Fundamentals of Entrepreneurship

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CHAPTER

ENTREPRENEURIAL
CREATIVITY AND INNOVATION

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Objectives
The objectives of this chapter are to:
provide students with a better understanding of the issues on
creativity and innovation especially those that are related to
entrepreneurship.
provide students with creativity techniques that can be applied
in their course works

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Learning Outcomes
At the end of this chapter, students should be able to:
be more open minded and ready to accept new ideas
gain an understanding of issues on creativity, innovation and
learn to apply creativity techniques

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Entrepreneurial Creativity and

Innovation
In free market economyentrepreneur has to be creative
and innovativein order to be more competitive, to improve
market share and to increase profitability.
Creativeness and innovativeness are valuable assetshelp
entrepreneurs to beat their competitors by being able to offer
better quality products, at competitive prices and with better
service delivery.

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Entrepreneurial Creativity and

Innovation (cont.)
Peter Drucker (1986) has stated that, Innovation is the specific
tool of entrepreneurs, the means by which they exploit change as
an opportunity for a different business or service.
According to 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) stated that creativity is the process
through which invention occurs, the enabling process by which
something new comes into existence.
Baron and Shane (2008) define creativity as a production of ideas
for something new that is also potentially useful.

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Entrepreneurial Creativity and

Innovation (cont.)
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 teammay
provide a better interface between departments or a more
synergistic(cooperative) 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.

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Entrepreneurial Creativity and

Innovation (cont.)

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Entrepreneurial Creativity and

Innovation (cont.)
Components Of Creativity
Creative

Thinking Skills

refers to how a person identifies a problem and seeks its

solutionthe 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(implementation) 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.
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Entrepreneurial Creativity and

Innovation (cont.)

Knowledge
Expertise or knowledge encompasses everything a person
knows and can docan be acquired in different ways: formal
and informal educationeducation 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 interestshould also have broad general
knowledge to enable him to think divergently and integrate or
apply other technologies that have been developed in other
fields.

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Entrepreneurial Creativity and

Innovation (cont.)

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.

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Entrepreneurial Creativity and

Innovation (cont.)
Example of sources for new ideas

Consumersthe feedback and complaints from consumers will

trigger ideas on how to fulfil the needs and want of the customers.
Existing products and servicesexisting 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 channelsmembers of distribution channels are also
excellent sources of market information because of their
familiarity with the needs of the market.
Governmentgovernment policy, regulation and support can be a
source of new product ideas that push entrepreneurs to be
innovative and creative.

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Entrepreneurial Creativity and

Innovation (cont.)
Creativity
Techniques

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Entrepreneurial Creativity and

Innovation (cont.)
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(previously) is not obvious or
noticeable.

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Entrepreneurial Creativity and

Innovation (cont.)
Problem
Reversal

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Entrepreneurial Creativity and

Innovation (cont.)
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.
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Entrepreneurial Creativity and

Innovation (cont.)
Using forced analogy to compare new start-up business with a new
born baby.

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Entrepreneurial Creativity and

Innovation (cont.)
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.
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Entrepreneurial Creativity and

Innovation (cont.)
Attribute Listing
The

attribute listing technique is where the problem is broken down

into smaller parts or characteristics and analysis is made on each of
these parts to develop ideas on how to improve them.
In this technique, the entrepreneur is required to list the attributes
of an item or problem and look at each from a variety of viewpoints,
looking at the positives and negatives aspects.
This technique allows entrepreneurs to process some unrelated
ideas and form it into a new combination for new uses.

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Entrepreneurial Creativity and

Innovation (cont.)
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.

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Entrepreneurial Creativity and

Innovation (cont.)
Mind
Mapping

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Entrepreneurial Creativity and

Innovation (cont.)
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.

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Entrepreneurial Creativity and

Innovation (cont.)
The Process Of
Creativity

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Entrepreneurial Creativity and

Innovation (cont.)
Knowledge Accumulation
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.

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Entrepreneurial Creativity and

Innovation (cont.)
Incubation
In

the incubation stage, an individual will immerse oneself by

allowing the subconscious mind to muse(think) or ponder(consider)
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(basis) is that new ideas or new insight often emerge
when one is busy doing something unrelated to the matter.

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Entrepreneurial Creativity and

Innovation (cont.)
According to Davenport and Prusak (2000), ideas are free. Ideas to
innovate can come from various sources as mentioned by Drucker
(1986):
The unexpected sourcessources of innovation might be derived
from unexpected success, unexpected failure or unexpected events
which trigger ideas and creativity in firms.
The incongruitythe 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 needopportunity is the source of innovation. Ideas could
be derived from the market information.
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Entrepreneurial Creativity and

Innovation (cont.)
Changes in industry or market changes that caught everyone
unawaresthe effect of globalization that has an impact on
the industry.
Demographic changespopulation change is one of the
innovation sources in meeting consumers needs.
Changes in perception, mood and meaningtrend and
lifestyles are among the sources of innovation under this
source of innovation.
New, scientific and non-scientific knowledgeknowledgebased innovation is based on this source is unique as the
competitors could have a hard time to imitate the innovation.

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Entrepreneurial Creativity and

Innovation (cont.)
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.

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Entrepreneurial Creativity and

Innovation (cont.)
Factors Influencing
Creativity

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Entrepreneurial Creativity and

Innovation (cont.)

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Entrepreneurial Creativity and

Innovation (cont.)
Innovation
Innovation

can be defined as the process by which entrepreneurs

convert opportunities (ideas) into marketable solutions.
It is the means by which they become catalysts for change
(Kuratko, 2009). Innovation is commonly defined as the introduction
of something new or a new way of doing something.

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Entrepreneurial Creativity and

Innovation (cont.)
According to Kinicki and Williams (2003), innovation is
finding ways to deliver new or better goods or services.
Chell (2001) stated that innovation is also deemed as the
creation of something new in the marketplace that alters the
supplydemand equation.
Peter Drucker said Innovation is change that creates a new
dimension of performance.
Many successful innovations improve on an existing product
to make it a better product in terms of quality, cost (price), or
service delivery.

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Entrepreneurial Creativity and

Innovation (cont.)

Innovation, according to Schumpeter (1934), covers:

the introduction of a new good or a new quality of the good

the introduction of a new method of production
the opening of a new market
the conquest of a new source of supply
the carrying out of the new organization of an industry

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Entrepreneurial Creativity and

Innovation (cont.)

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Entrepreneurial Creativity and

Innovation (cont.)
Sources of Innovation
Professor

Thomas W. Mason states that successful innovation is

seldom the outcome of a brilliant idea.
Peter Drucker emphasized looking for unexpected events, stupid
situations, needs within current processes and changes in industry
structure, demographics and perception.

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Entrepreneurial Creativity and

Innovation (cont.)

The following are four sources of innovation for entrepreneurs.

unexpected events or occurrence

new-knowledge concept
changes of demographics
process needs

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Entrepreneurial Creativity and

Innovation (cont.)

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