CHAPTER 5

Innovation: The
Creative Pursuit
of Ideas
OPPORTUNITY IDENTIFICATION: THE SEARCH FOR NEW IDEAS
Sources of Innovative Ideas
Source Examples
• TRENDS
- aging demographics, health and finance growth, senior living
- Societal Trends
- mobile (cell hone) technology, e-commerce, internet advances
- Technology Trends
- higher disposable incomes, dual wage-earner families, performance
- Economic Trends
pressures
- increased regulations, petroleum prices, terrorism
- Government Trends

• UNEXPECTED OCCURENCE - unexpected success: Apple Computer (microcomputers)

unexpected tragedy: 9/11terrorist attack
• INCONGRUITIES - overnight package delivery

• PROCESS NEEDS - sugar-free products, caffeine-free coffee, microwave ovens

OPPORTUNITY IDENTIFICATION: THE SEARCH FOR NEW IDEAS
Sources of Innovative Ideas
Source Examples
• INDUSTRY AND MARKET - health-care industry: changing to home health care
CHANGES
• DEMOGRAPHIC CHANGES - retirement communities for older people

• PERCEPTUAL CHANGES - exercise (aerobics) and the growing concern for fitness

• KNOWLEDGE-BASED - mobile (cell phone) technology, pharmaceutical industry, robotics

CONCEPTS
The Knowledge and Learning Process
Once sources of ideas are recognized, entrepreneurs must use their existing knowledge base, acquired
through work, experience, and education, to hone ideas into actual opportunities. General industry
knowledge, prior market knowledge, prior customer, understanding, specific interest knowledge, or any
previous knowledge helps entrepreneurs to distill unusual sources of innovative ideas into potential
opportunities.

The Role of Creative Thinking

It is important to recognize the role of creative thinking in the innovative process.
Creativity is the generation of ideas that results in the improved efficiency or
effectiveness of a system. There are two important components of creative problem
solving: processs and people.
• Process – goal oriented; designed to attain solution to a problem.
• People – are the resources that determine the solution.
The Nature of the Creative Process
Creativity is a process that can be developed and improved. Everyone is creative to some degree.
However, as is the case with many abilities and talents (athletic, artistic, etc.), some individuals have a
greater aptitude for creativity than others

TWO APPROACHES TO CREATIVE PROBLEM SOLVING

Adaptor Innovator

• Employs a disciplined, precise, methodical approach
• Is concerned with solving, rather than finding
problems
• Attempts to refine current practices
• Tends to be means oriented
• Is capable of extended detail work
• Is sensitive to group cohesion and cooperation
• Approaches tasks from unusual angles
• Discovers problems and avenues of solutions
• Questions basic assumptions related to current
practices
• Has little regard for means; is more interested in ends
• Has little tolerance for routine work
• Has little or no need for consensus; often is
insensitive to others
 FOUR PHASES OF THE CREATIVE
PHASE 1: BACKGROUND
OR KNOWLEDGE
PROCESS PHASE 2: THE
INCUBATION PROCESS
PHASE 3: THE IDEA
EXPERIENCE
PHASE 4: EVALUATION
AND IMPLEMENTATION
ACCUMULATION

Successful creations are generally Creative individuals allow their This phase of the creative process This is the most difficult step of a
preceded by investigation and subconscious to mull over is often the most exciting, because creative endeavor and requires a
information gathering. This tremendous amounts of it is when the idea or solution the great deal of courage, self-
usually involves extensive information gathered during the individual is seeking is discipline, and perseverance.
reading, conversations with others preparation phase. This incubation discovered. Sometimes referred to
while working in the field, process often occurs while they as the “e ureka factor,” this phase
attendance at professional are engaged in activities totally is also the one the average person
meetings and workshops, and a unrelated to the subject or incorrectly perceives as the only
general absorption of information problem. component of creativity.
relative to the problem or issue
under study.
 Incubation

The Critical
Thinking Knowledge
Accumulation
Creative Ideas

Process
Process

Evaluation and
Implementation
Recognizing Relationships
Many investors and innovations are a result of the investor’s ability to see new and
different relationships among objects, processes, materials, technologies, and people.
These relationships often lead to visions that result in new ideas, products, and services.

Developing a Functional Perspective

If you wish to become more innovative and creative, you need to visualize yourself in
complementary relationships to the things and people of the world. You must learn to
look at them in terms of how they complement attempts to satisfy your own needs and
to complete your projects. You must begin to look up at things and people in
nonconventional ways and from a different perspective.
Using Your Brains
The creative process involves logical and
analytical thinking in the knowledge
accumulation, evaluation, and implementation
stages. In addition, it calls for imagination,
intuition, analogy conceptualization, and
synthesizing in the incubation and idea
creation stages.
Using Your Brains
Experts on creativity, innovation, and self-development
have emphasized the importance of developing the skills
associated with both hemispheres of the brain.
• Right Brain Hemisphere – helps an individual
understand analogies, imagine things, and synthesize
information.
• Left Brain Hemisphere – helps the person analyze,
verbalize, and use ratinal approaches to problem
solving.
Processes Associated with the Two Hemispheres of
the Brain
Left Hemisphere Right Hemisphere

