INNOVATION AND CREATIVITY - 9

Lecture 2

Creativity and Innovation in an Entrepreneurial Organization

Growth and development cannot be sustained without additional innovations (usually in the
product or services or in its marketing) with additional innovation, firms become “glamorous”
introducing new products is seen as part of the process of innovation, which is always seen as
the engine driving continued growth and development.
The winning performance of the entrepreneur and the organization focuses on:
 Competing on quality not prices
 Domination of a market niche
 Competing in an area of strength
 Having tight financial and operating controls
 Frequent product or services innovation (particularly important in manufacturing).

INNOVATION AND CREATIVE PROCESS (teach this)

Innovation Management Process
Management, response to optimal technical change and innovation are crucial duties of an
entrepreneur, failure to accomplish these may undermine the basis of his /her venture existence.
There are four-stage processes which is relevant for managing and responding to technical
change and innovation which is by its nature useful for enterprise existence.
These are:
Stage 1: This involves the scanning of the environment for relevant signal indicating
opportunity for change.
Stage 2: This involves deciding which of this signal to respond to, based on the strategic view
of how the enterprise can best developed
Stage 3: This involves acquiring resources to enable a firm respond to his signal and might be
as a result of research and development.

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Stage: Implementing the project; developing both the technology and market in order to
respond effectively.

BASIC ELEMENTS OF THE CREATIVE PROCESS

The process of creating interesting ventures is inherently dynamic and versatile. There are
many aspects to the approach and the stages of the creative process. Some insight into the
process is given below:

Step 1: Preparation
The first stage, of course, is the preparation of some basic ideas to hold onto. There has to be
some inspiration that “forces” or “prepares” the entrepreneur to move forward. The creative
process starts with identifying a problem and then researching for related information. This is
done in an effort to start looking for a viable solution. An entrepreneur looks in every direction
to solve the problem, be it inside the industry or outside.

Step 2: Thinking outside the box – going beyond the comfort zone
Can we achieve anything if we are not willing to go beyond our comfort zone? One has to leave
the comfortable arena, go beyond and take a risk. Rewards come with efforts.

“Thinking outside the box” is an expression that has been used in marketing, business and
psychology since the 1970s. It owes its origin to a “nine dot” game that was once used as a test
of creativity. The puzzle was designed such that the person had to go beyond the dots to find
the solution. However, psychologists say that this “external” factor is not really external, it is
simply the existing solution to the problem. “External” is only how our brain tends to perceive
it.

Step 3: Creativity isn’t magic

Despite the immensely amazing things creativity can achieve, it is definitely not magical.
Creativity is simply approaching things with a different perspective. The simplest approach to
creative thinking can be copying different elements, transforming them, combining them and
eureka! There is a new idea. This essentially makes use of existing elements. As Kirby
Ferguson says, “It happens by applying ordinary tools of thought to existing materials. And the

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soil from which we grow our creations is something we scorn and misunderstand even though
it gives us so much — and that’s… copying.”

Step 4: Incubation
During the incubation stage, ideas that have the potential to solve a problem tend to flourish.
This stage is characterized by the unconscious thought process of refining an idea. Apparently,
there are many activities at work during this stage, but the overall goal is to find a solution.
Evaluating existing projects can help to generate viable ideas. Some researchers even refer to
the creativity process as re-creativity since it takes inspiration from existing ideas and molds
them in an innovative way.

Step 5: Illumination
Incubation leads to clarity of ideas. This is the “solution finding” stage. Now the creativity
process leads to the knowledge of some practical ideas that can be put to work. It is like a “light
bulb” moment, hence it’s called illumination.

Step 6: Verification
This stage determines whether the “found” solution even has the potential to work or not. The
idea can either be accepted as such, modified with minor or major changes, or rejected
altogether, requiring that the whole process be done again.

