NAME: MBURU PETER MUTURI

REG NO: D33S/14211/2019

ANSWER ALL QUESTIONS

1. Discuss the componential theory of organizational creativity and innovation and

show how it is applicable in organizations. (10 marks)

The componential theory of creativity is recognized as one of the major theories of

creativity in individuals and in organizations, serving as a partial foundation for several
other theories and for many empirical investigations. It was first articulated by Teresa
Amabile in 1983
The theory is a comprehensive model of the social and psychological components
necessary for an individual to produce creative work. The theory specifies that creativity
requires a confluence of four components:

Creativity should be highest when;

a) an intrinsically motivated person with

b) high domain expertise and
c) high skill in creative thinking
d) works in an environment high in supports for creativity.

Key concepts include:

Many managers have relied on tools and techniques developed from the theory to stimulate
creativity and innovation within their organizations.

- According to the theory, domain-relevant skills include knowledge, expertise, technical

skills, intelligence, and talent in the particular domain where the problem-solver is
working.
- Creativity-relevant processes include a cognitive style and personality characteristics that
are conducive to independence, risk-taking, and taking new perspectives on problems, as
well as a disciplined work style and skills in generating ideas.
- The third central tenet is the intrinsic motivation principle of creativity: People are most
creative when they feel motivated primarily by the interest, enjoyment, satisfaction, and
challenge of the work itself - and not by extrinsic motivators.
- The social environment can stimulate creativity through offering a sense of positive
challenge in the work; work teams that are collaborative, diversely skilled, and idea-
focused; freedom in carrying out the work; supervisors who encourage the development
of new ideas; and so on.

Linking idea generation, creativity and innovation

- Amabile (2013) argues that managers can stimulate and facilitate organizational
creativity, where organizational creativity is defined by Woodman et al. (1993) as the
‘creation of a valuable, useful new product, service, idea, procedure or process by
individuals working together in a complex social system’. Cirella and Shani (2012) argue
that creativity within organizations happens when people work together to trigger ideas
through dialogue, debate and conflict. When a company decides to introduce a new good
or service, it creates lots of ideas, and then picks the best of these for development

Stimulating idea creation and creativity

- Since new ideas and creativity are prerequisites for innovation, and innovation is
essential for survival and growth in the modern economy, it is important that
organizations manage and develop these attributes
- This model argues that creativity arises through the coming together of four elements:
three relate to the individual – knowledge (all the relevant understanding an individual
brings to bear on a creative effort), creative thinking (how people approach problems)
and motivation (the passion and interest the individual has for their work), and one relates
to the external environment in which the individual works.
I. Knowledge
- Firstly, employees need to build their technical expertise over time. This knowledge then
acts as a solid foundation from which creativity can emerge. Without this knowledge
base, Simonton (1980) suggests that individuals cannot be creative. Secondly, employees
 need to be able to recognize opportunities and combine previously disparate elements in
new way
- Knowledge generation stimuli, such as work teams and job rotation, are positively
related to innovation output.
II. Creative thinking
- Since creativity involves the production of high-quality, original, and elegant solutions to
complex, novel, ill-defined or poorly structured problems
- Brainstorming is one of the most popular techniques used to induce creativity; Its purpose
is to generate a limited number of good ideas which can be developed further with a view
to implementing them
- Amabile (1996) argues that these skills can also be increased with education and training.
III. Motivation
- The third element in the Componential Theory of Creativity is motivation. Mitchell
(1982) defines motivation as ‘the psychological processes that cause the arousal,
direction and persistence of behavior’
- Amabile (1996) argues that people are more creative when they are hedonically
intrinsically motivated as they are more likely to explore various pathways and
alternatives.
These is through providing Non-financial incentives support which intrinsically
motivate employees and hence increase creativity and innovation
IV. The work environment
- The work environment is important when motivating idea generation, creativity and
innovation.
- Supportive work environments (i.e., those introducing more than one idea generation and
creativity stimuli) enhance creativity and hence result in higher innovation output.

Summary of Application in organizations

a) brainstorming sessions;
b) multidisciplinary or cross-functional work teams;
c) job rotation of staff to different departments or other parts of their enterprise
group;
 d) financial incentives and non-financial incentives for employees to develop new
ideas;
e) training employees on how to develop new ideas or creativity.
b)
 2. Using relevant examples explain the various technology acquisition options at the
disposal of managers in an organization. (10 marks)

I. Internal R&D process (Build internally)

- When a particular field is nascent, and the vendor landscape is not robust,
and the feature set is rudimentary, it may necessitate a “Build internally”
decision.
- When a specific capability is mission-critical and offers a tremendous
competitive advantage, companies often choose to build the technology
internally.
- Of course, there are times the cost considerations, in cases where they are
favorable to the enterprise, will drive the build decision

For example, a company may have a specific group of developers, and other
talents in an inexpensive overseas development center and hence could build
it on the cheap. Born of a merger between Thomas Edison’s Edison Electric
Light Company and the competing Thomson-Houston Co., General Electric
was built as a company focused around innovation—so, while electric light-
related products were its initial offerings, it quickly grew from there to
develop a broad range of products powered by electricity, from toasters to
ranges to washing machines.

