Entrepreneurship – Innovation and Creativity

Innovation is the tool of entrepreneurship. In addition, both innovation and entrepreneurship

demand creativity. Creativity is a process by which a symbolic domain in the culture is changed.
Creativity is the ability to make or otherwise bring into existences something new, whether a new
solution to a problem, a new method or device, or a new artistic object or form.

Innovation
Innovation is the creation of new value. Innovation is the process that transforms new ideas into
new value. No innovation is possible without creativity. Innovation is the process that combines
ideas and knowledge into new value. Without innovation an enterprise and what it provides quickly
become obsolete.
Innovation is the specific function of entrepreneurship, whether in an existing business, a public
service institution, or a new venture started by a lone individual in the family kitchen. It is the means
by which the entrepreneur either creates new wealth-producing resources or endows existing
resources with enhanced potential for creating wealth.

Sources of Innovation Opportunity: How much of innovation is inspiration, and how much is hard
work? If it’s mainly the former, then management’s role is limited: Hire the right people, and get out
of their way. If it’s largely the latter, management must play a more vigorous role: Establish the right
roles and processes, set clear goals and relevant measures, and review progress at every step.
Peter Drucker is considered one of the truly great management consultants. He wrote around 39
books and is considered a seminal thinking in the field of management. In an article, he writes that
“innovation is real work, and it can and should be managed like any other corporate function. But
that doesn’t mean it’s the same as other business activities. Indeed, innovation is the work of
knowing rather than doing”.
Drucker argues that most innovative business ideas come from methodically analysing seven areas
of opportunity, some of which lie within particular companies or industries and some of which lie in
broader social or demographic trends. Astute managers will ensure that their organizations maintain
a clear focus on all seven. But analysis will take you only so far. Once you’ve identified an attractive
opportunity, you still need a leap of imagination to arrive at the right response.
The following are his 7 sources of innovative opportunity.
1. The Unexpected: The market place is the number one area to look for opportunities. A good
manager should be constantly studying the market. Is a particular product or service in greater
or lesser demand than anticipated? Why? Is there a way we can exploit this unexpected
success? What has to happen if we want to convert this success into an opportunity?
2. The Incongruity: There is a discrepancy between what is and what should be. This is a key to
developing wildly successful businesses but it’s tricky. Facebook is a company that nailed it.
Prior to the social network’s prolific rise Myspace or Orkut was the dominant player, but it had
its downfalls. Facebook wisely noted what Myspace was versus what should be and built that
platform. The end result? A company that just had an IPO versus one that has fallen off
considerably. One of the best places to look for incongruity is in your own customers. Their
complaints and unmet wants are all the hints you need.
3. Process Need: Process need involves identifying your company’s process weak spots and
correcting or redesigning them. This is a task oriented solution meaning that the source of

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 innovation comes from within your existing capabilities and ways of doing business – not the
market. E.g. a restaurant that identifies that people wait too long for their entrees and so
decides to hire another chef to speed up creation times. Essentially your company will want to
look for all weak links and eliminate them.
4. Industry and Market Structure Change: Your industry and the market are in continual flux.
Regulations change and some product lines expand while others shrink. Firms should
continually be on the watch for this. One example is deregulation. When a previously regulated
industry becomes open there is historical precedence for companies that enter early to be very
successful. Other things to watch out for are the convergence of multiple technologies and
structural problems that occur from time to time (often immediately following an industry
boom).
5. Demographics: We constantly see changes occur in populations, income levels, human capital
(education) and age ranges. Smart firms are constantly paying attention to this. When it comes
to the baby boomers’ businesses have been following them constantly as they got older. At
present they are one of the largest as well as the most affluent demographic groups with high
levels of disposable income. Combining demographic data with segmentation and targeting is a
powerful method of accurately meeting a target market’s desires.
6. Changes in Perception, Meaning, and Mood: Over time populations and people change. The
way they view life changes, where they take their meaning from, and how they feel about
things also is modified over time and smart companies must pay attention to this in order to
capitalize (and avoid becoming forgotten, a relic of ages past). E.g. “down-aging” which refers to
people who look at 50 as being 40. Industries have responded to this, most notably in the
cosmetic and personal care industry which provides plenty of solutions to help these people
look younger. Full industries are creeping up that make people feel younger. Have you spotted
any lately?
7. New Knowledge: As the speed of technological revolution increases there will be an ever
increasing number of opportunities that open up. The internet has been the most notable one
in the last couple decades but there have been a plethora of other industries and opportunities
pop up as a result of this technological revolution. New knowledge is about more than just
technology though, it’s about finding better ways of doing things and improving processes. Your
company should look to this new knowledge for ways it can improve incrementally. Intel does
this constantly and it’s a major part of why they’re the leading processor manufacturer today.
Constantly paying attention to the latest in both academic research as well as investing heavily
in their own R&D, the company has managed to find continual sources of innovation, driving its
success.

