CHAPTER SEVEN

The Benefits of Creativity In today's world of global enterprise, were you to ask the average corporate executive what area of their business would most benefit from creative thinking, the answer most likely would be marketing or perhaps advertising or even research and development. And if you were to ask what areas of business would benefit least from creative thinking, the answer would undoubtedly be accounting. Creative accounting in the era of Sarbanes-Oxley would probably conjure up issues of unethical practices and cooking the books. But think about such accounting practices as Activity-Based Costing (ABC), a costing model which identifies activities in an organization and assigns the cost of each of those activities with resources to all products and services according to the actual consumption by each. Or Balanced Scorecard and its derivatives, the presentation of a mixture of financial and non-financial measures each compared to a target value within a single concise report. Or even Economic Value Added (EVA), an estimate of a firm's economic profit being the value created in excess of the required return of a company's investors (being shareholders and debt holders). Behold the product of the creative process applied to the discipline of accounting.