II. Joint venture process

- Joint venture is a form of alliance, defined as a partnership by which two or more

companies create a new entity to carry out a productive economic activity (Harrigan,
1984). The productive economic activity can be the development or commercialization of
a specific technology (Chatterji, 1999), or a new stream of business (Buckley, 1998). It
will work well if there are complementary technologies and firms have potential benefits
from the successful completion of the venture (Boarini, 1999). According to Simon
(1991) joint ventures tend to emphasize a unilateral flow of technology while strategic
alliances usually involve a bilateral flow of technology. It is a long-term arrangement
 (Canez & Probert, 1999), offers the advantages of sharing costs and reducing risks
(Dussauge, Hart & Ramanantsoa, 1992), commonly involves tacit knowledge which can
be appropriated by the partners only over a period of time (Teece, 1986), and may be
feasible for technologies later in their life cycle (Ford & Saren, 1996).

Example SK Telecom and Deutsche Telekom today announced that they entered into an
agreement to establish a 5G technology joint venture. They will each hold 50 percent of
the joint venture and each will name one representative to lead the new entity.

III. Outsourcing R&D

- An R&D contract is hiring or funding another party to undertake a particular type of

research. The other party could be a university, a small independent company, or R&D
organizations (public, government or private). Usually, the research will be generic in
character, wide range of applications in industries and firms, exploits little or no firm-
specific knowledge, and deals primarily with isolated or separable aspects of a firm’s
operations (Mowery & Rosenberg, 1989). It is unlikely to involve product innovation.
Examples are research on materials testing, improvement of production process or
analysis of input qualities.

Outsourcing is good when;

- The enterprise that is outsourcing the function doesn’t derive a competitive

advantage.
- The BPO services provider excels at such services and is an integral part of
their core set of capabilities.
- The cost savings and risk avoidance are undeniable.
- By outsourcing certain functions, the enterprise can renew its focus on core
operations and technologies.
IV. Technology licensing

- Companies can also acquire technologies by way of licensing one or more

patents or commercialize technology from a university or a lab
- Licensing is one of the most important and widely used method of external technology
acquisition. It is the acquisition, by contract, of product or process technology, designs, or
marketing expertise. It may involve a fee, a royalty as a proportion of sales or a reciprocal
flow of rights and knowledge, and the commitment to obligations by both parties to
maintain the agreement over a specified period of time (Lowe & Taylor, 1998).Licensing
allows companies to enter new markets faster without significant investment in research
and development (Canez & Probert, 1999) and enables firms rapidly to establish
positions in new technical areas, particularly in those which complement existing core
skills (Tidd & Trewhella, 1997). Yoshikawa (2003) also argues that licensing is suitable
when the time pressure is great.

Examples of licenses include a company using the design of a popular character, e.g.
Mickey Mouse, on their products.

V. Technology Acquisition

- More and more large firms are engaging in M&A (Mergers and Acquisitions – mostly the
latter) to acquire critical technologies from startups. Such acquisitions allow for not only
access to new technology but often top tech talent.

- Sometimes, these acquisitions are considered Acqui-hire when the startup has not fully
built out the product or validated the product/market fit, and it is pre-revenue or generates
non-material revenue streams. The Acqui-Hire is primarily a talent play, and companies
are happy to pay top dollar to onboard leading technologists and innovators

Technology acquisition is good when;

- The technology is integral to the future success of the enterprise.

- The growth of the company could pose a threat to core revenues and products.
- The firms feel that the addition of such technology or talent could be accretive to their
growth aspirations.

Example; the traditional Global 2000 companies are relying on vendor products to power
their technology needs and growth aspirations.
 3. Examine the lessons learnt from 3M culture of innovation and how an organization
can use them to gain competitive advantage. (10 marks)

I. Fifteen percent time (time to innovation).

- Fifteen percent time is a term invented by William McKnight at the Minnesota
Mining and Manufacturing Company, or 3M, as it’s known today. This policy
allowed employees to spend 15 percent of their paid work time daydreaming,
doodling or experimenting with ideas that didn’t necessarily have to do with their
work at the company.
II. Reward experimentation -- even failure (employees’ empowerment).
- Going along with McKnight’s 15-percent-time rule, leaders of innovative companies
know that beyond just giving your employees time to experiment, you should also
reward innovative habits. One of the most powerful tools for promoting employee
creativity and innovation is recognition. People want to be recognized and rewarded
for their ideas and initiatives, and it is a practice that can have tremendous payoff for
the organization.
III. Encourage research.
- Along with encouraging your team to experiment, encourage them to do their own
research as well. Let your employees’ personal interests and passions do the leading
as they look into new technologies, reading articles and writing reports for your
company.
IV. Employee collaborative forums.
- Whether it’s a weekly all-staff meeting or a company bulletin, foster a space where
employees can meet across teams to discuss and present their research,
experimentation or intrapreneurial ideas from their 15 percent time. Use newer social
media technologies to promote collaboration across the enterprise. Crowd source
good ideas within the organization and capitalize on those innovations. Establish
committees to grant monies to individuals and groups for their new ideas

V. Intrapreneurship.
 - Coined in the late 1970s, intrapreneurship is an old term that’s now really starting to
take off. An intrapreneur can be defined as someone who thinks like an entrepreneur
but brings their ideas to the company where they are employed instead of launching
their own business You can encourage intrapreneurship at your organization with
such simple steps as establishing where your employees can go with their ideas,
instating a "no idea is a bad idea" policy, gathering support your employees need to
try out their ideas, and letting them pitch decision-makers at your company.
VI. Attract good talent
- Lastly, there’s no better way to encourage innovation in your company than to
lead by example. Innovation starts at the top; leaders should be role models for
workplace passion, positive outlook, clear direction and vision, and of course,
embracing change. Also, Showcase and highlight the innovation programs that
your organization has implemented. Present videos, papers, or demonstrations of
the technologies you offer and pursue