TOPIC 3:

DEVELOPING ENTREPRENEURIAL CREATIVITY

AND INNOVATION
Learning Objectives

At the end of this chapter, students

should be able to:
• State the steps involved in identifying,
evaluating and selecting a business
opportunity
• Describe the process of creativity
• Explain the types of innovation
• Explaining the factors needed for successful
innovation and entrepreneurship.
Opportunity Analysis

Business opportunities usually exist in the

following two instances:
• The product is already available in the market, but
does not fully meet the demands and preferences of
the customers
• The customers require a product that can help to
solve their specific problems
Opportunity Analysis

Steps in Identifying, Evaluating and Selecting

Business Opportunity
 Step 1: Identifying customers’ needs and wants
- Needs refers to something basic in life such as
food, clothing and shelter
- Wants is the craving for something that is far better
than the basic item
- Needs & wants can be either products or service
- Products exist in physical form. eg; car and handphone
- Services are intangible and have the ability to fulfill a
customer’s wants such as cafe and beauty saloon
Opportunity Analysis

 Step 2: Environmental scanning, self-

evaluation
and community values/norms
- Important factors need to consider:
• Environmental scanning ~ from macro& micro
perspectives
• Self evaluation ~ see what is available in oneself
such as experience, networking, knowledge &
skills, interest and financial institution.
Opportunity Analysis

 Step 3: Screening of business opportunities

- Important factors need to consider:
• Legality
• Monopolistic power and level of competition
• Capital requirements
• Risks
 Step 4: Selecting the best business opportunities
- Entrepreneur needs to assess the first 3 steps outlined
before a decision is made to venture into a business. However,
the business venture also will depends
on the entrepreneur’s creativity and innovativeness in
selecting a business opportunity.
Creativity, Innovation, and Entrepreneurship
Creativity
is the ability to develop new ideas an to discover new
ways of looking at problems and opportunities.

Innovation
is the ability to apply creative solutions to problems
and opportunities to enhance or to enrich people’s
lives. (Creative destruction)

In a nutshell, creativity is thinking new things,

innovation is doing new things.
 Creativity is related to
‘imagination’ but innovation
is related to
‘implementation’
 Example

• The invention of motorcycle was a biggest innovation over

scooters. In early centuries people used to travel with
scooters, for which they have to make lots of efforts to start it
like they need to strike the kick and knee down from either
side if it won’t start. So, years and years passed away and
nobody even thought for the invention of bikes. The invention
of the bike make them realize that they can also ride bikes
without making any extra efforts, they just have to click the
switch and its starts automatically.

• In this example, the thought of creation of a new traveling

motorcycle is creativity, but the actual invention of it is
innovation.
 CREATIVITY

What is Creativity?

• Creativity involves the development of unique and

novel responses to problems and opportunities
(Schermerhorn, Hunt and Osbor, 2003).

• According to Stemberg, Kaufman and Pretz, (2002),

creativity is the ability to produce work that is novel
(i.e. original and unexpected), high in quality and
appropriate (i.e. useful and meets task constraints).
 CREATIVITY

• "Creativity isn't necessarily innovation,"

Hunter told Business News Daily.
• "If you have a brainstorm meeting and
dream up dozens of new ideas then you
have displayed creativity, but there is no
innovation until something gets
implemented."
 CREATIVITY

• Creativity is the characteristic of a person to generate new ideas,

alternatives, solutions and possibilities in a most unique and
different way.
• Creativity is the ability to conceive something unpredictable,
original and unique. It must be expressive, interesting and
imaginative. It is the mirror of how beautifully a person can think in
any given circumstance.
• It is not genetic, but can be developed if someone keep on
learning and comprehending things with a rare and exclusive
perception. Creativity is a brainstorming and mind-blogging
activity in which a person has to think beyond his imagination for
bringing something worthwhile. It is an activity of unveiling
something which was previously hidden.
 BARRIERS TO CREATIVITY

Searching for the one “right” answer

Most educational systems teach that there is one “right” answer to a
problem. This is a boon to creativity since it acts as a block to
brainstorming.

Focusing on “being logical”

Being logical is valuable when evaluating ideas and implementing
them, however, focusing too much effort on being logical in the early
imaginative phases discourages the use of intuition.

Blindly following the rules

Often times, creativity depends on our ability to break existing rules so
we can find new ways of doing things.

Constantly being practical

Suspending practicality for a while frees the mind to consider creative
solutions that, otherwise, might never arise.
BARRIERS TO CREATIVITY
Fearing looking foolish
Creative thinking is no place for conformity. New ideas are
rarely born in a conforming environment. People tend toward
conformity to avoid looking foolish.

Fearing mistakes and failure

Trying something new often leads to failure, however, failure
should not be seen as an end; but rather as pit stops toward
success.

Believing that “I’m not creative”

One who believes they are not creative will likely behave in the
same way, thus making the belief a reality. Everyone has the
potential to be creative, however, one must tap into that
potential first.
Characteristics of Creative Individuals
The Creativity Processes Associated with
the Two Brain Hemispheres
 Creativity
The following questions are designed to spur the imagination and
can help develop creativity:
1. Is there a new way to do it?
2. Can you borrow or adapt it?
3. Can you give it a new twist?
4. Do you merely need more of the same?
5. Do you just need less of the same?
6. Is there a substitute?
7. Can the parts be rearranged?
8. What if we do just the opposite?
9. Can ideas be combined?
10. Can we put it to other uses?
11. What else could we make from this?
12. Are there other markets for it?
 INNOVATION AND
THE ENTREPRENEUR
 Innovation
Schumpeter (1934) was first to point out the importance of new
value created by entrepreneurs.

