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Managing Employee Creativity and Innovation for Business Growth

Dr. KSS Kanhaiya


BE, DCPA, MBA, MA (App. Psy.), PhD (Mgmt.)
C.Eng. (I), FIE (I), MIMA, LMCSI, LMISCA, LMIIMM
kss.kanhaiya@gmail.com

Introduction:
Today, newer technology platforms and business models are created faster than testing
by practitioners. Organizations running on fossilized ideas either die out or are gobbled up,
unless the environment is overly protective of them for strategic, jingoistic or ulterior
considerations.
Quest for competitive advantage is essential for long-term survival of any business
organization. As every organization is in continuous pursuit of creating or acquiring
competitive advantage, many of specialties once considered competitive advantage have –
with time – turned into entry barriers today for companies trying to compete globally. One
familiar example is the ISO 9000 Quality Management System Certification.
Because each firm is unique as regards the possession and use of resources and
capabilities; it is the heterogeneity of resources that can contribute to competitive advantage.
In today’s business scenario tectonic shifts are taking place at lightning speed. The
benchmarks of performance excellence are continually shifting and the competition is getting
fiercer. Competitors mirror rival activities very quickly. Existing economic conditions and
fierce competition prevalent presently are forcing organizations to seek new ways to reduce
costs and to enhance profitability. If a firm expects to survive and grow, it constantly needs
creativity to differentiate, add value and create competitive advantage.
Therefore, to thrive and excel, business organizations need continued innovation,
expeditious response, excellence and creative human talent. Employees need to do things
differently through the robust process of innovation and change. Creativity breeds new ideas
and Innovation brings those new ideas to life. As said Tom Hopkins, “The profit of great
ideas comes when you turn them into reality.”
Creativity and Innovation unveiled:
There are many myths about creativity. There is the belief that creativity is a
mysterious talent that some people have and others can only envy. But, in reality, anyone can
learn and practice the thinking skill of creativity. Some people might be better than others, as
is the case with any skill – such as driving, cooking, tennis or soccer. Creativity consists of
coming up with many ideas, not just that one great idea. An essential aspect of creativity is
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not being afraid to fail and to have the courage for generating new ideas. The stone-age didn’t
end because they ran out of stones. It can be argued that creative idea generation, rather than
necessity, is the mother of invention.
Innovation is the introduction of something new for an organization. You might do this
by copying someone else, by systematic logical design or through direct and deliberate
creativity. However, there must be a readiness to explore and implement new ideas. So
'innovation' is often used as a term to mean progression and adapting to changed conditions.
Unfortunately, this is often not the case with many organizations.
Innovation is novelty. The newness can be in the idea, its implementation, adaptation or
refinement. Creativity may lie in seeing or creating an opportunity where others can’t.
Creativity in business can be described as problem solving. By inducing the creative
state, the individual and group creative capacity is optimized in order to solve business issues.
This involves more than brainstorming, which in many organizations simply involves setting
up a flipchart, herding staff into a room and calling it a brainstorming session.
Creative people are intrinsically motivated. This means that they see inherent value in
what they are doing – as opposed to extrinsic motivation, which causes them to engage in an
activity to fulfill ulterior goals. Some extrinsic motivation is useful but there is a significant
positive correlation between creativity and intrinsic motivation and by managing creativity, it
is possible also to enhance motivation.
Creativity and Innovation – Importance:
The highly competitive nature of today’s business needs creative and innovative ideas
for dominant success. Although good service is the essence of a successful business, novel
ideas are jumping advancements; thus, a company has no chance to win this competitive
game in the absence of creativity and innovation.
Scientific analysis and mathematical skills alone cannot endeavor to define problems or
seek alternative solutions. Or, in the business world, cost-benefit analysis and spreadsheet
skills alone cannot endeavor to define problems or seek alternative solutions. They are merely
tools for understanding what a problem looks and feels like. Only creative and imaginative
thought, when applied with personal knowledge of a problem, can produce solution
alternatives, what-if scenarios and the exploration of additional problem causes.
Creativity and Innovation Challenges:
From idea to reality is an important metamorphosis. In a subtle transition, the innovator
becomes a manager. The challenge shrinks from making the idea work to completing
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assignments. Adventure makes way for task monitoring and the organization becomes an
unevolving, risk-averse entity. Bureaucracy is a good example of dysfunctional fixation on
procedures and precedents. Ironically, the compulsions of survival fuel both innovation and
conservatism.

