LECTURE SESSION SIX

PHILOSOPHY OF ENTREPRENEURSHIP
Lecture Outline
6.1 Introduction
6.2 Learning Outcomes
6.3 Creativity and Entrepreneurship
6.3.1 Creativity and Innovation
6.3.2 The Creativity Processes
6.3.3 Elements of Innovation
6.3.4 Importance of Innovation
6.3.5 Innovation and Entrepreneurship
6.4 Creative problem-Solving Techniques.
6.5 Summary
6.6 Review Activity
6.7 References and Further Reading

6.1 Introduction
Welcome to this Sixth lecture in Entrepreneurship Skills. In this lecture, we shall explore
the concepts of Creativity and Innovation.

6.2 Learning Outcomes

At the end of this lecture, you should be able to:
i) Differentiate between creativity and innovation.
i i) Describe the FIVE stages in the creative process.
iii) Explain the importance of innovation in
entrepreneurship.

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Let us start our discussion by asking ourselves this question.

Intext Question 1: How many boxes do you see in the below

figure?

Well done. I believe you answered NINE. However some people will see more boxes
than NINE They will see 25. Try to count and see these boxes. This introduces us to
creativity. You must be able to stretch yourself and see outside the box.

6.3 Creativity and Entrepreneurship

Creativity is the ability to design, form, make or do something in a new or different
way. The ability to come up with creative solutions to needs/problems and to
market them often marks the difference between success and failure in business.
It also distinguishes high-growth or dynamic businesses from ordinary, average
firms. Real, successful entrepreneurs are creative in identifying a new product,
service or business opportunities.

6.3.1 Creativity and Innovation

Creativity is the ability to design, form, make or do something in a new or different
way. The ability to come up with creative solutions to needs/problems and to market
them often marks the difference between success and failure in business.
Innovation is a process of doing new things. Ideas have a little value until they are
converted into products, services or process. Innovation, therefore, is the process of

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transformation of creative ideas into useful applications, but creativity is prerequisite to
innovation.
Entrepreneurship can be partly described as a combination of creativity followed by
innovation, where creativity is the act of ‘thinking’ new things, coming up with ideas
and innovation is ‘doing’ new things or implementing newly created ideas.

6.3.2 The Creativity Process

Ideas usually evolve through a creative process whereby imaginative people germinate
the ideas, nurture them and develop them successfully. The Seven stages in creative
process include:

1. Preparation – This is the first stage at which the base for creativity and innovation is
defined; the mind is prepared for subsequent use in creative thinking. During
preparation the individual is encouraged to appreciate the fact that every opportunity
provides situations that can educate and experiences from which to learn.

The creativity aspect is kindled through a quest to become more knowledgeable. This
can be done through reading about various topics and/or subjects and engaging in
discussions with others. Taking part in brainstorming sessions in various forums like
professional and trade association seminars, and taking time to study other countries
and cultures to identify viable opportunities is also part of preparation. Of importance
is the need to cultivate a personal ability to listen and learn from others.

2. Investigation – This stage of enhancing entrepreneurial creativity and innovation

involves the business owner taking time to study the problem at hand and what its
various components are.

3. Transformation – The information thus accumulated and acquired should then be

subjected to convergent and divergent thinking which will serve to highlight the
inherent similarities and differences. Convergent thinking will help identify aspects that

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are similar and connected while divergent thinking will highlight the differences. This
twin manner of thinking is of particular importance in realizing creativity and
innovation for the following reasons:

4. Incubation – At this stage in the quest for creativity and innovation it is imperative
that the subconscious reflect on the accumulated information, i.e. through incubation,
and this can be improved or augmented when the entrepreneur:

- Engages in an activity completely unrelated to the problem/opportunity under

scrutiny
- Takes time to daydream i.e. letting the mind roam beyond any restrictions self-
imposed or otherwise
- Relax and play
- Study the problem/opportunity in a wholly different environment

5. illumination – This happens during the incubation stage and will often be
spontaneous. The realizations from the past stages combine at this instance to form a
breakthrough.

6. Verification – This is where the entrepreneur attempts to ascertain whether the

creativity of thought and the action of innovation are truly effective as anticipated. It
may involve activities like simulation, piloting, prototype building, test marketing, and
various experiments. While the tendency to ignore this stage and plunge headlong with
the breakthrough may be tempting, the transformation stage (3rd) should ensure that
the new idea is put to the test

7. Implementation – This is where the product of creativity and innovation is made into
a reality and it's what defines the difference between inventors and entrepreneurs.

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6.3.3 Elements of Innovation

Collaboration

Teamwork is essential to getting things done. In todays global and digital 24/7 world,
challenges are more complex; it's becoming increasingly important to bring more,
diverse minds to the table and to break down silos.