More recently, Carland, Hoy, Boulton and Carland (1984)

extended and specified Schumpeter’s idea, saying that
entrepreneurs:

 introduce new goods

 introduce new services
 introduce new methods of production
 open new markets
 open new sources of supply
 re-organise industry.
 Innovation

• Innovation is the specific instrument of

entrepreneurship. It is the act that endows resources
with a new capacity to create wealth
• Whatever changes the wealth-producing potential of
already existing resources constitutes innovation
• Innovation does not have to be technical, it is also an
economic or social term
• Innovation can be defined as changing the yield of
resources, or defined in demand terms rather than in
supply terms, that is as changing the value and
satisfaction obtained from resources by the consumer
Innovation

• Innovation is the conversion of new knowledge into

new products and services.
• Innovation is the ability to apply creative solutions to
problems and opportunities to enhance or to enrich
people’s lives.
• Innovation is a process by which entrepreneurs
convert opportunities into marketable ideas (Howell &
Higgins, 1990).
• According to Drucker (1985), innovation is the specific
instrument of entrepreneurs, the means by which they
exploit change as an opportunity for a different
business or a different service.
What is innovation?

• Innovation is the process and outcome of

creating something new, which is also of value.
• Innovation involves the whole process from
opportunity identification, ideation or invention to
development, prototyping, production marketing
and sales, while entrepreneurship only needs to
involve commercialization (Schumpeter).
• Invention is the creation of something that has
never been made before and is recognized as
the product of some unique insight.
The Innovation Process

• Drucker has noted that, because innovation is both

conceptual and perceptual, would be innovators
must go out and look, ask and listen.
• Successful innovators use both the right and left
sides of their brains. They look at figures. They
look at people. They analytically work out what the
innovation has to be to satisfy the opportunity.
• Then they go out and look at potential product
users to study their expectations, value, and needs.
Forms of Innovation

• Innovation can take many forms but it can be

reduced to four dimensions of change (the 4Ps
of innovation)
Forms of Innovation

• Product innovation
 This refers to changes in the things (products/services) which
an organization offers.
 Examples: a new design of car and a new home entertainment
system.

• Process innovation
 This refers to changes in the ways in which things (products/
services) are created and delivered.
 Examples: the change in the manufacturing methods and
equipment used to produce the car or the change in the office
procedures and sequencing in an insurance case.
Forms of Innovation

• Position innovation
 This refers to changes in the context in which the
products/services are introduced.
 Examples: Johnson & Johnson changed their product
positioning to cater not just for babies but also for adults.

• Paradigm innovation
 This refers to changes in the underlying mental models which
frame what the organization does.
 Examples: the shift to low-cost airlines, the provision of online
insurance and other financial services.
 Types of Innovation
There are four distinct types of innovation, these are as
follows:
Invention - described as the creation of a new product,
service or process

Extension - the expansion of a product, service or process

Duplication - defined as replication of an already existing

product, service or process

Synthesis - the combination of existing concepts and

factors into a new formulation
 Types of Innovation
• According to Kuratko and Hodgetts, (2004), they are
four basic types of innovation.
From Creativity to Entrepreneurship
Comparison Chart

Basis for Creativity Innovation

comparison
Meaning Creativity is a act of Innovation is the
creating new ideas, introduction of something
imaginations and new and effective into the
possibilities. market.
Process Imaginative Productive
Quantifiable No Yes
Related to Thinking something new Introducing something
new
Money No Yes
consumption
Risk No Yes
 Key Differences Between Creativity and
Innovation
• The following are the major differences between Creativity and
Innovation:
– The quality of thinking new ideas and putting them into reality is creativity. The
act of executing the creative ideas into practice is innovation.
– Creativity is an imaginative process as opposed to innovation is a productive
process.
– Creativity can never be measured, but Innovation can be measured.
– Creativity is related to the generation of ideas which are new and unique.
Conversely, Innovation is related to introduce something better into the market.
– Creativity does not require money. On the other hand innovation requires
money.
– There is no risk involved in creativity, whereas risk is always attached to
innovation.
SUMMARY
Entrepreneurship has been described as an action-
oriented way of thinking, the focus of which is
creativity, innovation and change. Therefore, it is not
surprising to see that entrepreneurs are among the
more creative and innovative players of
organizational change.

It is the entrepreneurs’ business to generate or add

value as they venture, introducing new forms, new
organisations, new products and new language to
the world at large.
SUMMARY…cont
In this topic we looked at the more creative side of
entrepreneurship – the value adding, innovative and
organisation-creating aspects, recognising that creativity
requires someone (like an entrepreneur) to add value in the
marketplace through the innovation process.

From the idea generation to the successful product

development and launch, innovation is the seed-bed for
change. Charged with the coordination of the innovation
process are the entrepreneurs. Their role is to nurture
creative vision through development and testing on to
successful commercialisation. It is their vision that sees not
only the product or the process but also the opportunity to
market it.