A readiness to do something new is required for innovation. But anything new is


viewed as a risk and also as a distraction from the normal routine. Resources need to be
committed to anything new. There are lots of organizations who do not like to try new things,
for obvious reasons. Managers reach senior positions by being good at continuity and
problem-solving. You do what you are meant to do and solve problems that interfere with
that doing. The readiness to try new things is hardly ever a factor in an executive’s success
and promotion.

Fear of failure also plays a part. Something new that does not work is seen as a failure
or an error. Language does not have a word that means a “fully justified venture which, for
reasons beyond one’s control, did not work”. So something that does not work is simply
labeled a failure. It makes sense for executives to avoid “failures”.
Creativity and Innovation – Sources and Enablers:
A variety of theorists attempted to better understand the sources of creativity and
innovation in individuals. Still there is disagreement between theorists. Broad, complex and
multi-faceted, creativity can take many forms and can be found within a variety of contexts.
It is embodied by individuals with a broad range of personal characteristics and backgrounds.

Cognitive psychology provides the perspective on the sources of individual creativity.


Psychological research on creativity expanded significantly after the 1950 presidential
address of J.P. Guilford at the American Psychological Association underlining need for
greater attention to the topic of creativity.

As per the framework provided by Teresa Amabile of the Harvard Business School,
creativity arises through the confluence of Knowledge, Creative Thinking and Motivation.
Environment and individual’s personal decision also play their role.
Knowledge
It consists of all the relevant information that an individual brings to bear on a problem.
There are two types of knowledge that may be required for creativity. People build the
technical expertise and in-depth experience through long-term focus in one specific area. This
expertise serves as a foundation for creativity within a domain. At the same time, creativity
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rests on the ability to combine previously disparate elements in new ways, which implies a
need for a broader focus and varied interests.

Thus, the best profile for creativity is T-shaped, with a breadth of understanding across
multiple disciplines and one or two areas of in-depth expertise. Frans Johansson explains that
“we must strike a balance between depth and breadth of knowledge in order to maximize our
creative potential”. He suggests that one way to improve breadth is to team up with people
with different knowledge bases. The implications of this recommendation are in the realm of
greater focus on interdisciplinary study and having cross-functional group projects with team
members from varied functional areas.