Step 7: Critical thinking

Generating innovative ideas is a comparatively easy task. The major success of an
entrepreneurial endeavor lies in critically examining the viability of an idea. Critical thinking
enables an entrepreneur to self-judge in order to evaluate the idea. It is defined as a self-
directed, self-disciplined, self-monitored and self-corrective process of evaluating an idea.

No one else is aware of the aspects of the problem as well as the proposed solution like the
entrepreneur is. Therefore, a very honest opinion about the viability of the idea can come from
the entrepreneur himself.

Critical thinking offers many competitive advantages to the entrepreneur, such as:

It helps formulate the best possible idea.

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It allows for exploring new horizons and seeing the big picture.
It enables the entrepreneur to evaluate and ask questions that have not been considered
previously.
It helps in taking decisive actions; the result of creativity.
Therefore, the process of creative thinking that starts with brainstorming “ends” at the critical
analysis of the idea’s viability. The resulting potentially viable ideas can lead to the creation of
actual entrepreneurial enterprises or improvement of the existing ones.

HOW TO BE CREATIVE AND THINK OUTSIDE THE BOX

In business, if one aspires to achieve more, then it requires doing more. Everyone is
comfortable with the norms as they are pretty established with few chances of risks. However,
entrepreneurship cannot thrive on the “norms”, rather it requires building something innovative
from those norms.

Creativity leads to innovation, which in turn leads to improvement in the business one way or
the other. Creative thinking leads to new products and services, increasing market competition.

Creativity being a very important factor of the whole endeavor can sometime not be that easy
to achieve. An entrepreneur cannot rely upon occasional “light bulb” moments to achieve
professional greatness. However, there are certain ways that can “train” the entrepreneur to be
able to think creatively on a frequent basis, boost the process and make it more efficient.

Think freely, but focus on the major question you want answered, the product you want
developed, or the area you want improved.
Free thinking is primary to creating more contemporary and profitable business practices.
Likewise, a creative mind is expected to come up with innovative ideas; something not thought
of before. However, the basic focus of the creative process should revolve around a problem
and building a solution for it. Putting up some restrictions and establishing some parameters is
important in the creative process. Endless opportunities interfere with the generation of viable
ideas. Focused thinking helps in detailed idea generation that has the potential to be
implemented.

Brainstorm.
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Choosing a successful idea requires that there are enough viable ideas on the table in the first
place. Creative thinkers need to churn out every possible alternative they have in mind. In fact,
the collection of ideas or brainstorming is so important that there should be regular
brainstorming sessions. This helps in compiling every idea starting with the most absurd ones.
One should know that a very weird idea could be made wonderful later on.

Encourage and reward creative ideas of your team.

The team can be the greatest asset an enterprise can have. Conscious efforts should be made to
encourage the employees to think creatively. There could be small trips arranged for employees
to get inspiration and effectively engage in creative thinking. At the end, there should be
rewards for employees who help in increasing the company’s value. There could be certificates,
vacations, awards or another motivational strategy to inspire employees.

Share ideas and solicit feedback.

We learn a lot from our experiences. Nevertheless, in entrepreneurial endeavors, it is better that
an idea is refined and theoretically foolproof before it is taken to the step of execution. One
person could be ignoring some very important aspects of a problem, however, sharing ideas
and soliciting feedback can give a multidimensional perspective.

Evaluate your ideas.

Princeton Creative Research has laid out a checklist for entrepreneurs to evaluate an idea. Some
salient checkpoints are given below:

 Do you think your idea has some realistic need and is beneficial toward that?
 Can you pinpoint the issue your idea resolves?
 What will be the expected short-term and long-term results and gains of
implementation?
 Do you know any limitations of the idea? Are there any risk factors involved?
 Is the implementation simple or complicated?
 Do you think the market can accept your idea? Do you know who your potential
customer would be?
 Is there a need of your product or service? Alternatively, will it have to be created by
marketing and promotion?

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These evaluation marks can help supply detailed knowledge of the idea’s viability, providing
another tool to check the idea along with critical thinking.

