CHAP 2 Creativity Innovation and Entrepreneurship ws (1).ppt

Creativity, Innovation &
Entrepreneurship
Enterprise and its Business
Environment © Goodfellow

“How Can we Know Where We’re Going
Without Knowing First Where We ‘ve Been?”
Creativity; Past, Present & Future…..

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).

“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).
The Past…….

Natures Creation? or Human Creation
Venoms & Poison or Anaesthetics
The Leaf or Solar Panel (energy from light)
The Brain or Computer/Electronic Circuitry
DNA or Computer Program
The Ear Drum or Microphone
The Eye or Camera (lens, focus, iris, film)
Eye Lid or Windshield Wiper
Incisor Teeth or Knife
The Heart or Pump
Spinal Chord/Nervous system or Communication/Telephone Cables
Birds or Music
A Gift from the Gods or a New Phenomenon?
Or…Could Both Be True????...... Maybe?

Creativity
“There is no doubt that creativity is the most
important human resource of all. Without
creativity there would be no progress, and
we would be forever repeating the same
patterns”
(Edward de Bono).

Two views of Creativity
The Elite View
V’s
The Developmental 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…
• Available to Everyone
• Evident in Personal & Modest Insights
• Released Through Training & Development
of Personal Potential
• Within the Scope of All Jobs
• Encouraged or Discouraged Within Groups
According to their Climate
• Escape from ‘Personal Stuckness’ & Reveals
Itself in Results Which are Original &
Potentially Valuable

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

Three Components of Creativity
• Domain Relevant Skills
• Creative Processes
• Intrinsic Task Motivation
See; Amabile, Philips & Collins,

Stages in Creative Thought
• Preparation
• Incubation
• Insight
• Evaluation
• Elaboration

• So What Is An
Innovation?

What is Innovation?
• Newness & Adding Value
• Functional Value: Technology-Driven
• Symbolic Value (Meaning): Design-Driven
• Degree of Newness:
• Radical Innovation
• Incremental Innovation

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

Not all Innovations are Successful…
Innovation = Invention + Commercialization

Neither are All Fashion Trends

What is Entrepreneurship?
“Entrepreneurship is the identification,
evaluation, and exploitation of opportunities”
(Shane, 2011, p. 143).

Historic Evolution on Entrepreneurship
• Entrepreneurial strategies are not a twentieth-century
phenomenon.
• The word entrepreneur originates from a 13th century French
verb, entreprendre, meaning “to do something” or ‘to undertake’
(Sobel, 2011, p. 2).
• Marco Polo established trade routes to the Far East, he
demonstrated risk-taking behaviour we associate with
entrepreneurship today (Osborne, 1995, p. 4). The ‘fit’
between his skills and the environmental opportunity is a
perfect illustration of a true entrepreneurial strategy, and
in particular is more relevant to our understanding of
entrepreneurship, with its increasing global scope (Ibid,
p. 4).

Marco Polo’s Trade Routes…

What Does it Mean Today?
• Dictionary definition
• The owner or manager of a business
enterprise who, by risk and initiative, attempts
to make profits
• Popular view:
• ‘Arthur Daly’, ‘Del Boy’
• Original derivation:
• ‘entreprendre’ (French): to undertake

Definitions of Entrepreneurship
• “Much has been written on the complex subject
of entrepreneurs and entrepreneurship, and
many inconsistent definitions have been brought
forth and explored in great detail. Yet the
entrepreneur is still one of the most ‘intriguing
and elusive characters to constitute the subject
of analysis” (Baumol, 1968, p. 64).
• “All who claim to have caught sight of him report
he is enormous, but disagree on his particulars”
(A.A. Milne. In Kirby, 2003, p. 11).

However…..
“Entrepreneurship is essentially an
economic phenomenon, and ‘involves a
nexus of two phenomena: the presence of
lucrative opportunities and the presence of
enterprising individuals”.
(Venkataraman, 1997)

• Who are these
Individuals?

Historical Views from Economics
• Economics tends to marginalize the entrepreneur
• Cantillon and Say (from the perspective of an agrarian
economy) – someone who makes buying and selling
decisions and in so doing is the bearer of risk
• ‘Austrian school’: Kirzner – an ‘alert’ middleman who spots
opportunities to facilitate exchange (arbitrage)
• Schumpeter: an innovator – the entrepreneur brings change
through the introduction of new technological processes or
products
• Knight: someone who undertakes risk, with profit being the
reward for bearing uncertainty
• Shackle: emphasises the role of creativity in the
entrepreneurial process
• Casson: someone with the skills to organise or reallocate
resources

Economic Theories of Entrepreneurship
Risk Taker –
Richard
Cantillion, 1755
Novel
Resource
Combination
– Alfred
Marshall,
1920
Risk Taker &
Innovator –
Von Thunen,
1850
Technological
Knowledge –
Jeremy
Bentham,
1838
Economic
Change –
Carl Menger,
1871

Definitions continued
• Note: None of These Definitions Sees the
Entrepreneur as the Creator of a Business
• Contemporary Definitions:
• Distinguish Between ‘Enterprise’ & ‘Entrepreneurship’
• Enterprise:
• Using Skills Such as Initiative, Independence,
Creativity, Problem-solving, Identifying & Working on
Opportunities, Leadership & Acting Resourcefully to
Apply Creative Ideas & Innovations to Practical
Situations to Effect Change

• Which Entrepreneurs Can
You Name?