Studies by Simonton support the idea that individuals must develop in-depth domain
expertise to be creative. He explains that creative output is linked to the amount of time a
person is actively engaged in a creative domain. The relationship tends to be a curvilinear,
inverted backwards J function of career age. Creativity production increases with years in the
field until reaching a maximum at which point it begins to taper off. Howard Gardner’s
research into the sources of creativity supports this idea and further extends it to a “10-year
rule” – ten years is the approximate time required to build the domain knowledge and
expertise needed to spur creative successes. The implications of this recommendation are in
the realm of greater focus on planned job rotations at intervals sufficient for development of
domain knowledge and not earlier or too late.
Creative Thinking
Thinking is a key aspect of the creative process. Creative Thinking relates to how
people approach problems and depends on personality and thinking/working style. Important
determinants of creative thinking are:
• Comfort in disagreeing with others and trying solutions that depart from status quo.
• Combining knowledge from previously disparate fields.
• Ability to persevere through difficult problems and dry spells.
• Ability to step away from an effort and return later with a fresh perspective. (Incubation).
Sternberg’s triarchic theory asserts that the three main aspects of intelligence essential
for creativity are – synthetic, analytical and practical:
• Synthetic: It is the ability to generate novel and task appropriate high quality ideas. One
aspect of this is the ability to redefine problems effectively and to think insightfully.
Insightful thinking involves knowledge acquisition in three forms – Selective encoding
i.e. distinguishing relevant from irrelevant information; Selective combination i.e.
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combining bits of relevant information in novel ways; and Selective comparison i.e.
relating new and old information in novel ways.
• Analytical: It is involved in creativity as the ability to objectively judge the value of one’s
own ideas, to evaluate their strengths and weaknesses and identify ways to improve them.
• Practical: It is the ability to apply intellectual skills in routine contexts and to “sell”
creative ideas.
The cognitive processes suggested within Sternberg’s synthetic thinking category
appear repeatedly in literature. It is clear that the central component of creative thinking is the
ability to combine existing elements of knowledge or understanding in new ways. Simonton’s
research on Creative Darwinism asserts that creativity is a stochastic combinatorial process
under which multiple ideational variations emerge in an individual’s mind, and then a subset
of them are selected for preservation and execution.
As per this concept, creativity requires the capacity to generate blind variations in the
same sense that genes generate random mutations which is not linked to the probability of
success of any given variation. The implication is that, creative performance may be
increased by any technique that might break the stranglehold of conventional expectations
and simply increase the number of randomly generated variations.
This supports the idea that “if the variation process is truly blind, then good and bad
ideas should appear more or less randomly across careers, just as happens for genetic
mutations and recombinations.
Thus it implies that the creative mind can be enhanced by environments or efforts that
encourage the individual to generate new variations and combinations of ideas.
Quality of creative output is closely connected to sheer quantity. The more an
individual produces, the more likely (s)he is to stumble upon success. Also, the best creative
product tends to appear at the point in a creator’s career when (s)he is most prolific. Thus, to
encourage creativity, risk tolerance at organizational level is a must.
Motivation
Motivation is generally accepted as key to creative production, and the most important
motivators are intrinsic passion and interest in the work itself. Even more than particular
cognitive abilities, a set of motivational attributes – childlike curiosity, intrinsic interest,
obsessive perseverance – differentiate change introducers from others. Many theorists see
motivation as the most important component of creativity.

Amabile’s Intrinsic Motivation Principle of Creativity asserts that people are most
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creative when they feel motivated primarily by the interest, satisfaction, and challenge of the
work itself – and not by external pressures [i.e., extrinsic motivation].

Numerous studies document how intrinsic motivation enhances creativity and extrinsic
rewards hamper it due to the negative feelings resulting from external control. The principle
is best illustrated by Amabile’s maze analogy. The extrinsically motivated person will take
the shortest, most obvious path to get to the reward at the finish line. The intrinsically
motivated person will explore various pathways and alternatives, taking time and enjoying
the process along the way. The exploration will lead to novel, alternative solutions, some of
which may turn out as more appropriate and successful than the original, obvious path.
Environment
However, there are probably two types of extrinsic motivation: synergistic
(informational or enabling motivations) and non-synergistic (controlling motivations).
Synergistic extrinsic motivators support and enhance intrinsic motivation. Non-synergistic
ones hinder it. Nonetheless, the types of extrinsic motivations most likely found in the
workplace are non-synergistic and are not easily avoided.

Different types of motivation play a role in different parts of the creative process.
Intrinsic motivation is particularly important when the emphasis is on novelty. If greater
emphasis is on persistence, synergistic extrinsic motivators may play a role. Additional roles
for extrinsic motivators are that they can help an individual sustain energy through the
difficult times necessary to gain domain skills. Extrinsic motivators may also serve to bring
people in contact with a topic to engage their intrinsic interest.

The implication of this is that business must review the reward mechanism and the
output monitoring systems in light of the impact of promotions, raises or praises as reward for
routine fulfilments on creativity. If assessment is used as a tool for improvement, rather than
as a judgment; it may reduce the feeling of external control.
Personal Decision
On one hand, a creative effort can be viewed as a defense against personal inadequacy
and feelings that the self is flawed and destined to failure. On the other hand, a meaningful
purpose can also serve as a motivation for creativity. For some persons, the exercise of some
skills can be a source of joy.