Blocks and Barriers to Creative Thinking

How can entrepreneurs learn to tap their innate creativity more readily? The first step is to
break the barriers to creativity that most of us have created over the years. We now turn our
attention to these barriers and some suggested techniques for tearing them down. However,
creativity has widely been described as the ability to develop new ideas and to discovery new
ways of looking at problems, threats and opportunity. Creativity tools can be classified in many
different manners. McFadzean (1998) has developed a framework for classifying creativity
tools using three categories:
i. Paradigm preserving, where neither new elements nor relationships between the
elements of the problem are introduced.
ii. Paradigm stretching, where either new elements are introduced or new relationships
between the elements of the problem are conceived. Tools include- Checklists,
Metaphor, Role storming, Heuristic Ideation Technique and Reversal.
iii. Paradigm breaking, where both new elements and new relationships between the
elements are introduced. Tools include- Picture Stimulation, Rich Pictures, Imagining
etc.

There are three broad, overlapping categories of blocks:

i. Personal blocks: examples include: lack of self-confidence or self-image; a tendency to
conform; a need for the familiar, habit-bound thinking; emotional numbness; saturation;
excessive enthusiasm; various values and cultural influences; and lack of imaginative control.
ii. Problem-solving blocks are strategies, skills, or behaviours that inhibit ability to focus
and direct problem-solving activities, generate and identify options and alternatives, or turn
ideas into action. Examples include: solution fixedness, premature judgments, habit transfer,
using poor problem-solving approaches, lack of disciplined effort, poor language skills, various
perceptual patterns that limit intake and rigidity.
iii. Environmental blocks are those factors in your context, situation, or setting that interfere
with your problem-solving efforts. This include: the belief that only one type of thinking is
required for creative outcomes, resistance to new ideas, isolation, a negative attitude toward
creative thinking, autocratic decision making, reliance on experts, and various strategic blocks
that limit the use of resources
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More than fifty years ago, Osborn (1953) introduced creative tools and a model for solving
problems in creative ways. Since that time, this model, called Creative Problem Solving (CPS)
has become one of the most widely used approaches for applying creative thinking. Studies
have shown that CPS was one of the most effective methods for promoting creative-thinking
skills.
Specific Barriers to Creativity
1. Searching to the one right answer
2. Focusing on being logical
3. Blindly following the rules
4. Constantly being practical
5. Viewing play as frivolous
6. Becoming overly specified
7. Avoiding ambiguity
8. Fearing mistakes and failure

INNOVATION PROCESS: THE WAY TO THE GOAL (teach)

Innovation refers to the introduction of a new quality of a good or a new good, market, method
of production, source of supply, and organization in an industry. The most promising thing
about innovation process is being able to actualize an idea into a successful concept.

Following is an explanation into the importance, steps involved, its types, examples with risks
and solutions involved in the innovation process.
Importance of Innovation

Solving Problems –
If your business provides services, you might realize that your customers do not have an avenue
to share their opinions, complaints, and compliments.

So, to solve the problem, you could decide to operate a virtual office where customers’ needs
can be attended to within a short time. The customers will be happy and as a result, your sales
will go higher.

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Adapting To Change –
Change is inevitable and innovation is the method to not only keep your business afloat but
also ensure that it remains relevant and profitable. So, when you develop an innovation culture,
you remain relevant at all times.

Maximizing On Globalization –
Markets all over the world becoming more interlinked and greater opportunities are emerging
in these new markets. For instance, if your company hopes to tap into this market share,
innovation is a must to enable you to capitalize on the opportunities opening up.

Facing Up the Competition –

To retain or establish your company’s cutting edge, you can compete strategically by having a
dynamic business that can make strategic and innovative moves and thus cut above the rest.

Evolving Workplace Dynamics –

The demographics in the workplace are constantly changing. Innovation is therefore critical to
ensure the smooth running of the company.

