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
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.”
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
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
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.”
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.”
What also makes the scheme a success is that it takes the risk out of
suggesting new ideas. “When it comes to creativity, fear can be an inhibitor,”
says Clinton Lucy, principal consultant at Bath Consultancy Group, which advises
companies on leadership and transformation. “Fear is also an inhibitor to high
performance and, paradoxically, it’s some of the higher performers who are most
Wishful Thinking’s McGuinness adds, “Fear of getting things wrong and being
criticised for getting them wrong is one of the blocks on creativity.” He
suggests not just looking for the ‘right answer’ to a problem, but also trying
to find a second, third and fourth ‘right answer’. It encourages FDs to look at
alternatives, he argues.
Away from the numbers
Even the most uptight FD could have a spark of creativity, argues Derek
Cheshire, owner of Creative Business Solutions and a specialist in creativity
and innovation. One problem is that FDs too often look at problems in numbers
only. At his workshops, Cheshire gets managers to model their organisations in
Play-Doh or Lego. “It gets them thinking more about how their organisations work
and the different connections between people and resources,” he says.
Yet there is no one way to come up with creative ideas. At Motivcom, an
Aim-listed marketing services group, employees will often brainstorm ideas, says
FD Sue Hocken.
“Somebody’s idea might seem a bit kooky, but by discussing it, you can
sometimes get a good solution,” she says.
This year, Hocken has been doing some creative thinking on keeping the
company’s salary bill under control during the downturn. She’s starting a
scheme, originally suggested by the sales department, which allows staff to
‘buy’ extra holiday in return for a reduction on their salary spread over the
year. It’s early days, but it looks as though more than one in 10 staff may take
up the offer.
There are many ways for FDs to get more creative, but Lucy notes that crea
tivity often flows from people who question existing patterns and widen their
“You need to ask why something is done this way and whether there are other
ways of doing it. Asking questions is a way of challenging things that have been
done for a long time,” he says.
Create to innovate
1. Lateral thinking
A good starting point if you feel you need to open up your mind and think the
unthinkable. Invented by psychologist Edward de Bono, who says it’s a way “to
generate new ideas and escape from old ones,” it works by ‘discontinuous leaps’
and free associations in thinking to produce new ideas. Check out de Bono’s
book, Lateral Thinking for Management.
2. Mind gym
Perhaps part of your problem is that you don’t recognise when and where you have
your best ideas. Research by Roffey Park Management College found that
inspiration comes from the interplay of three factors:
• An urgent business problem
• Personal experiences and insights
• A creative environment
Your good ideas could come when you’re playing golf or lounging in the bath. If
so, get out the clubs or the loofah.
Now you’ve loosened up your mind, you need to use it. Brainstorming is a way of
generating new ideas. But it’s best done in short bursts when the mind is fresh.
Read James Webb Young’s classic A Technique for Producing Ideas for
4. Reverse brainstorming
Can’t think of any good ideas? Then think of some bad ones instead.
Psychologists say it’s easier to be negative than to be positive. Once you’ve
got all the bad ideas, you can see if the opposite works as a positive idea.
5. Hot groups
Time to get your colleagues thinking creatively. Try a hot group – in which you
assemble some hand-picked talent and ask them to come up with answers to a press
ing problem against a tight deadline. Have a mix of personalities – a visionary
one, a practical one, a technologist, a people-person – and let members spark
off one another. Read Hot Groups by Jean Lipman-Blumen and Harold J Leavitt for
6. Deep diving
If the hot group finds the temperature rising, tell it to try some ‘deep diving’
– a combination of observing, brainstorming and prototyping. Tom Kelley tells
you how to do it in The Art of Innovation.
7. The 15% solution
This was manufacturing giant 3M’s way of discovering new ideas – giving staff
the opportunity to spend 15% of their time working on their own projects. The
Post-it Note was one of the success stories.
8. People watching
“Innovation begins with the eye,” according to IDEO, the Californian design
company that has become a master of using ‘people watching’. Looking at how
people do things can provide plenty of ideas about how to improve products or
services – or even internal processes. Those people you’re watching, after all,
can be your own employees.
9. Scenario planning
Time to get heavy. A big commitment is needed to do this properly, but the
spin-offs can be enormous. Scenario planning is a structured way of looking at
how the future might pan out. Then you can make plans on the basis of the most
likely scenario. Oil company Shell is the past master and Peter Schwartz
explains why in The Art of the Long View.
10. Value innovation
A concept from business school Insead’s W Chan Kim and Renée Mauborgne. The idea
is that companies should be looking for new ‘market space’ where competition
doesn’t yet exist. The method: seek out ways to give customers quantum leaps in
value. Their book Blue Ocean Strategy explains.