Thus creativity is the outcome of the interaction between the innovating individual, that
individual’s domain of knowledge and the social field that judges the individual’s
contribution to the domain. Lack of affirmation of work from the social field might
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discourage persistence. The innovator may use the social field as a source of information
about work, but also give equal or greater weight to signs of progress and success in the
activity itself.

Potential implications of this viewpoint are that the system should provide greater focus
on helping employees identify areas of interest and passion – areas where they can achieve
the state of flow which leads to growth of skill and confidence.

HRD interventions should attempt to enhance creativity, but should also help
employees identify the field of creativity itself so they gain an explicit awareness of their own
creative potential, as well as and understanding of methods of enhancement. With this
knowledge, they can make an informed decision to pursue creative activities and at the same
time, can control and direct the development of their abilities.

There is considerable evidence to support the belief that most people have potential
they never realize and that persistent effort to develop that potential is likely to be successful.

Furthermore, meta-cognition of the creative process should involve managing one’s


emotions, cognitive resources, learning one’s strengths and weaknesses and managing time
allocation to creative pursuits.
Creativity and Innovation Management:
Innovation can happen if there is a readiness to try new things and if a habit of
exploring new possibilities is developed. Creating a climate of acceptance for every new
possibility is very difficult. Perhaps there is a need for a specific Innovation Manager whose
role should be to develop innovation readiness.

Many businesses work on the basis of osmosis. If a new idea has been around for a long
time and has been taken up by other businesses, then it becomes natural and low risk
proposition to adopt that innovation. Hence, employees need to be sensitive to what is
happening elsewhere in the same field and to what is happening in the world around. Such
opportunity scan helps in obtaining management support for innovative ideas.

It is important to incorporate innovation and creativity into the core values of the
organization, have a Knowledge Management system, let people try their ideas for
improvement, and keep the structure flat. Cross-functional teams must be encouraged and
members should be rotated intermittently. It is equally important to have ambiguity-tolerance,
train people to unlearn and to expose them to realities beyond the organizational boundaries.
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Such culture can be created through dynamic, proactive style where CEO is a change agent,
with the highest possible mandate.

Initially, innovation management was formed to provide an efficient managing system


for Research & Development, but it has now spread beyond this area due to its importance in
various fields of business. In general, innovation management has main duties to manage
both input and output of innovative ideas.

In the former case, innovation management must conduct the flow of innovative ideas
such as new discoveries, into the organization for subsequent uses. In other words, it should
collect relevant external innovations to serve the internal innovative system.

Secondly, the internal innovation should be managed properly. An organization should


always have new products and services to satisfy the customer-needs. Internal innovative
system is responsible for analyzing the external needs, estimating the internal possibilities,
and proposing new innovative ideas.
Distinguishing Creative People in Organization
Due to the importance of creativity and innovation for an organization, in a modern
management, it is necessary to distinguish creative people. In general, people in technical
positions, associated with leading the organization strategy, are divided to two groups:
creative people and their assistants.

This creative group is divided in two groups namely initiators and problem solvers. The
initiators are creative people who have that additional mental ability that enables them to
recognize previously unrealized problems and to evaluate their importance. It is one thing to
have an idea about specific problem; it is quite another to have an idea about what it is that is
worth having an idea about.

Although problem solvers are key persons in an organization – particularly in critical


situations, the problems need to be introduced to them, as they are not problem finders. The
problem solvers should follow the initiators – although it may not exactly be construed as the
relationship between creative people and their assistants.

The initiators are also divided to two groups viz. discoverers and inventors. Although
these two groups are usually considered identical, they are significantly different. Discoverers
work on a higher creative position of the organization by dealing with the question “why?”
for analyzing a phenomenon or a problem; but inventors serve the routine performance of the
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organization by struggling with the question “how things work and can be made to work
better”.

