Release the creative genius: finding smarter solutions in troubled times

Illustration: David Lyttleton

Creativity isn’t always the first quality that springs to mind when people think about finance directors. They’re not called beancounters -­ usually behind their backs -­ for nothing. Yet, as the ‘credit crunch’ and ‘global recession’ rewrite the financial rule book, creative is what many FDs need to be if they are to steer their companies through the rocky shoals ahead.

Like many FDs in these straitened times, Barney Bannington was having trouble raising finance for a project. Bannington is chief financial officer of a captive Luxembourg investment scheme that funds the European expansion strategy for e-shelter, a German company with e70m turnover that builds and operates data centres.

Bannington, who is also UK managing director of e-shelter, wanted to bankroll building another UK centre, which was proving difficult.

“As everyone is aware, getting any kind of finance at the moment is extremely challenging,” he says. His main problem was that real-estate investors willing to put their money into the bricks and mortar didn’t want to share the operating risks once the data centre was up and running.

“A data centre has very challenging service level agreements to meet as part of its contracts with customers. This adds a substantial element of risk for the property owner,” he says.

It was clear that if he was going to find the money at a time when investors were averse to new projects anyway, he needed another approach.

He decided to get more creative in finding investors for his data centre project. “We divided the structure of the company into two parts ­ one owning the property and the other being responsible for its operation,” he explains. “In this way, investors in the property company are protected from operating risk because it’s contained within the operating company ­ making the property company a more attractive investment proposition.

“We then looked at a different group of investors for funding the operating company ­ which is a much smaller part of the total sum needed. The approach enabled us to attract investment from a private equity fund which has provided the capital to acquire the site for our new campus and begin building.”

Free thinking
Can the pin-striped pillar of financial orthodoxy become the free-thinker that companies need post-recession? One clue lies in the fact that many FDs have shown themselves adept at financial innovation in the past. (Too adept in some cases.)

But the kind of imagination they need to display in the future will have to go further than the finance function. They will need to play their part in finding new kinds of solutions for the broader business problems their companies face.

The good news is creativity is a skill that can be learned, according to those who have studied its uses and abuses in business. “It comes down to motivation,” says Mark McGuinness, who runs Wishful Thinking, an organisation that trains and coaches managers to become more creative.

“If you can see the benefits of being creative, the chances are you’re going to do it. If you’re in a situation where conventional wisdom works, you have no motivation to do it.”

Be inspired
How does e-shelter’s Bannington seek out new ideas? “I don’t think the answer comes in a flash of lightning. It’s something you chew away at over a period of time. You talk to people and gather other opinions. Then, one day, you wake up in the morning and suddenly you know what you need to do.”

Bannington’s approach echoes those of creative thinking ‘gurus’ who believe ideas can come simply by observing others (see Create to innovate, point 8) or from working out where you get your best ideas and replicating the experiences (see point 2).

The challenge for FDs is not just to get more creative themselves, but to encourage and lead innovation throughout their companies. Daryl Scales is UK and Ireland FD at Enterprise Rent-A-Car. He’s a great believer in encouraging everyone to be on the lookout for new ideas that can save cash without harming the service the company provides in a very competitive market.

Here’s an example of the type of smaller scale creative thinking Scales encourages. An employee realised that the company was putting both tax disc holders and no-smoking stickers in fleet cars separately. The creative idea was to print the “no smoking” sign on the back of the disc holder. It was a simple solution ­ and it saved the company £15,000 a year.

In another example, the IT team identified 382 telephone lines in the company that had no particular purpose. Cancelling them resulted in an annual saving of £50,000. Scales points out that small savings such as these soon accrue to a “surmountable reduction in cost”.

Enterprise Rent-A-Car employees who come up with ideas are awarded an “olive”, a scheme pioneered by Bob Crandall, former president and chairman of American Airlines. He saved the airline $40,000 a year by taking the olive out of in-flight meals. (Most people never ate them anyway.)

Keep it simple
Scales believes companies need more of this kind of cost-saving thinking now. “The key to the initiative is its simplicity,” he says. “It’s a straightforward idea that everyone ­ from our board through to our back-office support staff ­ can quickly get on board with, creating a momentum for change. “It isn’t an inaccessible, complex business improvement tool. It’s a way of encouraging simple improvements that deliver a big difference.

“Everyone in the business is an expert in what they do. The olive concept is a way of recognising that expertise and encouraging people to innovate in their own area of the business in a way that benefits the entire organisation. It’s the whole-company approach that ensures the olive programme is such a success.”