Collaboration is one type of group activity familiar to community development. There

is no shortage of initiatives intended to be collaborative. Collaboration has never been
easy, mostly because conflict and competition within and among groups dominates the
landscape. As everyone tends to avoid tension, what we actually may be left with in
communities is peaceful (or less than peaceful) coexistence, and not collaboration. It
may be a good time for re-thinking collaboration.

Collaborative process is more than working together. It means the ability to think
together and to act on complex projects. The traditional strategic planning process is not
a model for the disciplines required to transform our economies. Rather, strategic
"doing" offers a framework to achieve results. Thinking together is open innovation.
Strategic doing guides open innovation. Strategic doing means:

Listen and explore—what can we do together?

Learn and adjust—how will we learn together?
Focus and align—what should we do together?
Link and leverage—what will we do together?

Ideation

Fresh, new ideas help your organization stand out. With intense competition for
resources, organizations must differentiate in order to survive.

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Implementation

What good are new ideas if they are not put to use? Organizations must engage the best people
to champion their ideas and keep those great ideas moving forward.

There is no shortage of conversations on how technology is changing lives and how

technological innovations are being implemented at lightning speed

Value Creation

You don't have innovation if your new ideas aren't creating value. Organizations must
implement ideas and programs identified as most effective in delivering value
to stakeholders.

The failure rate of established companies has skyrocketed during the past year.
However, there are companies still experiencing monumental success despite the
economic downturn. These companies are thriving because they effectively deliver
products valued by consumers.

The purpose of innovation is to create business value. Value can be defined in many
ways, such as incremental improvements to existing products, the creation of entirely
new products and services, or reducing cost. Businesses seek to create value because
their survival, growth and ability to compete in a rapidly changing market depend on
whether they innovate effectively.

Many companies develop experimentation brands, joint ventures or co-brands. This

gives them the freedom to test new ideas and create value without the risk of damaging
an established brand..

Need-finding is a process of looking for new opportunities. To understand the

customer's experience, researchers look for gaps in customer service because they may
represent opportunities.

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a) 6.3.4 Importance of innovation
a) Reduced costs of production and distribution
b) Improvement in the quality and quantity
c) Customer satisfaction
d) Corporate image
e) Customer loyalty such as repeat purchase and favourable recommendations by
satisfied customers.
f) Competitive advantage
g) Motivation to employees
h) Expansion of business.

6.3.5 Innovation and Entrepreneurship

 Innovation refers to:
a) Doing something differently.
b) Process of improving what already exists
c) In entrepreneurship it is regarded as one of the features of an entrepreneur.
Thus, the most successful entrepreneurs are innovators.
d) It gives an entreprneur a competitive advantage.
 Schumpeter (1934) identified the entrepreneur’s challenge as discovering and
implementing new ideas. He asserts that innovation is a unique feature, which
separates entrepreneurs from managers. It’s stated that this is achieved by:
1) Developing new products or services
2) Developing new methods of production
3) Identifying new markets
4) Discovering new sources of supply, and

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 5) Developing new forms of organizations, carrying out of new form of
organization of any industry by creating of a monopoly position or the breaking
up of it.
Emphasizing the role of innovation, Schumpeter averts that the entrepreneur is
someone who carries out “new combinations” by such things as introducing new
products or processes, identifying new export market s or source of supply, or creating
new types of organization. Schumpeter presented a heroic vision of the entrepreneur as
someone motivated by the “dream and the will to find a private kingdom”; the “will to
conquer: the impulse to fight, to prove oneself superior to others”; and the “joy of
creating.”

In Schumpeter’s view the entrepreneur leads the way in creating new industries, which,
in t urn, precipitate major structural changes in the economy. Old industries are
rendered obsolete by a process of “creative destruction.” As the new industries
compete with established ones for labour; materials, and investment goods, they drive
up the price of these resources. The old industries cannot pass on their higher costs
because demand is switching to new products.

As the old industries decline, the new ones expand because imitators, with optimistic
profit expectations based on the investor’s initial success, continue to invest.
Eventually, overcapacity depresses profits and halt s investment. The economy goes
into depression, and innovation stops. Invention continues, however, and eventually
there is a sufficient stock of unexploited inventions to encourage courageous
entrepreneurs to begin innovation again. In this way Schumpeter used
entrepreneurship to explain structural change, economic growth, and business cycles,
using a combination of economic and psychological ideas.

Schumpeter was concerned with the “high-level” kind of entrepreneurship that,

historically, has led to the creation of railroads, the birth of the chemical industry, the

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commercial exploitation of colonies, and the emergence of the multidivisional
multinational firm. His analysis left little room for the much more common, but no less
import ant, “how-level” entrepreneurship carried on by small firms.

Distinguish between innovation and innovation.

a) Invention – occurs when new methods and new materials are discovered.
b) Innovation –occurs when the new methods and materials are utilized to form
new combinations.

Activity
Identify FIVE cases of innovation and creativity that happened in
recently in your country?