Customers’ changing tastes and preferences: The current customer has a great variety of
products and services available to him. Hence, the company must keep itself abreast of these
evolving tastes and also forge new ways of satisfying the customer.

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Steps of Innovation Process

Step 1: Idea Generation and Mobilization –

New ideas are created during idea generation. Successful idea generation should involve the
pressure to compete and the freedom to explore. Mobilization occurs when the idea is moved
to a different logical or physical location. For instance, how Apple waited three years after
MP3 players were introduced to create the iPod, which was attractive, intuitive, and offered
capacity for up to 1,000 songs.

Step 2: Advocacy and Screening –

Advocacy and screening help to evaluate the feasibility of a business idea with its potential
problems and benefits. Hence, a decision can be made about an idea’s future. Companies
looking to develop a culture can establish a few best practices. For instance, Employees should
have plenty of avenues to receive advocacy and feedback. Also, organizations must understand
the difficulties involved in evaluating truly innovative ideas. Also, organizations need to build
transparent evaluation and screening protocols.

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Step 3: Experimentation –
The experimentation stage tests the sustainability of ideas for an organization at a specific time.
Experimentation generates new ideas with the information that is gathered on the results and
feasibility of the original idea. For instance, when Amazon tested its grocery delivery service
in certain Seattle suburbs. After this, Amazon Fresh expanded to Los Angeles, San Diego, and
New York City.

Step 4: Commercialization –
Commercialization develops market value for an idea by focusing on its impact. An important
part is establishing the specifications of any given idea. Commercialization is the stage that
involves the change of focus developments to persuasion. After the idea is clarified and a
business plan is developed, it will be ready for diffusion and implementation.

Step 5: Diffusion and Implementation –

Diffusion is the company-wide acceptance of an innovative idea, and implementation sets up
everything needed to develop the innovation. Diffusion and implementation allow the
organization to determine the next set of needs for customers. Receiving feedback, indicators
for success metrics and other benchmarks enable the organization to stimulate the innovation
process.

Types and Examples of Innovation

Product Innovation –
Product innovation is either the development of a new product, such as the Fitbit or Amazon’s
Kindle, or an improved version of the existing product, such as an increase in the digital camera
resolution of the iPhone. It could also be a new feature to an existing product, such as power
windows to a car.
Examples of product innovations:
The first electric vehicles introduced in the car’s market were also innovative, and new batteries
with longer ranges that keep coming out are also an example of innovation.
Lego has been changing the materials of its bricks to biodegradable oil-based plastics.

Process Innovation –
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The process involves a combination of skills, facilities, and technologies used to produce,
support, and deliver a product or service.
Examples of Process innovations:
Henry Ford’s invention of the world’s first vehicle assembly line. This process changed the
vehicle assembly and shortened the time necessary to produce a single vehicle from 12 hours
to 90 minutes. The Differential company built a mobile sales dashboard for the leading Grupo
Bimbo. Having a mobile sales dashboard gives the team quick access to the sales information
and other KPI’s for each country.

Business Model Innovation –

In Business model innovation capabilities, or processes optimized to make a company
successful and profitable will become the targets for transformation.
Examples of Business Model innovations:
Amazon found a new channel through technology by eliminating the traditional retail
distribution channel and developing direct relationships.
IBM has managed changes in customer offers from mainframes to personal computers to
technology services.

Organizational Innovation-
Organizational innovation refers to the development of a new organizational strategy. This
involves changes in company’s business practices, organization of work, and its relationship
with external stakeholders.
Examples of organizational innovations:
The companies adopted a four-day week working schedule.
The companies that started to use the power of digital and allowing employees to skip the office
and work from home.

