As a controller in the 1980’s, my Plant Manager often called me a “creative accountant”. That’s because I had a knack for getting the monthly actual cost to match the budget most every month. Without breaking any laws or regulations, I simply learned how to use accrual accounts and inventory reserves to keep the corporate watchdogs from calling. But in the 1990’s, managers need more value when they ask their accountants for creative solutions to business problems. The best practice accounting method most synonymous with the word “creative” is Activity Based Costing (ABC).
ABC was created in 1986 to meet the decision-making and cost improvement needs of all industries. With its common sense principles and outstanding results, ABC meets Generally Accepted Accounting Practices (GAAP) and other external reporting requirements. Learning “how to” do ABC is a thought provoking experience for accountants and non-accountants alike. And implementing ABC provides another set of creative experiences for those people most closely involved in the project. But after the pilot project, the creative juices of ABC’ers seems to diminish.
Do you want to become more creative? To re-energize my own creativity, I recently read “Color Outside the Lines”by Howard Hendricks. I have combined some of his ideas with mine to provide some methods to improve your Activity Based Creativity:
- Spend time with creative people. Look for people in other professions that you admire and that exhibit creativity. Don’t limit yourself to your industry or the business world. For example, Peter Drucker in his book“Management Challenges for the 21stCentury” says that people in business can learn a lot of creative methods from the pastors of the fastest growing churches in America called mega-churches, e.g. non-denominational churches with attendance in excess of 1,000 every Sunday. Talk with college professors, entrepreneurs or politicians.
- Spend time with creative ABC people. Look for experienced and creative ABC people. Talk with them. But don’t limit your search to ABC’ers in your industry. Some of the most creative ABC implementations today are in the service industry and local government. To find people to talk with read ABC magazine articles, ABC books, attend ABC conferences or visit ABC web sites. Local professional organizations, such as the Institute of Management Accounting (IMA), typically have ABC’ers in attendance. For book reading ideas, see Tom’s Top 10 recommended books at http://www.icms.net/tomspicks.htm.
- Write an ABC article.While reading can provide creative ideas, writing gives you cause to reach deep within yourself. Writing exposes your creativity. Howard Hendricks makes a profound statement in his book: “Not everyone approaches the art of writing with ease and comfort. But those who labor to develop their artistry with words experience a profound satisfaction — that of fashioning into language ideas clothed in a wardrobe fit for the occasion.” Write an article. I’d love to read it and possibly publish it in The Journal of Cost Management.
- Ask questions of fellow employees.There is a skill in asking questions that arouse curiosity, creativity, challenge conventional thinking and correct false assumptions. Go beyond the typical ABC questions of “What are your activities?” and “Do you think this activity is value or non-value?” Here are some creative ABC questions to consider using:
- “What would be our customer’s Top 10 questions if they saw our product’s ABC Bill of Activities?”
- “What incredible invention would make our ABC system easier to maintain?”
- “What barnyard animal would we choose for our ABC mascot?”
- “If we can’t get employees to use their ABC reports, what unusual or outrageous act might get their attention?”
- “Top management has been wiped out by a tidal wave at their annual retreat in Bora Bora; when your ABC team is put in charge of the company, how would you use ABC to change things?”
- Create a Creativity Team. Some of the most successful ABC’ers have assembled a diverse team to oversee and optimize their system. To augment your employees on the ABC team, consider adding a local professor, knowledgeable consultant/coach, a Vice-President other than the CFO, a supplier that uses ABC or maybe a psychologist. Author Dee Hock says “The problem is never how to get new, innovative thoughts into your mind, but how to get old ones out. Make an empty space in any corner of your mind, and creativity will instantly fill it.”
Wouldn’t it be great if our mind growled like our stomach does when it is hungry? Zig Ziglar says, “From the neck down, very few people are worth more than $100 per week. From the neck up, there is no limit to what an individual is worth. We feed our stomachs, the $100 part below our necks, every day.” Spend some time and money in the next month to feed your ABC million dollar mind.