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Creative treasury could boost your company’s productivity

Creative and treasury are two words not often uttered in the same breath, but research shows that a lack of creative thinking can hamper productivity. There is huge pressure on business leaders to make the right choices and to run operations as efficiently as possible. But this leaves very little room for experimenting with innovative processes, services or products, partly because the fear of failure is too great. It may be counter-intuitive but this fear of failure is cramping the will to innovate, which leads ultimately to a loss of productivity.

In an interview with Knowledge@Wharton, Jennifer Mueller, a professor at the University of San Diego, discusses what is stopping business executives from thinking creativity. Many of Professor Mueller's arguments are relevant to how corporate financial or treasury departments operate.

Corporate creativity-blockers

She makes several interesting points:

  • Creative ideas are great but all companies want to make “correct, accurate, good” decisions. The problem is there's no way of telling whether creative, new ideas will work in practice and what the results will be.
  • Creative ideas don’t have metrics and they are therefore “unknowable”. Mueller says: “Instead, a way to think about creativity might be better served by not thinking like a decision-maker but like an inventor figuring out and getting curious about the answer.”
  • New solutions/systems may seem faulty to begin with but that's part of the learning curve in any process that embraces innovative and creative ideas. Mueller points out that although solutions initially seem to fail, they ultimately change, develop and get better (she gives the example of Obamacare in the US, which had initial teething problems with its online systems).
  • There is huge pressure on business leaders (and the younger millennial generation) to make the correct business choices, with no margin for 'failure'. This leads to people being unwilling to experiment.
  • Corporates place huge focus on the “how/best” mindset, subscribing to the idea that there is one best way to do things. This is enshrined in one of the favourite corporate buzzwords of the moment: 'best practice'.
  • There is a definite link between lack of creativity and loss of productivity.

Changing the mindset

To get away from the corporate mindset that values the tried-and-tested processes that deliver predictable, reliable results, Professor Mueller, who has written a book on this subject, urges corporate executives to focus a little less on metrics. Metrics can measure and benchmark established processes but they can be misleading. They can't gauge the potential of new ideas, such as a new venture or a new way of doing something. What's need to assess something new is gut instinct. She notes that looking for patterns won't help you to see the best way of doing things either: “innovative ideas don’t look like the pattern, by definition.”

Should treasury throw out 'best practice'?

Treasury isn't a role that typically requires huge amounts of creative thinking. Some might say the less the better. After all, treasury is there to mitigate company risks and ensure stable cash flows and liquidity when and where needed (among a myriad other responsibilities). And it's treasury's focus on best practice that really encapsulates the need to use efficient, established processes that deliver the best, most reliable results. Yet Professor Mueller says that best practice means “don’t change” and “do what everybody else is doing”. In treasury, embracing best practice often means adopting a globalised approach and international standards – but to improve your corporate treasury processes, it will always be necessary to change and to do something that others aren't.

When creativity boosts treasury

Some areas of treasury might lend themselves more to creative thinking than others. Every company will have its own unique set of requirements and business processes relating to its supply chain, for example. These will differ according to your company's industry sector, business model and global footprint. There may not be a 'best practice' that suits your company's supply chain perfectly, so treasury will need to think creatively to find the best ways to pay, to manage communications, to manage bank relationships, to manage FX exposures, etc. There's been much talk in recent years about virtual accounts and how these can revolutionise accounts receivable and enable 'on behalf of' payment structures. Adopting new ways of working can bring great cost benefits for companies – and can make all sorts of processes simpler, such as compliance or bank account administration. There may not yet be a 'best practice' manual on implementing such structures but you could bet on it that quite a bit of creative thinking is needed to get an innovative treasury structure in place. There may be some false starts but you can't say that some treasurers don't think creatively.

CTMfile take: Is it terribly unfair to say there's no creative thinking in the world of corporate treasury? When was the last time you used your creativity to get something new done in your treasury department? (It sounds like a bad interview question but we'd love to hear in the comments below).

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