Enterprise Concepts and Issues © Goodfellow Publishers 2016

CHAPTER 3: CREATIVITY, INNOVATION,

AND ENTREPRENEURSHIP
Creativity; Past, Present & Future…..

“How Can we Know Where We’re Going

Without Knowing First Where We ‘ve Been?”
Creativity: What is it???……

“The ability to create and innovate has been

observed throughout history and even though the
fundamental tools may have changed the ability
has been prevalent in every civilisation”
(Hisrich, Peters and Shepherd, 2005, p. 8).
“May our species be resurrected and awakened
by the Spirit of Creativity for this coming century”
(Fox, 2002).
The Past…….

“Throughout history, the process of creation whether;

paintings or musical compositions were thought of as
‘spiritual experiences in the service of whatever muse
held the artist in her thrall”
(Thorsby, 2001, p. 95).

“The artist was a channel for a superior power, creativity

a gift from the gods, and the imagination a divine
spark”
(Thorsby, 2001, p. 94).
A Gift from the Gods or a New Phenomenon?
Or…Could Both Be True????......
Maybe?
Natures Creation? or Human Creation
Venoms & Poisons or Anaesthetics
The Leaf or Solar Panel (energy from light)
Brain or Computer/Electronic Circuitry
DNA or Computer Program
Ear Drum or Microphone
Eye or Camera (lens, focus, iris, film)
Eye Lid or Windshield Wiper
Tears or Wiper Fluid
Incisor Teeth or Knife
Heart or Pump
Spinal Chord/Nervous system or Communication/Telephone Cables
Song Birds or Music
Creativity: Nature or Nurture?
• Let’s look at the field of music:
• If we want to be great musicians what do we need?
• A good “ear” – which may have some biological origin
• Talent – again, an innate trait.
• But also THEORY, STUDY, PRACTICE, PRACTICE,
PRACTICE!

• If I am super-talented through natural chance, I may become a

great pianist – but only if I study hard
• If I am not super-talented but I study hard, I may not be the
greatest pianist in the world, but I can certainly become
competent – and even make a living from it.
 Creativity: Nature or Nurture (2)
• If business creativity depends on nature, then only a few of us can
operate in that sphere.
• Result – business grinds to a halt!
• Luckily, we know, from experience and from research that we can
learn techniques which support creativity.
• So, we may not all be creative business gurus who come up with
fabulous ideas while sitting in our armchairs
• BUT
• We can apply creative techniques and thinking processes which
help us develop new ideas and keep our businesses flexible and
successful.
Why is Creativity Important?
• All business sectors seek novelty
• Consumer products
• Media
• Fashion
• Travel
• Even seemingly conventional sectors respond to novelty, e.g.
medicine seeks new formulations of existing drugs.
• Note that some novelty may be “better”, e.g. better medicine, some
is simply a response to the desire for something new, e.g. fashion.
• So, a continual drive for novel developments suggests that creative
thinking is key to success.
 Creativity
ativity there would be no progress, and we would be
de Bono).
 Who is Creative?

• Are creative people born or made?

• Think back to your first year management studies
and discussions of what constitutes an
entrepreneur, and whether these skills can be
learned.
• The literature suggests that creativity can be innate
(you’re born with it), but can also be learned (you
get better with practice).
 Two views of Creativity
te View
’s
pmental View
The Elitist View…
• Getting New & Valuable Ideas
• A Rare Talent
• Creating Great Works of Art or Scientific
Discoveries
• Unable to be Taught
• Not Relevant in My Job/ Organisation
• A Lonely Individual Process
The Developmental View…
Which View Do You
Agree With?
The Reality…..
• Creativity Is Not Exclusively for ‘Elite’
People
• It Can be Developed in All Persons
• Creativity is a Personal Problem-solving
Process of a Non-routine Kind
• It Can be Learned, Practiced &
Successfully Applied by all – in Every
Walk of Life
Can We Learn Creativity?

