Section 1:

The Challenge of Entrepreneurship

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Essentials of Entrepreneurship and Small
Business Management
Ninth Edition, Global Edition

Chapter 3
Creativity and Innovation:
Keys to Entrepreneurial
Success

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Learning Objectives (1 of 2)
1. Explain the differences
among creativity,
innovation, and
entrepreneurship.
2. Describe why creativity
and innovation are such
an integral part of
entrepreneurship.
3. Explain the 10 “metal
locks” that limit individual
creativity.

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Learning Objectives (2 of 2)
4. Understand how entrepreneurs can enhance the
creativity of their employees as well as their own
creativity.
5. Describe the steps in the creative process.
6. Discuss techniques for improving the creative process.
7. Describe the protection of intellectual property through
patents, trademarks, and copyrights.

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Creativity and Innovation
• Creativity: the ability to develop new ideas and to discover
new ways of looking at problems and opportunities;
thinking new things.
• Innovation: the ability to apply creative solutions to
problems or opportunities to enhance or to enrich people’s
lives; doing new things.

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Entrepreneurship
• Entrepreneurship: the result of a disciplined, systematic
process of applying creativity and innovation to the needs
and opportunities in the marketplace.
• Entrepreneurs connect their creative ideas with the
purposeful action and structure of a business.

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Failure: Part of the Creative Process!
• Most ideas don’t work and most innovations fail
• For every 5,000 to 10,000 new drug discoveries:
– 250 get to preclinical trials
– 5 make it to clinical trials
– 1 or 2 are reviewed by the FDA
– Only 1 gets to market
• Failure is part of the creative process

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Creativity: Essential to Survival
• Creativity is an important source of building a competitive
advantage
• Can we learn to be creative? Yes!
• By overcoming paradigms and by suspending conventional
thinking long enough to consider new and different
alternatives

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How Creative are You? (1 of 2)
Figure 3.1 How Creative Are You? Can You Recognize
the Well-Known Phrases These Symbols Represent?

Do you recognize these?

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How Creative are You? (2 of 2)
[Figure 3.1 Continued]

Sources: Based on Terry Stickels, “Frame Games,” USA Weekend, April 26–28, 2013, p. 14

Do you recognize these?

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Creative Thinkers: (1 of 3)
• Always ask: “Is there a better way?”
• Challenge custom, routine, and tradition.
• Are reflective.
• Are prolific thinkers.
• Play mental games.

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Creative Thinkers: (2 of 3)
• Realize that there may be more than one “right” answer.
• Know that mistakes are pit stops on the way to success.
• Recognize that problems are springboards for new ideas.

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Creative Thinkers: (3 of 3)
• Understand that failure is a natural part of the creative
process.
• Have “helicopter skills.”
• Relate seemingly unrelated ideas to a problem.

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Divergent vs. Convergent Thinking
• Successful entrepreneurship requires both divergent and
convergent reasoning.
– Divergent reasoning: the ability to create a multitude
of original, diverse ideas.
– Convergent reasoning: the ability to evaluate multiple
ideas and to choose the best solution to a problem.

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Barriers to Creativity (1 of 2)
• Searching for the one “right” answer
• Focusing on “being logical”
• Blindly following the rules
• Constantly being practical
• Viewing play as frivolous

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Barriers to Creativity (2 of 2)
• Becoming overly specialized
• Avoiding ambiguity
• Fearing looking foolish
• Fearing mistakes and failure
• Believing that “I’m not creative”

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Spurring the Imagination (1 of 3)
• Questions to ask:
– Is there a new way to do it?
– Can you borrow or adapt it?
– Can you give it a new twist?
– Do you merely need more of the same?
– Do you need less of the same?

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Spurring the Imagination (2 of 3)
• Is there a substitute?
• Can you rearrange the parts?
• What if you do just the opposite?
• Can you combine ideas?
• Can you put it to other uses?
• What else could you make from this?

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Spurring the Imagination (3 of 3)
• Are there other markets for it?
• Can you reverse it?
• Can you eliminate it?
• Can you put it to another use?
• What idea seems impossible, but if executed, would
revolutionize your business?

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Enhancing Organizational Creativity (1 of 3)
• Include creativity as a core company value.
• Hire for creativity.
• Create an organizational structure that nourishes creativity.
• Embrace diversity.
• Expect creativity.
• Expect and tolerate failure.

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Enhancing Organizational Creativity (2 of 3)
• Incorporate fun into the work environment.
• Encourage curiosity.
• Design a work space that encourages creativity.
• View problems as opportunities.
• Provide creativity training.
• Provide support.
• Develop a procedure for capturing ideas.

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Enhancing Organizational Creativity (3 of 3)
• Talk and interact with customers.
• Reward creativity.
• Model creative behavior.
• Monitor emerging trends and identify ways your company
can capitalize on them.
• Look for uses for your product or service in other markets.
• Don’t forget about business model innovation.