Verbal Nonverbal

Analytical Synthesizing

Abstract Seeing analogies

Rational Nonrational

Logical Spatial

Linear Intuitive

Imaginative
 Ways to Develop the Left and
Right-Hemisphere Skills
Left Hemisphere Skills
1. Step-by-step planning of your work and
life activities
2. Reading ancient, medieval and
scholastic philosophy, legal cases, and
books on logic
3. Establishing timetables for all of your
activities
4. Using and working with a computer
program
5. Detailed fantasizing and visualizing of
things and situations in the future
6. Drawing faces, caricatures, and
landscapes
Right Hemisphere Skills
1. Using metaphors and analogies to
describe things, and people in your
conversations and writing
2. Taking off your watch when you are not
working
3. Suspending your initial judgment of
ideas, new acquaintances, movies, TV
programs, and so on
4. Recording your hunches, feelings, and
intuitions and calculating their accuracy
ELIMINATING
MUDDLING MINDSETS
A number of mental habits block or impede creative
thinking. Some common mental habits that inhibit
creativity and innovations are either/or thinking, security
hunting, stereotyping, and probability thinking. These
habits, or muddling mind-sets, tend to hinder creative
thought processes, and different thought processes must be
used to enhance creative thinking.
THE ENTREPRENEURIAL
PROCESS
DEVELOPING CREATIVITY

1. Brainstorm 6. Always celebrate failure

2. Opposites attract 7. Make ‘em laugh

3. THINKubate 8. Sweat it

4. Trigger great ideas 9. Remember your wildest dreams

5. Connect
Arenas of Creativity
• Idea Creativity: thinking up a new idea or concept, such as an idea for a
new product or service or a way to solve a problem.

• Material Creativity: inventing and building a tangible object such as a

product, an advertisement, a report, or a photograph.

• Organization Creativity: organizing people or projects and coming up

with a new organizational form of approach to structuring things.

• Relationship Creativity: an innovative approach to achieving

collaboration, cooperation, and win-win relationship with others.
Arenas of Creativity
• Event Creativity: producing an event such as an awards ceremony, team
outing, or annual meeting.

• Inner Creativity: changing one’s inner self; being open to new

approaches to how one does things and thinking about oneself in different
ways: achieving a change of heart pr finding a new perspective or way to
look at things that is a significant departure from how one has
traditionally looked at them.

• Spontaneous Creativity: acting in a spontaneous or spur-of-the-moment

manner, such as coming up with a witty response in meeting, an off-the-
cuff speech, a quick and simple way to settle a dispute, or an innovative
appeal when trying to close a sale.
The Creative Climate
Creativity is most likely to occur when the business climate is right. No enterprise will have
creative owners and managers for long if the right climate is not established and nurtured.
Following are some important characteristic of this climate:
• A trustful management that does not overcontrol employees
• Open channels of communication among all business members
• Considerable contract and communication with others
• A large variety of personality types
• A willingness to accept change
• An enjoyment in experiencing with new ideas
• Little fear of negative consequences for making a mistake
• The selection and promotion of employees on the basis of merit
• The use of techniques that encourages ideas, including suggestion systems and
brainstorming
• Sufficient financial, managerial, human, and time resources for accomplishing goals
Innovation and the Entrepreneur
Innovation is a key function in the entrepreneurial process.
Innovation is the process by which entrepreneurs convert
opportunities (ideas) into marketable solutions. It is the
means they become catalysts for change.

The Innovation Process

Most innovations result from a conscious, purposeful search
for new opportunities. This process begins with the analysis
of the sources of new opportunities.
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, values,
and needs.
 Types of Innovation
Type Description Examples
Invention Totally new product, service , or process Wright brothers – airplane
Thomas Edison – lightbulb
Alexander Graham Bell - telephone

Extension New use or different application of an Ray Kroc – McDonald’s

already existing product, service, or process Mark Zuckerberg – Facebook
Barry Sternlicht – Starwood Hotels &
Resorts

Duplication Creative replication of an existing concept Wal-Mart – department stores

Gateway – personal computers
Pizza Hut – pizza parlor

Synthesis Combination of existing concepts and Fred Smith – FedEx

factors into a new formulation or use Howard Schultz - Starbucks
 The Major Misconceptions of
Innovation
• Innovation is planned and predictable.
• Technical specifications must be thoroughly prepared.
• Innovation relies on dreams and blue-sky ideas.
• Big projects will develop better innovation than smaller
ones.
• Technology is the driving force of innovation success.
Principles of Innovation
• Be action oriented.
• Make the product, process, or service simple and understandable.
•Make the product, process, or service customer-based.
•Start small.
•Aim high.
•Try/test/revise.
•Learn from failures.
•Follow a milestone schedule.
•Reward a heroic activity.
•Work, work, work.
Thank You!