We can argue that although we might not be

able to learn how to turn ourselves into
creative people, we can learn how to think
about business creatively.
The Role of the Brain
The Whole Brain: Universal Thinking Styles
 Three Components of Creativity

• Domain Relevant Skills

• Creative Processes

• Intrinsic Task Motivation

See; Amabile, Philips & Collins,

 Creativity
ativity there would be no progress, and we would be
de Bono).
 De Bono’s creative process

1. Generating knowledge and awareness

• Reading, learning, researching, finding out about the world in
general and the area in which you wish to operate
2. Incubation
• Time for reflection
3. Idea generation
• Using your own knowledge and creative thinking techniques
e.g. brainstorming, to create ideas
4. Evaluation and Implementation
• Choosing your idea and making it work!
Edward De Bono: ‘Six’ Thinking Hats (1985)
• Archives, Reports, Media, Articles, Books, Biographies, Images,
Audio & Digital Media

• Does my Direction Feel Right? Could I be Looking in the

Wrong Place? Asking the Wrong Questions?

• What Can I do Different? Is there Anything More to

Look at? What are the Weaknesses?

• Why is it Worth it? For Whom is it of Interest?

Why Can it Be Done? Because it Can……

• Alternative Ways? New Methods or

Tools? New Stance? New View of
Your Original Stance?

• What Has Been Done? What is

Still to do? How to Proceed?
The Unique Blue Hat
Evaluation Sequence
• To discover the positive aspects and negative
aspects of an idea. You use the yellow hat
(sunny optimism) before the black hat
(caution).
• You could follow up with the green hat (new
ideas) and red hat (emotion, feelings) thinking.

• Examples: Consider positive and negative

 Not doing homework one night
Caution Sequence
Design Sequence

• Creating:
• New ideas
• Products
• Improvements to existing designs.

• For this, we could use the blue (control),

green (creative new ideas) and red
(emotions, feelings) hats.
Other Sequences
Example: Creative Problem Solving Steps
1. Problem Definition
I Used the Explorer Mindset To look at the Larger Issues Related to Entrepreneurship (Quadrant C
and D thinking) Then to find the main issues of interest the detective mindset was used (using
Quadrant A and B thinking)
2. Idea Generation
Records,
Prior
Data
In the second stage, brainstorming a multitude of Literature
creative ideas using the imaginative, intuitive mindset Collection
of an Artist (Quadrant C and D thinking)
3. Idea Synthesis
Is there
In the creative idea evaluation phase, I try to obtain
Another Reflect
more practical, solutions using the mindset
of an engineer (Quadrants D and A thinking) Way?
4. Idea Judgement
In the critical idea evaluation phase, I must determine
which ideas And solutions are best, thinking like a Judge Who is Review
(Quadrants A and B) it For? Methods
5. Solution Implementation
Putting the solution into practice requires the mindset of the producer where the focus is primarily on
carrying out the data collection within the research project (Quadrant B and C are especially important,
but the whole brain must be used)
 So What is Creativity?

• It can be anything…. While we often associate

the term with artistic endeavour – writing,
painting, making music. We can be creative in
business life as well.
• “Creativity is… the ability or quality displayed
when solving hitherto unsolved problems, when
developing original and novel solutions to
problems others have solved differently, or when
developing original and novel… products”
(Parkhurst, 1999).
What does this tell us about creativity?

• It tell us that:
• Creativity can be about developing new
products
• BUT
• It can also be about developing new
solutions.
Ideas Can Start with Solving Problems

• Solving “Points of Pain”:

• To Notice Inefficiency, Inconveniences, &

Other Forms of “Points of Pain” & Use these
to Build New Business Opportunities
Solutions?

• What do we mean by solutions?

• In this context, it could mean
• new processes to help us do something better
• new ways of using existing products
• new services to supply to new or existing
customers etc.
• New ways of thinking about things!
Idea Generation
• Your Task: Generate as many ideas for a
new product or service to improve student
experience at HW as you can in 5 minutes
 • So… If Creativity is
Solving Problems… What
Is An Innovation?
To Innovate….
• According to the New Oxford Dictionary (2004, p. 942), innovation
means to be able to: “Make changes in something established,
especially by introducing new methods, ideas, or products”.
• According to the UK government, “innovation is the process by
which new ideas are successfully exploited to create economic,
social and environmental value” (BIS 2014, p.7).
• In the mid-twentieth century, economist Joseph Schumpeter (1950)
pioneered the categorisation of innovation as the creation of
something ‘new’ that creates and adds value for those who interact
with, or consume, it. Something ‘new’ can also mean the updating of
something which already exists in order to take advantage of a
specific segment or a newly-identified or emerging market.
Schumpeter’s Innovator
• Schumpeter (1934) distinguished inventions from innovations and
identified ‘Five Types of Innovation’
Disruptive and Sustaining Innovations