Principles of Innovation: Innovation requires a fresh way of looking at things, an understanding of

people, and an entrepreneurial willingness to take risks and to work hard. People involved in
innovation are guided by certain principles of innovation. These vary among different entrepreneurs;
organisation; philosophers; but the basic framework remains the same.
Steve Jobs has given 7 principles largely responsible for success through innovation. These are
described in his book, “The Innovation Secrets of Steve Jobs”. Briefly, these principles are as follows:
1. Do what you love: Steve Jobs once told a group of employees, “People with passion can change
the world for the better.” Jobs has followed his heart his entire life and that passion, he says,

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 has made all the difference. It’s very difficult to come up with new, creative, and novel ideas
unless you are passionate about moving society forward.
2. Put a dent in the universe: Passion fuels the rocket, but vision directs the rocket to its ultimate
destination. In 1976, when Jobs and Steve Wozniak co-founded Apple, Jobs’ vision was to put a
computer in the hands of everyday people. In 1979, Jobs saw an early and crude graphical user
interface being demonstrated at the Xerox research facility in Palo Alto, California. He knew
immediately that the technology would make computers appealing to “everyday people.”
Xerox scientists didn’t realize its potential because their “vision” was limited. Two people can
see the exactly the same thing, but perceive it differently based on their vision.
3. Kick start your brain: Steve Jobs once said “Creativity is connecting things.” Connecting things
means seeking inspiration from other industries. At various times, Jobs has found inspiration in
a phone book, Zen meditation, visiting India, a food processor at Macy’s, or The Four Seasons
hotel chain. Steve doesn’t “steal” ideas as much as he uses ideas from other industries to
inspire his own creativity.
4. Sell dreams, not products: To Steve Jobs, people who buy Apple products are not
“consumers.” They are people with hopes, dreams and ambitions. He builds products to help
people achieve their dreams. He once said, “some people think you’ve got to be crazy to buy a
Mac, but in that craziness we see genius.” How do you see your customers? Help them unleash
their inner genius and you’ll win over their hearts and minds.
5. Say no to 1,000 things: Steve Jobs once said, “I’m as proud of what we don’t do as I am of what
we do.” He is committed to building products with simple, uncluttered design. And that
commitment extends beyond products. From the design of the iPod to the iPad, from the
packaging of Apple’s products, to the functionality of the Web site, in Apple’s world, innovation
means eliminating the unnecessary so that the necessary may speak.
6. Create insanely great experiences: The Apple store has become the world’s best retailer by
introducing simple innovations any business can adopt to create deeper, more emotional
connections with their customers. For example, there are no cashiers in an Apple store. There
are experts, consultants, even geniuses, but no cashiers. Why? Because Apple is not in the
business of moving boxes; they are in the business of enriching lives.
7. Master the message: Steve Jobs is the world’s greatest corporate storyteller, turning product
launches into an art form. You can have the most innovative idea in the world, but if you can’t
get people excited about it, it doesn’t matter. Simply put, innovation is a new way of doing
things which results in positive change. Innovation is attainable by anyone at any organization,
regardless of title or position. Make innovation a part of your brands’ DNA by thinking
differently about business challenges.

Innovation Process: The innovation process defines the management of an idea from the strategic
search to the successful market launch and its transfer to the operative management. The process is
the heart of innovation management, whereby it makes sense to understand innovation goals as
superordinate components of an innovation process and to align the process with the goals. The
decision for certain innovation goals in turn marks the starting point of the innovation process and
defines the process steps derived from it (idea generation, concept, development, etc. The phases of
an innovation, i.e. an innovation process can be divided into four main steps:
1. Idea Generation and Mobilization: New ideas are created during idea generation. Successful
idea generation should involve the pressure to compete and the freedom to explore.

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 Mobilization occurs when the idea is moved to a different logical or physical location. E.g. Apple
waited three years after MP3 players were introduced to create the iPod, which was attractive,
intuitive, and offered capacity for up to 1,000 songs.
2. Advocacy and Screening: Advocacy and screening help to evaluate the feasibility of a business
idea with its potential problems and benefits. Hence, a decision can be made about an idea’s
future. Companies looking to develop a culture can establish a few best practices. E.g.
Employees should have plenty of avenues to receive advocacy and feedback. Also, organizations
must understand the difficulties involved in evaluating truly innovative ideas. Also,
organizations need to build transparent evaluation and screening protocols.
3. Experimentation: The experimentation stage tests the sustainability of ideas for an organization
at a specific time. Experimentation generates new ideas with the information that is gathered
on the results and feasibility of the original idea. E.g. Amazon tested its grocery delivery service
in certain Seattle suburbs. After this, Amazon Fresh expanded to Los Angeles, San Diego, and
New York City.
4. Commercialization: Commercialization develops market value for an idea by focusing on its
impact. An important part is establishing the specifications of any given idea. Commercialization
is the stage that involves the change of focus developments to persuasion. After the idea is
clarified and a business plan is developed, it will be ready for diffusion and implementation.
5. Diffusion and Implementation: Diffusion is the company-wide acceptance of an innovative idea,
and implementation sets up everything needed to develop the innovation. Diffusion and
implementation allow the organization to determine the next set of needs for customers.
Receiving feedback, indicators for success metrics, and other benchmarks enable the
organization to stimulate the innovation process.