Well done. You have been able to give examples of FIVE innovations that have
happened in the recent past. This leads us to our last section creative Problem
solving Techniques.

6.4 Creative problem-Solving Techniques.

Creativity is an important attribute of a successfully entrepreneur. Creativity can be
unlocked and creative ideas and innovations generated by using any of creative
problem-solving techniques discussed below.

i Brainstorming
In this method, creative problem-solving method is applied which is a method for
obtaining new ideas focusing on parameters.

ii Reverse Brainstorming

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1. This is a group method for obtaining new ideas focusing on the negative. Criticism
is allowed in when discussing an idea.
2. The technique is based on finding fault by asking the question. The process in this
method involves finding out of everything wrong with an idea, followed by a
discussion of ways to overcome these problems.

iii Brain writing

This is a form of written brainstorming in which participants are given more time to
think than brainstorming sessions, where ideas are expressed spontaneously.
It is a silent, written generation of ideas by a group of people. Participants write their
ideas on special forms or cards that circulate within the group, which usually consists of
the members.

iv Gordon Method
This is a method for developing new ideas when the individuals are unaware of the
problem. Members are not aware of the problem to ensure that the solution is not
clouded by preconceived ideas and behavioral patterns.

The entrepreneur starts by mentioning a general concept associated with the problem.
The group responds by expressing a number of ideas. Then a concept is developed,
followed by related concepts, through guidance by the entrepreneur. The actual
problem is then revealed, enabling the group to make suggestions for implementation
or refinement of the final solution.

v Checklist Method

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This is a method of developing a new idea through a list of related issues. The
entrepreneur can use the list of questions or statement to guide the direction of
developing entirely new ideas or concentrating on specific idea areas.

vi Free Association
In this method, an entrepreneur develops a new idea through a chain of word
associations. This technique is helpful in developing an entirely new slant to a problem.
A word or phrase related to the problem is written down, then another and another,
with each new word attempting to add something new to the ongoing through process,
thereby creating a chain of ideas ending with a new product emerging.

vii Forced Relationship

This is the method of developing a new idea by looking at product combinations. It is a
technique that asks questions about objects or ideas in an effort to develop a new idea.
The new combination and eventual concept is developed through five steps namely,
Isolate the elements of the problem;
1) In the relationships between these elements;
2) Record the relationships in an orderly form;
3) Analyze the resulting relationships to find ideas or patients;
4) Develop new ideal from these patterns.

Viii Collective Notebook Method

In this method, group members develop new regularly through recording ideas in a
small notebook that easily fits in a pocket containing statement of the problem, blank
pages and any pertinent background data is distributed. Participants consider the
problem and its solutions, recording ideas at least once, but preferably three times, a
day. At the end of the week, a list o the best ideas is developed, along with any
suggestions.

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ix Attribute Listing
This is the method of developing a new idea by looking at the positives and negatives.
It is an idea finding technique that needs the entrepreneurs to list the attributes of an
item or problem and the look at each from a variety of viewpoints.
Through this process, originally unrelated objects can be brought together to form a
new combination and possible new uses that better satisfy a need.
x Big Dream Approach
This method entails developing a new idea by thinking without constraint. In this
approach an entrepreneur is required to dream about the problem and its solution, in
other words, think big.
Every possibility should be recorded and investigate without regard to all, the negative
involved or the resources required. Ideas should be conceptualized without any
constraints until an idea is developed into a workable form.

xi Parameter Analysis
This is the method of developing a new idea by focusing on parameter identification
and creative synthesis. Step one involves (parameter identification) involves analyzing
variables in the situation to determine their relative importance. These variables
become the focus of the investigation, with other variables being set aside.

After the primary issues have been identified, the relationships between parameters
that describe the underlying issues are examined. Thorough an evaluation of the
parameters and relationships, one or more solutions are developed; this solution
developed is called creative synthesis.

6.5 Summary
The session looked at Creativity and innovation in business. It has
also explored innovation and how it impacts entrepreneurship.
We finished with the various Problem solving Techniques which

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also double up as methods of coming up with business ideas.

6.6 Review Activity

i) Explain some of the attributes of the entrepreneur that
propagate the Philosophy of entrepreneur.
ii) Discuss how creativity can be enhanced in an organisation?

6.7 References and Further Reading

i. Hirsch, R.D., Peters, M.P. & Shepherd, D.A. (2014).
Entrepreneurship, 8th Edition. Boston, U.S.A:
McGraw Hill Education (ISBN: 987-0073530321).
Ch. 2, 5-6, 11-12
ii. Kuratko, D. F. (2016). Entrepreneurship: Theory,
Process and Practice, 10th Edition. Boston, MA, USA:
CENGAGE Learning (ISBN-13: 978-1285051758).
Ch.5 - 7
iii. Scarborough,M.N.(2015). Essentials of Entrepreneurship
and Small Business management, 8th Edition. Chapter 1.

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