It is obvious that distinguishing these creativity-based groups is an important duty of


the management system, and is only possible in the light of modern aspects of creativity and
innovation management.
Risk Management
Creativity and Innovation management is somehow risk management. When dealing
with novel creative ideas, the results are not guaranteed. Thus, not only it is needed to find,
propose, and perform novel creative ideas, but also an essential requirement is to forecast the
future performance in action. In general, such manager should be risk taker, multidimensional
analyzer, prospector, futurist, and somehow discreet.
Promoting Innovation and Creativity
Several programs, courses, workshops and techniques have been developed to promote
creativity and to enhance the cognitive functions that support it. The key question is, can
creativity be enhanced, and if so, how? Nickerson believes the answer to the first question is
yes, but that the how is not well understood, although there is some speculation that is worth
exploring. His research indicates that classroom instruction can have a positive impact on
creative abilities.

Theorists mention multiple idea-getting techniques, including brainstorming and


divergent thinking methods and other instructional approaches to increase creativity and
Brainstorming is one of the most popular techniques to induce creativity. It was originally
suggested by Alex Osborn in his 1957 book, Applied Imagination.

However, the technique is often implemented incorrectly. Studies show that due to
evaluation apprehension and blocking, fewer ideas are generated in brainstorming groups
than would be generated if participants thought alone and wrote ideas down. Brainstorming
sessions should first involve 15-20 minutes for people to think individually and write their
ideas on an anonymous piece of paper which is then handed over to the facilitator. All ideas
are then discussed openly with a view to first considering how each one could be feasible
rather than the more common approach of criticizing to find why it wouldn’t work.

In an attempt to assess the effects of creativity training, 156 creativity training


programs were reviewed and categorized into clusters. Four themes emerged in the training
programs: 1) idea production training, 2) imagery training, 3) cognitive training and 4)
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thinking skills training.

Idea Production training is the most common and traditional method. However, in
terms of effectiveness, it is less effective than cognitive training like Creative Process
Training, Conceptual Combination Training and Critical/Creative Thinking Training.
Conceptual emphasizes conceptual combination, convergent thinking and techniques to
stimulate new combinations such as analogies and metaphors. Creative Process Training
develops creative thinking through convergent and divergent thinking. It’s typically lengthy
and involves practice on realistic exercises accompanied by lecture and discussion.
Critical/Creative Thinking stresses problem finding, idea evaluation, idea generation,
brainstorming and meta-cognition.

Most creativity programs, such as brainstorming and other idea-getting techniques,


address only one or a few of the sources of creativity, and show modest positive outcomes.
Cropley suggests a more holistic alternative approach: a program should be tailored to
address an individual’s creative potential, psychological aspects of creativity, thought
processes, such as divergent thinking, environment and special characteristics of the task and
desired solutions.
Assessment of and its Impact on Creativity
In order for creativity to become a priority in the classroom, it must be assessed at par
with the testing of more traditional skills and abilities. However, measuring creativity is more
complex. While tests of creativity and creative thinking exist, most of these measure only
certain aspects of creativity. It appears that creative products today are the best predictor of
future creative products. Thus, the best method of assessing creativity would involve the
review of actual creative output.

Nonetheless, tests have been designed to measure creative potential and creative
thinking processes. Many of these aim to measure convergent and divergent thinking. They
consist of open-ended questions to measure the fluency, originality, flexibility, elaboration or
effectiveness. Some tests assess cognitive functions as well as personality traits and
motivation associated with creativity.

Researchers suggest that Torrence tests of creative thinking are the best known and
most widely used tests. The test-retest reliabilities and the predictive validity of these tests
vary, but a many studies seem to indicate that the scores on this test do differentiate between
those who attain creative success and those who do not.
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Techniques to Stimulate Creativity and Innovation in the Workplace


Most literature on creativity and innovation in the workplace targets an audience of
managers and business leaders and focuses on methods to foster organizational climates
conducive to innovation. Companies generally approach creative climate in different ways.
One essential element, however, is that top management holds the power to set the tone and
thus plays a key role in whether a company will be innovative or not. Management must not
only ask for technical innovation but also encourage, stimulate, fund and reward it.
Management must be committed to creativity and be willing to sacrifice short term results for
innovation.