• Christensen (1997), identified two types of innovations:

disruptive innovations and sustaining innovations.
• The former, disruptive innovations involve a new value
proposition by which new markets are created.
• In such instances, individuals or business organisations seize
upon basic inventions and transform them into economic
innovations, thereby disequilibrating and altering the existing
market structure, then waiting until the process eventually settles
down before the next wave of innovation begins.
• In contrast, the latter, sustaining innovations are best
thought of as improvements to existing products,
processes or markets.
 What is innovation?
“When an enterprise produces a good or service or uses a method or input that is
new to it, it makes a technical change. The first company to make a given
technical change is an innovator. Its action is innovation.”

Schmookler (1966)

“Innovation by definition must be successful in the market. “The test of innovation,

after all, lies not in its novelty, its scientific content, or its cleverness. It lies in its
success in the marketplace.”
Drucker (1993)

It is the creativity of an entrepreneur that results in invention [creation of new

knowledge] and innovation [application of knowledge] to create new products,
services or processes.
 Department for Business,
Innovation and Skills

“Innovation is the process by which new ideas are

successfully exploited to create economic, social and
environmental value.”

(BIS, 2014)
What is Innovation?
• Degree of Newness:
• Radical Innovation
• Incremental Innovation
 Examples of Innovation

• Glass (3500 BC)

• Modern Public Library (1850-1945 depending on country)

• Electronic calculator (1961)

• Mobile phones (1973)

• World Wide Web / Internet (1989)

• Email (1993)
What is A New Innovation?
• What do you define as new?
• Can mean different things to different people
• New to the world (10%)
• New to the firms (20%)
• Additions to existing products/process (26%)
• Improvement and revisions to existing products/process (26%)
• Repositioning (with different purposes) (7%)
• New to the market (geography + segments)
• New to the season
• Cost reduction (11%)
(See; Booz, Allen & Hamilton, 1982; Griffin, 1997)
New Meaning, New Concept…. (1)
New Meaning, New Concept… (2)
Creative New meaning with New Innovation
Revolutionise Existing Concepts
 Open versus Closed Innovation
Closed Innovation Principles Open Innovation Principles
Not all the smart people work for us, so owe must find
Most of the smart people in our field work for us and tap into the knowledge and expertise of bright
individuals outside our company

To profit from R&D, we must discover, develop External R&D can create significant value; internal
and ship ourselves R&D is needed to claim some portion of that value
We don't have to originate the research in order to
If we discover it, we will get it to market first
profit from it
Building a better business model is better than getting
If we are the 1st to commercialise we will win
to market first
If we create the most and the best ideas in the If we make the best use of internal and external ideas,
industry, we will win we will win

We should control our intellectual property (IP) We should profit from others' use of our IP, and we
so that our competitors don't profit from our should buy others' IP whenever it advances our own
ideas business model
Open versus Closed Innovation
Under the concept of innovation that prevailed during most of the 20th
century, companies attained competitive advantage by funding large
research laboratories that developed technologies that formed the
basis of new products that commanded high profit margins that then
could be ploughed back into research.

The closed innovation paradigm has eroded due to the following

factors:

• Increased mobility of skilled workers

• Expansion of venture capital
• External options for unused technologies
• Increased availability of highly-capable outsourcing partners
Closed Innovation

(Chesbrough, 2003)
Open Innovation

(Chesbrough, 2003)
Not all Innovations are Successful…

Innovation = Invention + Commercialization

Neither are All Fashion Trends
Really!?!?
• Innovation = Invention +
Commercialization
• Are all Innovations
Opportunities?
Opposing Views…

• We can therefore see that there is a difference between

the commonly held definitions of “Creativity and
Opportunity” and the definitions used in a business
context.
• We may think that creativity is related to artistic or
cerebral activity and opportunity is a matter of chance.
• Business management theory suggests that in a
commercial context, creativity can be learned or
developed and that it need not relate to complete
novelty; opportunity can be created or developed.
 What’s an Opportunity?

