Is it possible to promote a spirit of creativity and entrepreneurship in a business within a culture of

discipline?

 

In the 1960s Abbot Laboratories exemplified just that. The company used rigor and discipline to enable

creative leaders to have freedom, as well as responsibility, within a framework of clear constraints.

 

In 1968 Abbott hired a financial officer who did not see himself as a traditional accountant or financial

controller. Rather, he set out to invent mechanisms that would drive cultural change. He created a whole

framework of accounting that he called Responsible Accounting. Every item of cost, income, and

investment would be clearly identifiable with a single individual responsible for that item.

 

The idea was that every Abbott manager in every type of job was responsible for his or her return on

investment. There would be no hiding behind traditional accounting allocations, no slopping funds about to

cover up ineffective management, no opportunity for finger-pointing.

 

The beauty of the Abbott system lay not just in its rigor, but how it used rigor and discipline to enable

creativity and entrepreneurship. Financial discipline was a way to provide resources for the really creative

work.

 

Abbott reduced its administrative costs as a percentage of sales to the lowest in the industry and at the same

time derived up to 65 percent of revenue from new products introduced in the previous four years.

 

Entrepreneurial leaders were recruited and given freedom to determine the best path to achieve their

objectives. On the other hand, individuals had to commit fully to the Abbott system and were held

rigorously accountable.

 

But they had freedom, freedom within a framework of discipline.

 

Source: Good to Great, Jim Collins