)
  5. There’s always a place in the market for something different. In the early years of rock and roll, drummers sat at the back of the band with their heads down, doing their best to be invisible. Then Keith Moon came along and the whole country knew the name The Who’s drummer, even if they weren’t a fan of the band itself. How many other drummers do you know the names of? I’m guessing not many. (Moral of the story: never think “everything has been done already”. It never has been.)
  6. It surprised me to learn that modern drumming started out in the distinctly un-modern world of the Deep South just after the end of the American Civil War. (Moral of the story: there’s always a deeper reason, and a longer history, for whatever you’re grappling with than you think. Problems, and opportunities for that matter, don’t just pop up from nowhere…they started out years ago, barely noticed at the time, and snowballed into the problem or opportunity you’re grappling with today. Pay attention to the little things that cross your path…sooner or later, they’ll become the big things.)
  7. One little invention – the foot pedal for the bass drum – seemingly inconsequential at the time, made the modern drum kit possible. Before that, there was no way a drummer could simultaneously play several different shapes, sizes and tones of drum to engage better with a tune and drive the song the way modern drummers do. (Moral of the story: don’t wait forever for a “big idea” to come along. Continual innovation, and trying to improve even a tiny amount every day is the best way to succeed. A simple lever was all it took to change the world of drumming for ever.)
  8. The segment with Sheila E. (Prince’s drummer and musical director) alone was worth watching the whole programme for. She made her own way as a woman in a man’s world and, I’m sure, wasn’t always met with the support her talent deserved as she climbed the ranks of professional drummers. (Moral of the story: never let anyone tell you that you can’t achieve your ambitions. Give full rein to your talents, and work hard. You can achieve anything as long as you don’t give up.)
  9. Also from Sheila E…what you do between the beat is as important as what you do on the beat. A 1-2-3-4 rhythm quickly gets boring and mundane. Great drummers add light and shade to help tell the story of the song. But she also said it was important not to overdo the “between the notes” playing or you’ll lose your audience too. (Moral of the story: more is not always better. And it’s a matter of art, not science, as to what the optimum balance is, even in something that seems as mathematically-governed as playing 4 beats to the bar.)
  10. Stewart Copeland played with a huge variety of amateur and professional drummers on his programme…from people on the streets of New Orleans to superstars in their own right like Sheila E, Chad Smith of the Red Hot Chilli Peppers, Taylor Hawkins of the Foo Fighters and John Densmore of The Doors. No matter what he was doing with another drummer Stewart Copeland had a smile on his face the size of a barn door. (Moral of the story: if you can find just one activity that makes your spirit soar, do it as much as you can for the rest of your life. Stewart Copeland won’t be going to meet St Peter grumbling to himself about spending too much time on his drum kit…it’s what he was born to do. Find out what you were born to do, then pray for one-tenth of the joy drumming gives Stewart Copeland. You’ll spend the rest of your life with the biggest smile imaginable on your face.)

Final bonus lesson…I got all this (and more, I could probably have written 50 points if I put my mind to it) from watching a TV documentary about very much a minority interest subject on a channel that is itself a distinct minority interest for the British television-viewing public. There’s always something you can learn, even in the unlikeliest places, if you keep yourself open to the learning opportunities that come your way.

If you’re a music nerd like me…or even (gasp!) someone who has no idea what this article is all about, you can see Stewart Copeland “on duty” in this great live performance…

You see, learning opportunities are everywhere if you pay attention to what’s going on around you…and yes, even drummers can give you a lesson or ten about what really matters in your business.

(Photo by Oscar Ivan Esquivel Arteaga on Unsplash)