“An opportunity has the qualities of being attractive, desirable and timely and is
anchored in a product or service which creates value for buyer or end user”

• A new or improved product

• A new service
• A new means of production
• A new way of distributing the product or service
• An improved service
• New combinations
• Or a hybrid of the above
Recognising an Opportunity

• Opportunities are not like raindrops – they do

not fall at our feet.
• Well, not usually! From time to time something
might just happen which allows an entrepreneur
to move forward.
• However, if we wait for an opportunity to turn up,
we will probably never succeed.
• As creative business people we seek or develop
opportunities.
So…
• Do Ideas = Opportunities?
• Do Problems = Opportunities?
• Reality - An Idea is Only an Opportunity
when It:
• Adds Value to Consumer
• It Solves a Problem
• It Can Make Some Money ( Communicate
Some Value to Other Stakeholders)
• It is a Good “Fit” with the Entrepreneurial
Team
• Timmons& Spinelli (2007)
Factors Influencing the
Creation/Discovery of Opportunities
 Drucker’s Opportunity Scan

• Internal • External
1. The unexpected - can we react to 1. Changes in demographics – age,
change? income, health, etc.
2. Incongruity – can we cope with the 2. Changes in perception, mood,
difference between what we meaning - can we react to
thought would happen and what changes in fashion, culture,
actually happened? This could attitudes.
create an opportunity.
3. New knowledge – science and
3. Inadequacy in underlying industry affect our products and
processes – can exiting processes processes.
and procedures be improved?
4. Changes in our industry or our
market – can we respond
positively?
 Creative Invention Vs
Innovative Opportunity
High

STRUGGLER INNOVATOR
Creative
Invention

STAGNATOR COPIER

Low
Low Innovative High

Opportunity
Perception
 Creativity and Commerce

So, think of creativity in terms of ways of

thinking which support commercial
opportunities, whether in developing new
processes, services or products.
Example: Rise of Levi’s
• Problem:
• Working Clothes for Mining Workers do Not
Last

• Solution:
• First Pair of Jeans
Ideas Start With Solving Problems
• Remember… Ideas Start With Solving
Problems
• Any Problems are Big Opportunities.
• No Problems, No Solutions, & No Reasons
for Firms to Exist.
• No One Pays You to Solve a Non-exist
Problem (Vinod Khosla, Sun Microsystems)
“Solving Problems”

• Take care with this use of the word “problem”…

• The normal use of this word might suggest that there is something
wrong
• In a business context, we might use the word simply to represent
something which makes the customer’s activities less
efficient/enjoyable/simple
• So, a “problem” might be something quite trivial, everyday or simple
– however, by providing a cost effective solution, we please our
customer and make money
• Examples
• Velcro – a simple alternative to the shoelace.
• A keyring that beeps – you can find your keys anywhere in the room
• Goretex – water resistant jackets.
Attributes of Creative Thinking

• Flexibility – willing to look at an issue from many angles,

not set in our ways.
• Originality – attempts to find non-typical responses to
problems.
• Non-judgemental – not rejecting a potential solution
without giving it appropriate consideration.
Creativity, Invention, Opportunity &
Entrepreneurship
ENTREPRENEURIAL ENVIRONMENT

INVENTION
Ability to be Ability to spot
CREATIVE OPPORTUNITIES

INNOVATION

SUCCESS
 Creating Creativity

• Creative Individuals don’t just sit waiting

for the “lightbulb moment”

• They approach a problem systematically

Stages in Creative Thought
• Preparation

• Incubation

• Insight

• Evaluation

• Elaboration
What Stops Business Creativity?

Barriers are understandable, but nevertheless can

prevent or slow the development of new ideas :
• Fear – change is always frightening.
• Risk – am I risking my established business?
• Convention – we’ve always done it this way.
• Self-doubt – if it’s that good, surely somebody else
would have made it by now?
• Fear of failure
Readings
Chesbrough, H. (2003) Open Innovation, Harvard University
Press: Cambridge, MA.

Fagerberg, Jan, Fosaas, Morten, & Sapprasert, Koson. (2012).

Innovation: Exploring the knowledge base. Research Policy,
41(7), 1132-1153.

Fillis, I. (2002) An Andalusian Dog or a Rising Star? Creativity

and the Marketing/Entreprenseurship Interface. Journal of
Marketing Research, 18(1), 379-395.

Rothwell, R. (1994). Towards the fifth generation innovation

process. International Marketing Review, 11 (7-31).