Topic 2 Creativity and Innovation

TOPIC 2
CREATIVITY AND INNOVATION
Fundamentals of Entrepreneurship All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1
Introduction
 In free market economy—entrepreneur has to be creative

and innovative—in order to be more competitive, to improve
market share and to increase profitability.
 Creativeness and innovativeness are valuable assets—help
entrepreneurs to beat their competitors by being able to offer
better quality products, at competitive prices and with better
service delivery.

Definition of Creativity
 According to Schermerhorn, Hunt and Osborn (2003),

“Creativity involves the development of unique and novel
responses to problems and opportunities.
 Stemberg, Kaufman and Pretz (2002): Creativity is the ability to
produce work that is novel (i.e. original and unexpected), high in
quality and appropriate (i.e. useful, meets task constraints).
 Kuratko (2009), “Creativity is a process that can be developed
and improved. Everyone is creative to some degree, some
individuals have a greater aptitude for creativity than others”.
 Schaper and Volery (2007). “Creativity is the process through
which invention occurs, the enabling process by which something
new comes into existence”.

Entrepreneurial Creativity and
Innovation (contn)
Creative ideas can be worked out or extracted from three different
perspectives as suggested by Bessant and Tidd (2007):
 Creativity at the personal level includes creative style, inclination,
ability to identify, assess and develop new ideas and concepts.
 Group or social creativity stresses the contribution of teams and groups
such as creativity through the discussion of a cross-functional team—
may provide a better interface between departments or a more
synergistic approach that improve effectiveness and efficiency for the
whole group or organization.
 Contextual creativity focuses on creativity that relates to internal and
external context such as processes, tools work method, lay out,
structures, strategy, concept, environment, climate, logistic, location,
etc.

SUMMARY WHAT
CREATIVITY IS
Creativity refers to the ability of generating novel (original, unique and

unexpected) and useful ideas for business venture.
Creativity is the ability to come up with new ideas, approaches or

actions and exploit them to create wealth. This includes, rethinking of
an old idea or to think of a new application for existing technology and
present it in a new way.

Pre-requisite of Creativity and
Innovation

Pre-requisite of Creativity and
Innovation
 1. Creative Thinking Skills
– refers to how a person identifies a problem and seeks its
solution—the capacity and ability to put existing ideas and
knowledge together to explore new possibilities.
– an entrepreneur identifies opportunities based on market
demand, develops a new product concept, formulates a
business strategy and mobilizes the required resources to
undertake the project.
– this requires a lot of creative thinking, resourcefulness and
execution skills as it is about being creative at finding the right
concept, formula, strategy, products, etc. to make the
proposal practical, affordable, viable and acceptable to the
customers and various stakeholders.
Innovation (cont.)
 2. Knowledge
– Expertise or knowledge encompasses everything a person
knows and can do—can be acquired in different ways: formal
and informal education—education and training are major
factors that distinguish the founders of technical ventures from
other types of entrepreneurs.
– In order to be creative, a person should have an adequate
level of knowledge and skills in the area of his interest as
specialized knowledge can enable a person to focus on his
specific area of interest—should also have broad general
knowledge to enable him to think divergently and integrate or
apply other technologies that have been developed in other
fields.
Innovation (cont.)
 3. Motivation
– Motivation determines what people actually want and will do.
– There are two types of motivation: intrinsic and extrinsic. Intrinsic
motivation is internally driven through a person interest, desire,
aspiration and passion.
– Extrinsic motivation can be divided into financial and non-financial
motivation.
– Non-financial rewards can be in terms of compliments, words of
encouragement, acknowledgement, peer pressure and
encouragement to promote creativity.
4. Knowing the Sources of New Ideas; consumers, existing products,
distribution channels, government

SOURCES FOR NEW IDEAS
 Consumers—the feedback and complaints from consumers will

trigger ideas on how to fulfil the needs and want of the
customers.
 Existing products and services—existing products and
services in the market will give new ideas to entrepreneurs to
further improve and upgrade their products and services from
time to time.
 Distribution channels - members of distribution channels are
also excellent sources of market information because of their
familiarity with the needs of the market.
 Government—government policy, regulation and support can
be a source of new product ideas that push entrepreneurs to be
innovative and creative.

Creativity Techniques
 Entrepreneurs can use several techniques to help generate

new ideas such as:
1. Problem reversal
2. Lateral thinking
3. Forced analogy
4. Mind mapping
5. Brainstorming
6. Ishikawa Technique

Creativity
Techniques

1. Problem Reversal
 It looks at the opposite of things, see things inside out,
backwards or upside down.
 This technique is based on the premise that the world is full of
opposites where the action of viewing a problem from an
opposite angle and by asking questions can yield a awareness
or realization of issues that hitherto is not obvious or
noticeable.

Creativity Techniques (contn)
Problem
Reversal

2. Lateral Thinking
 Lateral thinking technique was introduced and developed by
Edward De Bono.
 Lateral thinking requires a person to explore the possibility of new
solutions to a problem from a different approach or perspective.
 Looking at and analyzing problems from a different perspective
may give new insight and new solutions to an old problem or the
problem itself may already be irrelevant.

3. Forced Analogy
 This technique takes a fixed element such as the product or
some idea related to the product and forces it and compares it to
the attributes of another unrelated object or element. It is also
called forced relationship meaning the action of making an
association between two unlike things in order to obtain new
insights. There are five steps on processes for forced analogy:
– Isolate and list the elements of the problem.
– Find and establish possible relationships or connection between the
elements.
– Record the relationships in an orderly form.
– Analyze the resulting relationships to find new ideas or patterns.
– Develop new ideas from this pattern.