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Enhancing Individual Creativity (1 of 4)
• Allow yourself to be creative.
• Forget the “rules.”
• Give your mind fresh input every day.
• Take up a hobby.
• Travel and observe.
• Collaborate with other people.
• Observe the products and services of other companies,
especially those in completely different markets.

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Enhancing Individual Creativity (2 of 4)
• Recognize the creative power of mistakes.
• Be positive.
• Notice what is missing.
• Ask “am I asking the right questions?”
• Keep a journal handy to record your thoughts and ideas.
• Listen to other people.
• Listen to customers.
• Get adequate sleep.

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Enhancing Individual Creativity (3 of 4)
• Watch a movie.
• Go for a walk.
• Talk to a child.
• Do something ordinary in an unusual way.
• Keep a toy box in your office.
• Take note of your “pain” points.
• Do not throw away seemingly “bad” ideas.

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Enhancing Individual Creativity (4 of 4)
• Collaborate with others.
• Read books on stimulating creativity or take a class on
creativity.
• Doodle.
• Take some time off.
• Be persistent.

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The Creative Process (1 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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The Creative Process (2 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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Preparation (1 of 2)
• Get your mind ready for creative thinking.
– Adopt the attitude of a lifelong student.
– Read … a lot … and not just in your field of expertise.
– Clip articles of interest to you and save them.
– Develop your listening skills.

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Preparation (2 of 2)
• Join professional or trade associations and attend their
meetings.
• Eliminate creative distractions.
• Take time to discuss your ideas with other people.

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The Creative Process (3 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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The Creative Process (4 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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Transformation (1 of 2)
• Involves viewing both the similarities and the differences
among the information collected.
• Two types of thinking are required:
– Convergent: the ability to see the similarities and the
connections among various and often diverse data and
events.
– Divergent: the ability to see the differences among
various data and events.

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Transformation (2 of 2)
• How can you transform information into purposeful ideas?
– Grasp the “big picture” by looking for patterns that
emerge.
– Rearrange the elements of the situation.
– Use synectics: taking two seeming nonsensical ideas
and combining them.
– Remember that several approaches can be successful.
If one fails, jump to another.

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The Creative Process (5 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Illumination
7. Implementation

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Incubation
• Allow your subconscious to reflect on the information
collected.
– Walk away from the situation.
– Take the time to daydream.
– Relax – and play – regularly.
– Dream about the problem or opportunity.
– Work on the problem in a different environment.

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The Creative Process (6 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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The Creative Process (7 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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Verification (1 of 2)
• Validate the idea as accurate and useful.
– Is it really a better solution?
– Will it work?
– Is there a need for it?
– If so, what is the best application of this idea in the
marketplace?

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Verification (2 of 2)
• Does this product or service fit into our core
competencies?
• How much will it cost to produce or to provide?
• Can we sell it at a reasonable price that will produce a
profit?
• Will people buy it?

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The Creative Process (8 of 8)
1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Verification
7. Implementation

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Techniques for Improving the Creative
Process (1 of 4)
Brainstorming:
• The goal is to create a large quantity of novel and
imaginative ideas.

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Brainstorming Guidelines (1 of 2)
• Keep the group small – “Two pizza rule.”
• Make the group as diverse as possible.
• Do aerobic exercise before the session.
• Emphasize that company rank is irrelevant.
• Have a well-defined problem: why, how, what.
• Provide relevant background material.
• Limit the session to 40 to 60 minutes.
• Take a field trip.

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Brainstorming Guidelines (2 of 2)
• Appoint a recorder.
• Throw logic out the window.
• Encourage all ideas from the team.
• Shoot for quantity of ideas over quality of ideas.
• Use a circular or U-shaped seating pattern.
• Forbid criticism.
• Encourage idea “hitch-hiking.”
• Dare to imagine the unreasonable.

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Techniques for Improving the Creative
Process (2 of 4)
• Brainstorming
• Mind-mapping

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Mind-Mapping
Mind-mapping:
• A graphical technique that encourages thinking on both
sides of the brain, visually displays relationships among
ideas, and improves the ability to see a problem from
many sides.

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The Mind-Mapping Process
• Start by writing down or sketching a picture symbolizing
the problem or area of focus in the center of a blank page.
• Work as quickly as possible and write down every idea that
comes into your mind for 20 minutes, connecting each to
the central picture or words with a line.
• Don’t try to force creativity.
• After a brief rest, begin to integrate the ideas into a mind
map.

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Techniques for Improving the Creative
Process (3 of 4)
• Brainstorming
• Mind-mapping
• Force-Field analysis

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Force-Field Analysis
• Force-Field Analysis
– A useful technique for evaluating the forces that
support and oppose a proposed change.
– Three columns:
▪ Center: Problem to be addressed
▪ Left: Driving forces
▪ Right: Restraining forces
– Score each force (−1 to +4) and add them.

