don&amp;#39;t be afraid to grow

Don
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don't be afraid to grow

13 years 9 months ago

SA Time: Wed Sep 21 2011 14:40:37 GMT+0100 (GMT Daylight Time)

Businesses need a creative side

September 18 2011 at 09:29am
By Vuyo Jack

Steve Jobs, chief executive officer of Apple, founded the technology company in 1976. He is regarded as the best second-act story in business history.
Recently there has been a lot written about Steve Jobs’ departure as the chief executive of Apple. As of this month, Apple is the largest publicly traded company in the world by market capitalisation and the largest technology company in the world by revenue and profit.

The fascination people have about Jobs is his ability to bounce back and have great breakthrough. He started Apple in 1976 with Steve Wozniak and Mike Markkula, which came with the first commercially successful lines of personal computer in the 1980s. After a tug of war with Mike Sculley, Jobs resigned from Apple.

During the years of his absence the creative output and the share price of Apple went down. In this period Jobs formed Pixar, an animation company, that he eventually sold to Disney. He returned to Apple in 1996 and the rest is history.

Jobs has become iconic as the best second act story in business history.

So my analysis will focus on the ever constant tussle between the creative view versus the accountant’s view of running business.

First, the creative view of running a business beats the accountant’s view of running a business. Without the creative side there is no business to even speak of.

The creative side requires imagination coupled with action to bring about the thing imagined into actual existence.

Accounting then comes into play to measure the impact of the actions taken, which is an after-the-fact phenomenon because the accounting process is focused on reporting factual historical information.

This is why it is easier to look at things based on hindsight about what actions should have been taken to yield the best results. Accounting reporting does not take the risk of predicting results arising from possible actions, which is the domain of the creative part of business.

Second, accounting reporting is a useful accountability tool to use to measure the impact of the creatives in the business in terms of rands and cents. It brings about controls that help to maximise value.

However, the value in a business is mostly attributable to the creative energy that is flowing within the key parts of the business. So this accountability function played by accountants makes them the hated part of the business because they ask the tough questions that affect the final output of the business and the efficient use of the company resources.

This also causes accountants to be risk averse within the organisation because they focus on the bottom line impact of every decision made within the company.

So why is this relevant?

In most companies where you have the creative types running it, great value is created if it is balanced by the proper accounting teams.

If you have one extreme it would be the tech bubble of the 2000s, which showed the impact of creatives being given unfettered freedom in running the business without the proper accounting checks and balances. This led companies to be overvalued even when they had no sustainable tangible revenue potential to speak of, but only showed the creative potential.

On the other extreme you have businesses that are so obsessed with reporting controls that they lose the creative spirit that is needed to grow the company. This is the story of Apple in the years of the absence of Jobs.

Some companies in the motor industry also fell into the same trap where accountants’ view of business is takes priority over the creative view. Enron is another example of accountants’ view of business gone wild because of the manipulation of reporting which managed the appearances of success rather than having real substance coming through.

So the trend you see around the world is that most of the valuable companies are run by creatives but balanced by good flexible accounting brains.

Unfortunately, if you have a business run purely by accountants without the creatives at the fore you have the risk of the business declining.

In the early years of the accountants’ reign you will see a lot of restructuring which improves the reported figures but does not necessarily grow the company.

There are notable exceptions where chief executives might have the accounting background but are also using the right side of their brain extensively. These are the Brian Joffe’s of this world.

So in the final analysis of things the creatives are needed more in business as drivers of growth within companies, with the masterful balance brought about by accountants. This is Jobs’ legacy.

Ironically, this view comes from the chartered accountant that I am. - Vuyo Jack

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Creative Engineer , wrote
03:25pm on 20 September 2011

You can teach a creative person the basic of accounting. But you cant teach creativity. It based on how you grow up first 5 years. Most critical
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Rey cabrera, wrote
10:03am on 19 September 2011

You are very correct. However the top of the company controls the balance of power between the two. So whiteout Steve who knows where the scales will tip.

www.iol.co.za/business/opinion/columnist...ative-side-1.1139552

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Don
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Re: Re: don't be afraid to grow

13 years 9 months ago

#160783

I hear from family that school children listened and watched the bokke this morning....during school time......now why can this not happen when a super horse/ international star is running??? if we can have national pride for rugby, we can have national pride for equine athletes????

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