Using forced analogy to compare new start-up business with a new
born baby.

4. Mind Mapping
 Mind mapping technique was developed and made famous by
Tony Buzan.
 A mind map is a diagram used to represent words, ideas, tasks,
or other items linked to and arranged around a central key word
or idea.
 Mind maps are used to generate, visualize, structure, and classify
ideas, and as an aid to studying and organizing information,
solving problems, making decisions, and writing.

Creativity Techniques (cont.)
Mind
Mapping

5. Brainstorming
 The brainstorming term was popularized by Alex Faickney
Osborn in 1953.
 Peters, Hisrich and Shepherd (2008) suggest that when using
brainstorming, 4 rules must be adhered to:
– No criticism is allowed by anyone in the group especially negative
comments.
– Freewheeling is encouraged because as the idea is wilder, it
becomes better.
– Quantity of ideas is desired. The greater the number of ideas, the
greater the likelihood of the emergence of the useful ideas.
– Combinations and improvements of ideas are encouraged because
ideas of others can be used to produce other new ideas.
6. Ishikawa Technique
Also referred to as Couse-and-Effect Diagram; a process of identifying
possible cause of a problem.

The Process Of Creativity

The Process Of Creativity
1. Knowledge Accumulation (Information Gathering)

 This phase focuses more on the study of the background for the
subject matter which requires extensive reading, discussion with
experts, practitioners, academicians, researchers in the field,
attending workshops and seminars.
 This exploration exposes and helps entrepreneurs to have a better
understanding on the subject matter.

2. Incubation
 In the incubation stage, an individual will immerse oneself by
allowing the subconscious mind to muse or ponder on the
information gathered.
 The individual may not be directly involved in the creative task.
Incubation may be induced by engaging in ‘relaxing activities’
such as painting, meditating or playing sports or board games.
 The rationale is that new ideas or new insight often emerge when
one is busy doing something unrelated to the matter.

3. Idea Generation
According to Davenport and Prusak (2000), ideas are free. Ideas to
innovate can come from various sources as mentioned by Drucker
(1986):
 The unexpected sources—sources of innovation might be derived
from unexpected success, unexpected failure or unexpected
events which trigger ideas and creativity in firms.
 The incongruity—the uneasiness of customers in dealing with their
daily lives could give firms ideas to create something new for the
customers. For example, paying bills on the Internet.
 Process need—opportunity is the source of innovation. Ideas
could be derived from the market information.
 Changes in industry or market changes that caught everyone
unawares—the effect of globalization that has an impact on
the industry.
 Demographic changes—population change is one of the
innovation sources in meeting consumers needs.
 Changes in perception, mood and meaning—trend and
lifestyles are among the sources of innovation under this
source of innovation.
 New , scientific and non-scientific knowledge—knowledge-
based innovation is based on this source— is unique as the
competitors could have a hard time to imitate the innovation.

4. Evaluation and Implementation
 In this phase, a person transforms the idea into a workable
solution.
 The process of evaluation and implementation requires
continuous development and assessment so that a raw idea can
be conceptualized, modeled, strategized, refined, reworked,
improved, adjusted to make it practical, affordable, viable and
acceptable to the customers and stake holders.

Definition Innovation
According to Kurtko (2009), “Innovation can be

defined as the process by which entrepreneurs
convert opportunities (ideas) into marketable
solutions. It is the means by which it becomes the
catalyst for change.
Kinicki and Williams (2003), “Innovation is finding
ways to deliver new or better goods or services”.

Definition of Creativity and
Innovation (contn)
 Peter Drucker (1986): ‘Innovation is the specific tool of
entrepreneurs, the means by which they exploit change as an
opportunity for a different business or service”.
 Ward (2004); “To be successful, entrepreneurs must
generate valuable ideas for new goods and services that will
appeal to some identifiable market; and to figure out how to bring
the projects to fruition” .

Types of Innovation
 1. Invention - The act of creating a new product, service or process that is

totally novel or untried. Example when telephone first came to being.
 2. Extension - The expansion or addition to existing product lines, services

or processes. Eg AMW restaurant now has burger, friend chicken, ice-
cream, souvenirs. Dunhill currently not only producing cigarettes but bag,
belt and perfume
 3. Duplication - A process of replicating an existing product, service or

process. Duplication does not mean simply copying rather adding new
features or improving its competitiveness. Eg Hand phone not only able to
send voice but also text and pictures. Or the new Toyota, has air bag,
reverse camera etc
 4. Synthesis - A process of combining separate parts or elements into a

whole new formulation or application by taking into consideration several
ideas or items that already existed. Eg a hand phone + a camera = Smart
phone

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TOPIC 2

CREATIVITY AND INNOVATION

Fundamentals of Entrepreneurship All Rights Reserved

 In free market economy—entrepreneur has to be creative

Fundamentals of Entrepreneurship All Rights Reserved

 According to Schermerhorn, Hunt and Osborn (2003),

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Creativity refers to the ability of generating novel (original, unique and

Creativity is the ability to come up with new ideas, approaches or

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 Consumers—the feedback and complaints from consumers will

Fundamentals of Entrepreneurship All Rights Reserved

 Entrepreneurs can use several techniques to help generate

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

1. Knowledge Accumulation (Information Gathering)

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

According to Kurtko (2009), “Innovation can be

Fundamentals of Entrepreneurship All Rights Reserved

Fundamentals of Entrepreneurship All Rights Reserved

 1. Invention - The act of creating a new product, service or process that is

 2. Extension - The expansion or addition to existing product lines, services

 3. Duplication - A process of replicating an existing product, service or

 4. Synthesis - A process of combining separate parts or elements into a

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