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Techniques for Improving the Creative
Process (4 of 4)
• Brainstorming
• Mind-mapping
• Force-Field analysis
• TRIZ

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TRIZ
• TRIZ
– A systematic approach designed to solve any technical
problem.
– Relies on 40 principles and left-brained thinking to
solve problems.

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TRIZ Contradiction Matrix
Figure 3.2 TRIZ Contradiction Matrix

Source: Based on, G. Altshuller, TRIZ 40, http://www.triz40.com/aff_Matrix.htm.

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Techniques for Improving the Creative
Process (3 of 3)
• Brainstorming
• Mind-mapping
• Force-field analysis
• TRIZ
• Rapid prototyping

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Rapid Prototyping
Rapid Prototyping:
• Transforming an idea into an actual model that will point
out flaws and lead to design improvements.

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Protecting Your Ideas (1 of 3)
Patent:
• A grant from the Patent and Trademark Office to the
inventor of product, giving the exclusive right to make, use,
or sell the invention for 20 years from the date of filing the
patent application.

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Top Counterfeit Products Seized by U.S.
Customs Agents
Table 3.3 Top 10 Counterfeit Products Seized by U.S.
Customs Agents
Percentage of Counterfeit
Rank Product
Goods Seized
1 Wearing apparel and accessories 20%

2 Consumer electronics 16%

3 Footwear 12%

4 Watches and jewelry 11%

5 Handbags and wallets 10%

6 Pharmaceuticals and personal care 8%

7 Optical media 3%
Source: Based on
8 Computers and accessories 2% Intellectual Property Rights:
Fiscal Year 2016 Seizure
9 Labels and tags 2% Statistics, U.S. Customs
and Border Protection,
10 Office of International
Automotive and aerospace 2%
Trade, 2017, p. 8.

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Patent Applications and Patents Issued
Figure 3.3 Patent Applications and Patents Issued

Source: Based on data from the U.S. Patent and Trademark Office, 2016.

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The Six Steps to a Patent
1. Establish the invention’s novelty
2. Document the device
3. Search existing patents
4. Study search results
5. Complete the patent application
6. File the patent application

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Protecting Your Ideas (2 of 3)
• Trademark: any distinctive word, symbol, design, name,
logo, slogan, or trade dress a company uses to identify the
origin of a product or to distinguish it from other goods on
the market.
• Service mark: the same as a trademark except that it
identifies the source of a service rather than a product.

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Trademark Applications and Trademarks
and Renewals Issued
Figure 3.5 Trademark Applications and Trademarks and
Renewals Issued

Source: Based on data from the U.S. Patent and Trademark Office, 2016.

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Protecting Your Ideas (3 of 3)
• Copyright: an exclusive right that protects the creators of
original works of authorship such as literary, dramatic,
musical, and artistic works.
– Copyrighted material is denoted by the symbol ©.

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Protecting Intellectual Property
• The primary weapon an entrepreneur has to protect
patents, trademarks, and copyrights is the legal system.
• Before engaging in a legal battle consider:
– Can the opponent afford to pay if you win?
– Do you expect to win enough to cover your legal costs?
– Can you afford the loss of time, money, and privacy
involved?

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Characteristics of Patents, Trademarks, and
Copyrights (1 of 2)
Table 3.4 Characteristics of Patents, Trademarks, and
Copyrights
Protection What It Protects Who Is Eligible Length of Approximate
Protection Total Cost
Utility patent Exclusive right to make, First person to file 20 years $4,000 to $25,000,
use, and sell an invention for a patent depending on
complexity
Design New, original changes in First person to file 14 years $4,000 to $25,000,
patent the design of existing for a patent depending on
products that enhance complexity
their sales
Trademark Any distinctive word, Entity currently Renewable $1,000 to $2,500
phrase, symbol, design, using the mark in between fifth and
name, logo, slogan, or commerce or one sixth years and
trade dress that a who intends to ninth and tenth
company uses to identify use it within six years and every
the origin of a product or months 10 years
to distinguish it from other afterward
goods on the market

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Characteristics of Patents, Trademarks, and
Copyrights (2 of 2)
[Table 3.4 Continued]
Protection What It Protects Who Is Eligible Length of Approximate
Protection Total Cost
Service mark Same protection as a Entity currently Renewable $1,000 to $2,500
trademark except that it using the mark in between fifth and
identifies and commerce or one sixth years and
distinguishes the source of who intends to ninth and tenth
a service rather than a use it within six years and every
product months 10 years
afterward
Copyright Original works of Author or creator Life of the author $140 to $200
authorship, such as or creator plus 70
literary, dramatic, musical, years
and artistic works

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Conclusion
• Creativity and innovation are vital components to
entrepreneurial success.
• Successful entrepreneurs constantly push themselves and
the people in their businesses to think bold new thoughts,
come up with fresh new ideas, and question the status
quo.
• The results of their efforts are innovative new products,
services, and business models that benefit all of us and
improve the quality of our lives.

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Copyright

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