Marketing Innovation –
Marketing innovation means developing a new marketing strategy that produces changes. For
instance, designing, packing, and other decisions regarding price or promotion of a product.
Example of marketing innovation:
Touch Packaging Design has partnered with Nestlé Ice Cream to create a reusable, durable
container for its Häagen-Dazs brand that can be used in the new Loop circular shopping
platform.
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Risks of the Innovation Process and their solutions

Technological Failure of the Innovation –

The biggest risk any company takes in the innovation process is whether or not the new product
or idea will work once it is launched. To manage this risk, the company may carry out trials on
a small scale to test its effectiveness. So, if this is done, the necessary adjustments may be
made to avert any huge losses once the product is mass produced.

Financial Strain –
The innovation process is faced with the challenge of draining out the company resources. This
is because of the returns that are usually long-term as opposed to immediate. So, if this is done,
averting the necessary adjustments may be made to avert any huge losses once the product is
mass-produced.

Market Failure –
Failure in the introduction of new products or technology to the market means that demand
would be low and therefore the innovation is not viable commercially. Hence, you should
undertake extensive and in-depth market research before committing limited resources to its
development and production.

Redundancy –
With trends in the market, a profitable innovation today may be redundant shortly. Therefore,
there must be constant research on how to improve the existing systems, and the factors
influencing them to stay a step ahead.

Lack of Capacity for Implementation –

Lacking the structural and financial capacity to roll out the innovation is always risky. You
may choose to look for partners who will assist in your area of lack and thus overcome the
challenge.

Organizational Risks –

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These risks involve the structuring and running of the business. So, following proper planning
and allocation of resources helps to ensure this does not happen.

Unprecedented Risks –
They may involve changes in policies or political instability whose ripple effect spills over
hindering the effectiveness of the innovation. Therefore, the business needs to keep a
contingency plan to buffer it against such unseen events.

Conclusion
“I believe you have to be willing to be misunderstood if you’re going to innovate.”
Jeff Bezos (Founder of Amazon)

Although finding the right process for innovation may seem difficult, to begin with, the idea is
not to follow just one of them. Instead, take some time to test the most promising one and
combine different characteristics that might work best for your purposes.

Entrepreneurship could simply be the solution for the economic problems of today’s world. It
brings the most innovative and exciting ideas to reality. However, it is a process that can be
made even more successful with creative thinking. The above discussion helps us realize the
importance of creativity in the entrepreneurial process. Creativity and entrepreneurship are
intricately related and go hand in hand with each other. However, both are important to each
other; and one cannot guarantee success without the other. Hence, to be a successful
entrepreneur, creative thinking should be consciously done to bring forward the most viable
ideas.

Conclusion
Successful entrepreneurs require an edge derived from some combination of a creative idea
and a superior capacity for execution. The entrepreneur’s creativity may involve an innovation
product or a process that changes the existing order. Or entrepreneur may have a unique insight
about the course or consequence of an external change. Entrepreneurship is the vehicle that
drives creativity and innovation. Innovation creates new demand and entrepreneurship brings
the innovation to the market. Innovation is the successful development of competitive edge and
as such, is the key to entrepreneurship. Creativity and Innovation are at the heart of the spirit
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of enterprise. It means striving to perform activities differently or to perform different activities
to enable the entrepreneur, deliver a unique mix of value. Thus the value of creativity and
innovation is to provide a gateway for astute entrepreneurship—actively searching for
opportunities to do new things, to do existing things in extraordinary ways. Creativity and
Innovation therefore, trigger and propel first-rate entrepreneurship in steering organization
activities in whatever new directions are dictated by market conditions and customer
preferences, thereby delighting the customers to the benefit of the stakeholders. Innovation
also means anticipating the needs of the market, offering additional quality or services,
organization efficiently, mastering details, and keeping cost under control.
No doubt, the current economic environment is a volatile and violent one. The new
environment demands renewed dynamism of approach. Creativity and innovation is the new
name of the game. Only the discerning organizations can manage the changes inherent in the
new environment. It is the duty of the entrepreneur to keep his/her organization lean, young,
flexible, and eager for new things to continuously delight the customers, which is the purpose
of every business.

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