Types of Innovation:
1. Product Innovation: Product innovation is either the development of a new product, such as
the Fitbit or Amazon’s Kindle, or an improved version of the existing product, such as an
increase in the digital camera resolution of the iPhone. It could also be a new feature to an
existing product, such as power windows to a car. E.g. the first electric vehicles introduced in
the car’s market were also innovative, and new batteries with longer ranges that keep coming
out are also an example of innovation. Lego has been changing the materials of its bricks to
biodegradable oil-based plastics.
2. Process Innovation: The process involves a combination of skills, facilities, and technologies
used to produce, support, and deliver a product or service. E.g. Henry Ford’s invention of the
world’s first vehicle assembly line. This process changed the vehicle assembly and shortened
the time necessary to produce a single vehicle from 12 hours to 90 minutes. The Differential
company built a mobile sales dashboard for the leading Group Bimbo. Having a mobile sales
dashboard gives the team quick access to the sales information and other KPI’s for each
country.
3. Business Model Innovation: In a Business model innovation capability, or processes optimized
to make a company successful and profitable will become the targets for transformation. E.g.
Amazon found a new channel through technology by eliminating the traditional retail
distribution channel and developing direct relationships. IBM has managed changes in customer
offers from mainframes to personal computers to technology services.

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 4. Organizational Innovation: Organizational innovation refers to the development of a new
organizational strategy. This involves changes in the company’s business practices, organization
of work, and relationship with external stakeholders. E.g. The companies adopted a four-day
week working schedule. The companies that started to use the power of digital and allowing
employees to skip the office and work from home.
5. Marketing Innovation: Marketing innovation means developing a new marketing strategy that
produces changes. For instance, designing, packing, and other decisions regarding the price or
promotion of a product. E.g. Touch Packaging Design has partnered with Nestlé Ice Cream to
create a reusable, durable container.

Creativity
Creativity is marked by the ability to create, bring into existence, to invent into a new form, to
produce through imaginative skill, to make to bring into existence something new. Creativity is not
ability to create out of nothing but the ability to generate new ideas by combining, changing, or
reapplying existing ideas. Creativity is an attitude, the ability to accept change and newness, a
willingness to play with ideas and possibilities, a flexibility of outlook, the habit of enjoying the good,
while looking for ways to improve it. Creativity is also a process. Creative people work hard to
improve ideas and solutions, by making continuous and gradual alterations and refinements to their
works. Creativity requires passion and commitment.

Principles of Creativity: People become creative when they feel motivated primarily by the interest,
satisfaction, and challenge of the situation and not by external pressures; the passion and interest –
a person’s internal desire to do something unique; the person’s sense of challenge, or a drive to
prove something no one else has been able to. Within every individual, creativity is a function of
three components:
 Expertise
 Creative Thinking Skills
 Motivation
Expertise encompasses everything that a person knows and can do in the broad domain of his or her
work knowledge and technical ability. Creative thinking refers to how you approach problems and
solutions- the capacity to put existing ideas together in new combinations. The skill itself depends
quite a bit on personality as well as on how a person thinks and works. Expertise and creative
thinking are the entrepreneur’s raw materials or natural resources. Motivation is the drive and
desire to do something, an inner passion and interest. When people are intrinsically motivated, they
engage in their work for the challenge and enjoyment of it.

Adaptors and Innovators

Adaptors desire to do things better; Innovators seek to do things differently. Adaptors have a
preference for well-established organisational structures, systems and processes; whereas
Innovators like to break the mould, working outside the current restraints to find new and untested
solutions. In other words, we can say that the innovators break away from the existing framework of
systems and are associated with high interest levels in terms of originality of ideas, less concern for
efficiency and rule- group conformity, whereas Adaptors prefer to create change by improving on
the existing structure and favour staying in groups.

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Left Brain vs. Right Brain
The theory is that people are either left-brained or right-brained, meaning that one side of their
brain is dominant. If you're mostly analytical and methodical in your thinking, you're said to be left-
brained. If you tend to be more creative or artistic, you're thought to be right-brained.
In general, the left hemisphere or side of the brain is responsible for language and speech. Because
of this, it has been called the "dominant" hemisphere. The left brain is more verbal, analytical, and
orderly than the right brain. It’s sometimes called the digital brain. It’s better at things like reading,
writing, and computations.
The right brain is more visual and intuitive. It’s sometimes referred to as the analog brain. It has a
more creative and less organized way of thinking. The right hemisphere plays a large part in
interpreting visual information and spatial processing.

Purposeful Innovation
Purposeful innovation is about solving the problem as best as you can – and this has the added
bonus of making you less vulnerable to the impact of your competitors who may take on the same
problem.

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