In designing a workplace environment conducive to innovation, management must


consider the same elements that are key to creativity in individuals: knowledge and creative
motivation. In the workplace, it is easier to influence intrinsic motivation than to influence
knowledge or creative thinking styles which are longer term pursuits. Management can bolster
intrinsic motivation through focus on the following six areas:
Challenge: Match people to jobs where challenge is optimized: not so little that they
feel bored but not so much they feel overwhelmed and threatened by a loss of control.
Freedom: Employees need to be given optimum autonomy concerning the process, not
necessarily the result. Clearly specified goals often enhance people’s creativity, but freedom in
process enhances sense of ownership. At the same time, programs that allow employees to
choose their goals have also been known to enhance creativity.
Resources: Resources in both time and money are important. Under some
circumstances, time pressure can enhance creativity by increasing urgency and sense of
challenge, but fake or impossibly tight deadlines create distrust and cause burnout. In a study it
was discovered that people are less creative under time pressure, though they think they are
more so.
Work-Group Features: when teams include people of varied perspectives, ideas
combine. Teams must share excitement and recognize the value that each member brings to
the table. Creating such teams requires managers to have excellent knowledge of their people.
Supervisory encouragement: Supervisors should recognize creative work generously
even before finding the commercial impact of that work. In general, people react to new ideas
with a criticism bias. Such bias creates a climate of negativity and fear. An organization’s
culture and attitude toward failure are important to promote innovation. Organizations that
tolerate failure and encourage risk-taking are more likely to see successful innovation.
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Organizational support: Intrinsic motivation increases when people are aware that
those around them are excited and where there is information sharing and collaboration. Bad
politics is to be avoided.

In addition to motivational approaches, collective knowledge and thinking processes are


also important. Just as creative individuals must be capable of breaking down barriers between
disciplines and combining knowledge in new ways, organizational creativity also results from
both breaking and making of new corporate connections. The key to this process lies in
encouraging conflict and risk taking, and in encouraging the flow of information through the
organization. Promoting diversity and flexibility among team members involved in such
discussion is important.

Many managers equate creative ability with position within the organization – assuming
that only the higher ups have the best ideas and decision making abilities. To install systemic
creativity, leaders must engage the other employees and lead as a guide rather than manage
with command and control.

Information flow is a crucial aspect of promoting creativity throughout the organization.


When high volume of diverse information flows freely throughout the organization, the
likelihood of collision among beliefs, presumptions, and possibilities increases. Applying this
concept even to the flow of unrelated pieces of information is important. Designing the
physical workspace to create opportunities for interaction among otherwise separate workers
may also help improve the flow of unrelated information to spark new connections leading to
creativity. Company structure also plays a role in information flow. Ideas tend to move more
easily in companies with less structured roles and authority than bureaucratic organizations. A
rigid environment that adheres too strictly to procedure does not foster creativity. An
environment where there is comfort with ambiguity and a focus on ideas rather than careers, is
favorable to innovation. Job rotation and creating space for employee autonomy can help with
this problem. Management must also build diverse teams and create mechanisms by which
individuals with different perspectives can interact productively.

Leonard and Straus explain that the successful manager figures out how to get different
ideas and approaches to collide in a productive process called “creative abrasion”. By
deliberately creating diverse organizations and explicitly helping team members appreciate
thinking-styles different than their own, creative abrasion can result in successful innovation.
Managers can actively manage the process of bringing various cognitive preferences together
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to create heterogeneous teams. Through the use of established diagnostic instruments


revealing an individual’s cognitive preferences – such as the Myers-Briggs Type Indicator
(MTBI) or the Herrmann Brain Dominance Instrument (HBDI) – employees and managers
can better understand themselves and their colleagues. Joint discussion of the results of these
tests can help employees with differing styles to come to agreement on how to work together,
respect differences and leverage them in the process of creative abrasion. Understanding these
differences diffuses tension as people realize that alternate approaches are not wrong-headed,
but merely different.

Echoing the importance of information flow and flexible interaction among diverse
employees, Johansson explains that creative successes best occur at what he terms “The
Intersection” – a place where wildly different ideas bump into each other and build upon each
other.

Breaking down associative barriers is fundamental to reaching the Intersection.


