CREATIVITY AND INNOVATION IN BUSINESS Norhaniza Abdul Latiff By

Chapter 1 Introduction to Innovation & Creativity in Entrepreneurship

What Is An Entrepreneur? ENTREPRENEURSHIP The pursuit of opportunity through innovation, creativity and hard work without regard for the resources currently controlled.

Entrepreneurship Entrepreneurship: a way of thinking, reasoning, and acting that is: – opportunity obsessed – holistic in approach – and leadership balanced (This definition of entrepreneurship has evolved over the past two decades from research at Babson College and the Harvard Business School and has recently been enhanced by Stephen Spinelli, Jr., and John H. Muller, Jr., Term Chair at Babson College.)

Development of Entrepreneurship Earliest Period- Marco Polo Middle Ages- Theater, Architectural Works 17 th Century- Mississippi Company 18 th Century- Edison & Whitney 19 th & 20 th Centuries Organize/Operate Innovation McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Entrepreneurs: Born or Made? Is there inborn talent required? Assume that the answer is YES: then we can identify the main characteristics if we have them, fine - no others need to apply! we could start spotting talent in kindergarten we could "stream" these people we could discourage people without these talents

Entrepreneurs: Born or Made? Assume the answer is NO: then schools could teach anyone would be a "profession" like law or medicine companies could establish "nurseries" for them government "incubators" would be successes The real answer lies somewhere in-between Talent and education is the way

Who is an Entrepreneur? Situational more than personality Age Distribution for Starting Company Ability Age Flexibility

Who is an Entrepreneur? Manager’s Opportunities Perceived Capability Future Goals ChangeStatus Quo PossibleBlocked Satisfied manager Entrepreneur Frustrated manager Classic bureaucrat

Who are entrepreneurs? Common traits Original thinkers Risk takers Take responsibility for own actions Feel competent and capable Set high goals and enjoy working toward them Common traits Self employed parents Firstborns Between years old Well educated – 80% have college degree and 1/3 have a graduate level degree

Skills Required of Entrepreneur Technical Business Management Personal WritingPlanning Inner Control Oral Communication Decision Making Risk Taking Monitoring The Environment Human Relations Innovative Use Technology Marketing(Selling) Change- Oriented Visionary

Successful Entrepreneur Initiates Creation Process Devotes Time/Effort Assumes Risk Receives Rewards Independence Satisfaction Money

Successful and Unsuccessful Entrepreneurs Successful Creative and Innovative Position themselves in shifting or new markets Create new products Create new processes Create new delivery Unsuccessful Poor Managers Low work ethic Inefficient Failure to plan and prepare Poor money managers

Characteristics of Entrepreneurs Successful Entrepreneurs Key Personal Attributes Good Technical Skills Strong Managerial Competencies

Entrepreneurship Characteristics Commercial leanings Lack of structure/self-control Visionary tendencies. Risk-taking/appetite for uncertainty Persistence Doer/high initiative Charisma and extroversion

Entrepreneurship Characteristics High-energy level Strong self-image Team building skills/uses contacts and connections Views failure as learning Commitment and fun

Innovation, Creativity & Entrepreneurship Creativity: ideas going beyond the current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs Most people are creative at some time May involve combining and synthesizing new things Knowledge-creating organization: an organization where innovation is going on at all levels and in all areas 17

Why Creativity and Innovation? 18 Concepts

iPod by Apple 19 Introduction Since 2002: 162 million sold 90% of market Today we’ll ask ourselves again why this has been so successful…

Key Concepts 20 Concepts Development of new ideas Purposeful implementation of those ideas Exploitation of inventions to create economic and social value new ideas: knowledge concepts inventions: technologies business models useful implementation: products services experiences

What is Innovation? A process of intentional change made to create value by meeting opportunity and seeking advantage “…is the specific function of entrepreneurship…” Peter Drucker Process: Invention  Change  Useful implementation 21 Concepts

What Are Innovations? Innovations are new ways to achieve tasks. Types of innovations include : Mechanical—tractors, cars. Chemical—pesticides. Biological—seed varieties. Managerial—IPM, extra pay for work, overtime. Institutional—water users’ association, patents, banks, stock market, conservation districts, monks. It is useful to distinguish between process innovations (new biotechnology procedures) and product innovations (Bt cotton ).