Revolutionaries continued
• How have entrepreneurs affected your life in the past 24
hours?
• Have you used your computer? (personal computers, PC
software: Intel, Microsoft, Dell, Apple)
• Have you surfed the web? (web browser – Netscape, Google,
AOL)
• Have you made a purchase over the internet (internet retailers,
eBay, PayPal)
• Have you made a mobile phone call? (cellular phone services;
voice mail IT services)
• Have you used a hand held wireless communication device (a
‘blackberry’)? (RIM)
• Have you taken your car in for a fast oil change or MoT?
(KwikFit)
• Have you taken a budget flight? (Easyjet, Ryan Air)

Revolutionaries … continued
• Where have you bought your clothes? Have you put on trainers
(Nike, Reebok), put on waterproof clothes (WL Gore, Timberland)?
• Have you bought a coffee (Starbucks)
• Have you bought some DIY products (Home Depot, B&Q)
• Have you bought any stationary? (Staples)
• Have you listened to your iPod? (Apple)
• Have you watched a 24 hours news channel? (CNN)
• Do you purchase ethically (Bodyshop)?
• Have you played a round of golf? (Calloway Golf)
• Have you been to a fitness club (Fitness First, David Lloyd)?
• Have you bought a copy of ‘Big Issue’? (social entrepreneurship)
• Have you donated anything to a charity shop? (e.g. Bethany Trust)

• Why Do They Do What
They Do?

So Why Choose to be an Entrepreneur?
• Luke Johnson (FT 25/4/07)
• Freedom: “starting and running a business is the
best way of controlling your destiny”
• Changing the world: “creating an enterprise is
perhaps the most effective way of making a positive
difference to society that has ever been devised.”
“What could be more important than creating jobs?”
• Progress: “new business is about upsetting the
status quo, thereby leading to progress. I think that is
a virtuous mission”

continued
• Social mobility; “business is a fantastic way for
someone from a modest background … to
improve their life and get ahead.”
• Creative destruction: inefficient and loss making
companies die … but productive companies tend
to create a virtuous circle: … attract talent, pay
more, make investors good returns, and can afford
to launch better products. This is called progress.”
• Creating a better future: “the inventive ability of
entrepreneurs to find solutions to … problems”
such as global warming and so forth.
• Entrepreneurship is about striving for a better
future – not just dreaming.

In Economic Terms….
• “There has never been a better time
to practice the art and science of
entrepreneurship”.
(Bygrave and Zacharakis)

Importance of SMEs
• SMEs play an important role in the change of
technology and innovation
• SMEs create an additional sense of competition whilst
also, providing a mechanism for regeneration
• SMEs contribute to international competition
• SMEs create jobs
• SMEs contribute to economic growth
40

What Explains this Growth?
• Structural shift from manufacturing (large firm
dominated) to services (small firm dominated)
• Growth in personal, flexible, tailor-made services
• Restructuring by large firms – focus on core activities,
sub-contract non-core activities
• Technological change
• Scientific discoveries exploited by small firms
• Production and IT technologies have reduced the role of
economies of scale
• Low cost and access to communications technology (‘the great
equaliser’): access to information, distribution (‘the long tail’)

Growth Continued
• Importance of human capital rather than financial capital
as the basis for competitiveness
• Consumer choice – reaction against mass produced
products and services: individualism, demand for
authenticity, natural products (e.g. real ale beer) – growth
in market niches
• Deregulation of markets: e.g. in airlines, telecoms, media
• Personal choice – ‘rebellion’, reaction against working in
large impersonal organisations, want to control own
destiny
• Availability of finance – venture capital
• Availability of support, advice and education

• How do they do it?

Timmon’s (2007) Model

An Enterprise Needs
• According to Timmons & Spinelli (2007);
• Opportunity
• Lead Entrepreneur & A Team
• Resource Parsimony & Creative Use of
Resources
• Fit & Balance
• Integrated & Holistic
• Sustainable

The Paradoxes of Enterprise
On The One Hand
• Enterprise Requires Thought
& Preparation
• To Make Money
• An Opportunity with Little or
No Potential
• To Create & Build Wealth
• To Succeed
On The Other
• It Is An Unplanned Event
• You Have To Loose Money
• Can Be An Enormous
Opportunity
• You Must First Relinquish
Wealth
• You Must Experience Failure

Planned or Unplanned?
Sarasvathy, 2001

The Entrepreneurial Process

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)

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

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)

Example (1): Rise of Levi’s
• Problem:
• Working Clothes for Mining Workers do Not
Last
• Solution:
• First Pair of Jeans

• The Point of Pain: A Direct Solution
http://kck.st/LEbznj

What is Your Opportunity for the Pizza Business?