Associative barriers are the chains of associations we cluster around a concept in order to
categorize and structure the stimuli in our environment. Building such barriers is the mind’s
way of creating order in a chaotic world. Researchers suspect that these barriers inhibit
creativity. People with low associative barriers can make unusual connections which lead to
creativity. These include individuals that have been exposed to various cultures, are self-
taught and have less traditional backgrounds. They are less welded to one way of doing things
and more likely to arrive at unique Intersections. Management should consider these
characteristics in hiring practices and employees in their professional development endeavors.

In addition to designing a workplace environment conducive to creativity, the literature


suggests multiple strategic and tactical techniques that both management and innovative staff
can employ to guide the creative process. One of these is Kim and Mauborgne’s concept of
“value innovation”. These researchers found that the only significant differentiator between
high-growth companies and their less successful competitors was management’s approach to
strategy. Average or unsuccessful competitors followed the conventional strategic logic of
attempting to beat the competition while high-growth companies rendered their competition
irrelevant by breaking established industry boundaries to create new sources of value for
customers while often lowering costs at the same time. They re-shape the industry. They focus
on what the mass of customers have in common rather than the differences between customer
segments. This value innovation approach represents a simple and appealing model for
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companies to consider. The authors explain that the strategic logic of value innovators differs
from conventional logic along five dimensions, as outlined on next page:

Strategy Dimensions Conventional Logic Value Innovation Logic


Industry Assumptions An industry’s conditions are An industry’s conditions can be
given. shaped.
Strategic Focus A company should build Competition is not the
competitive advantages. benchmark. A company should
pursue a quantum leap in value
to dominate the market.
Customers A company should retain and A value innovator targets the
expand its customer base mass of buyers and willingly
through segmentation and lets some existing customers
customization, focusing on go. It focuses on the key
the differences in what commonalities in what
customers value. customers value.
Assets and Capabilities A company should leverage A company must not be
its existing assets and constrained by what it already
capabilities An industry’s has. It must ask, what could we
traditional boundaries do if we were starting anew?
determine the product and
services a company offers.
Product & Service The goal is to maximize the A value innovator thinks in
Offerings value of those offerings. terms of the total solution
customers seek, even if that
takes the company beyond its
industry’s traditional offerings.

Through the process of value innovation, companies create new solutions that bring
unprecedented value to the mass of customers by giving them more of what they want and less
of what they can live without. Under the value innovation approach, companies review
customer value and ask themselves four main questions:

1) Which of the factors that our industry takes for granted should be eliminated?
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2) Which factors should be reduced well below the industry’s standard?

3) Which factors should be raised well above the industry’s standard?

4) Which factors should be created that the industry has never offered?

These questions should be applied to the platforms on which innovation can take place:
product, service and delivery. While many companies focus on only the product dimension,
successful companies address all three.

Similar to value innovation concept, Drucker explains that “most innovations, however,
especially the successful ones, result from a conscious, purposeful search for innovation
opportunities. In other words, management’s purposeful search for new sources of value
innovation is fundamental to success. Drucker argues that management must purposefully
analyze all these sources of new opportunities. In this sense, the practice and discipline of
innovation can be somewhat systematic, guided by diligence, persistence and purposeful,
focused exploration.

Concluding Remarks
Business growth can be sustained through continuous creativity and innovation as part
of culture. Employees are fountainheads of capabilities of any business. Businesses must
employ creative people and create proper environment so as to stimulate creativity and
innovation within their functions.

Creative people enjoy what they are doing; they tend to describe themselves as
passionate. As a result they tend to behave more positively towards their colleagues,
customers, and people they come into contact with. Thus a business reaps benefits in
organizational culture and customer service. Business relationships and the network in
general are strengthened. Links are created in the value chain, staff turnover decreases and
consistency and sustainability – both requirements for success – increase. Businesses have to
note that the philosophy is not about seeing people as a fixed cost, but of harnessing and
maximizing human creative potential to add value and create new revenue streams.

And employees have to keep in mind that their creativity and innovation in their roles is
important for their business. As Ray Bradbury said “Life is trying things to see if they work.”
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