Locating a Business Idea
Mapping: where to look for?

Searching for Business Opportunity in a
360 Degree Space

Locating Business Ideas
• Products: Create Entirely New Products or New Services
• Solutions: Solve “End-to-end” Problems for Customers
• Customers: Find New Customer Segments or Unmet Needs
• Customer Experience: Change How Customers Interact With You
• Revenue Model: Change How You Get Paid
• Processes: Innovate on Operating Processes
• Value Chain: Change Position or Scope of Participation
• Logistics/Supply Chain: Change the Way You Source & Ship
• Channels: Change How you Go To Market with your Products
• R&D: Create New Technologies, Materials, Products or Processes

There are Other Techniques to
Screen Your Idea….

Screening
• Systematic approach but avoid the paralysis with
analysis approach.
• Should screening be the same for every
business or change depending on the context?-
Service company’s think that ideas should be
generated as required rather than an ongoing
basis but still use financial, marketing,
management, strategy and resource implications
( Kelley & Storey 1999)
• Hard and fast rules presented by writers.

Case Studies of Successful Businesses
• http://www.growingbusiness.co.uk/ones-
to-watch?page=6
• https://www.nationalfield.com/

True Entrepreneurial, Creative & Innovative Acts
• Dare To Dream!!!
• Be Creative… Do Things Which Others
Refuse! No Compromise Between Dream
& Capabilities
• The New Ones Can Start from the
Forgotten Old Ones Stop & Look Around

Don’t Limit Yourselves

• Berger, B. (1991) The Culture of Entrepreneurship. CA: ICS Press.
• Adair, J (2007) The Art of creative Thinking London. Kogan Page
• Antoncic, Bostjan & Hisrich, Robert D ( 2003) Clarifying the intrapreneurship concept Journal of Small Business & enterprise Development
Vol 10 no 1, pp7-24
• Bilton, C. (2007) Management and Creativity: From Creative Industries to Creative Management. 1st Edition, Oxford: Blackwell Publishing.
• Christensen C, Anthony, Roth, E. (2004) Seeing What's Next: Using the Theories of Innovation to Predict Industry Change, Harvard
Business School Press.
• Davidsson, P. (2006) The entrepreneurial process. In Enterprise and Small Business: Principles, Practice and Policy, S. Carter and D.
Jones-Evans, eds. 2nd Edition, Financial Times/Prentice Hall: Hanslow.
• De Bono, E.
• Dimov, D & De Clercq,D ( 2006) Venture Capital Investment Strategy andPortfolio Failure Rate: A Longitudinal Study Entrepreneurship,
Theory and Practice
• Fox, M. (2002) Creativity: Where the Divine and the Human Meet, 1st Edition. New York: Tarcher/Putnam.
• Goffin, K., & Mitchell, R. (2005) Innovation Management, Palgrave Macmillan.
• Hisrich, R.D., Peters, M.P., Shepherd, D.A. (2005) Entrepreneurship, 6th Edition, USA: McGraw Hill Irwin.
• Howells, J. (2005) The Management of Innovation and Technology, Sage.
• Johnson, Steven (2010) Where good ideas come from
• Kelley & Storey (2000) New service Development: initiation strategies, Int Journal of Service management. Vol 11 no1pp45-62
• Lumsdaine, E., & Binks, M. 2007. Entrepreneurship: From Creativity to Innovation, Oxford: Trafford Publishing.
• McDonald, L (2009) Wild drinks: The hedgerow Martini” The Times May 30 2009 available from
http://www.timesonline.co.uk/tol/life_and_style/food_and_drink/drinks/article6365156.ece accessed 23 January 2011
• Piercy, N. (2002) Market Led Strategic Change, Third Edition, Butterworth Heinemann.
• Porter & Kramer(2011) Creating shared Value HBR Jan/Feb 2011
• Stewart, Anne(2011) Where do great ideas come from? Inc magazine [online] available from
http://www.inc.com/magazine/20021015/24773_pagen_3.html accessed 21 January 2011
• Stokes, D,. Wilson, N,. (2006) Small Business Management & Entrepreneurship, Ch4, pp100 – 139 Thomson Learning.
• Throsby, D. (2001) Economics and Culture. Cambridge: Cambridge University Press
• Timmons, Jeffry A & Spinelli, Stephen (2007) New Venture Creation McGrawHill. ch 3 & 4
• WEBSITES ACCESSED………
• http://www.sie.ac.uk/60secondshorts/videos.php
• http://www.creax.com/csa/frame.asp?session=zero
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