The Innovation Process An innovation starts as a concept that is refined and developed before application. Innovations may be inspired by reality. The innovation process, which leads to useful technology, requires: Research Development (up-scaling, testing) Production Marketing Use Experience with a product results in feedback and leads to improved innovations.

The Innovation Process

What is Creativity? “ The imaginatively gifted recombination of known elements into something new.” Ciardi “ Fruitful combining which reveals to us unsuspected kinship between facts, long ago known but wrongly believed to be strangers to one another.” Poincare Process: Existing ideas  Recombination  New ideas 25 Concepts

What is Creativity? Taking an idea beyond Normal boundaries What we believe to be true What we see as socially acceptable Our current technology -OR- Combining unrelated ideas to make a new one. 2/4/201626

Can you create creativity? “ 20% time” at Google Let people work on what they want to work on Innovation will follow 50% of products come from Google’s 20% time I s this realistic for a new business? Can a small business do this? Can most businesses do this? Other ways? 27 Concepts

Do you have to invent to innovate? Innovation is different from invention You don’t need to invent to innovate Guy Kawasaki says: “COPY SOMEBODY … clever people have pretty much invented every business model that’s possible. You can innovate in technology, markets, and customers, but inventing a new business model is a bad bet. You have plenty of other battles to fight.” 28 Concepts

The practice of Innovation Systematic Entrepreneurship Innovation is the specific tool of Entrepreneurs It is capable of being presented as a discipline, capable of being learned, capable of being practiced In US, the entrepreneur is often defined as one who starts his own, new business. Not every one of these represents Entrepreneurship McDonalds was Entrepreneurship! JP Morgan did not aim for ownership

Principles of Innovation The Do’s Analysis-importance at different times Conceptual and Perceptual Look, ask, listen. Focused, Start small The Donts Don’t be too clever Don’t bring in too many things at once, they will remain as ideas not innovations Don’t innovate for the future. Do it for the present.

Infrastructure Needed for Innovation Long-Term Thinking Investment Community Banks Venture Capitalists Informal/Informed Private Investors (Angels)

Entrepreneur vs Intrapreneur 32

Entrepreneurs V. Intrapreneurs Entrepreneurs are people that notice opportunities and take the initiative to mobilize resources to make new goods and services. Intrapreneurs also notice opportunities and take initiative to mobilize resources, however they work in large companies and contribute to the innovation of the firm. Intrapreneurs often become entrepreneurs.

Intrapreneurship Learning organizations encourage intrapreneurship. Organizations want to form: Product Champions: people who take ownership of a product from concept to market. Skunkworks: a group of intrapreneurs kept separate from the rest of the organization. New Venture Division: allows a division to act as its own smaller company. Rewards for Innovation: link innovation by workers to valued rewards.

“Intrapreneurship” Instilling Entrepreneurial Spirit Within An Existing Organization To Innovate And Grow.

Organizational Culture Corporate Climate/Reward System Favors Conservatism Follow Instructions, No Initiative Hierarchy Of Authority Intrapreneurial Develop Vision, Goals, & Plans Suggest, Try, Experiment Flat Organizational Structure- Networking & Teamwork

Cultural Norms/Values CorporateIntrapreneurial FragmentedWhole InstructionVision Controlled In Control Outer-DirectedInner-Directed AlienationResponsibility “Chores”Enthusiasm/Motivation Defined Limits Space/Freedom InterferenceTrust Distrust Belief In People ExpendableExpandable Limiting People Growing People

Interest In Intrapreneurship Rising Interest in “Doing Your Own Thing” Corporation Support To Retain Creative Employees Fund Startups Hypercompetition Corporate vs. Intrapreneurial Culture

Intrapreneurial Activities New Business Venturing Innovation Self-Renewal Proactive

Climate for Intrapreneurship Technology New Ideas Encouraged Trial/Error Encouraged Failure Allowed No Opportunity Parameters Resources Available & Accessible Multidiscipline Teams Long Time Horizon Volunteer Program Appropriate Reward System Sponsors/Champions Available Support of Top Management

Establishing Intrapreneurship Commitment of Top Management Identify Ideas/Areas Interested In Supporting Use Technology For Flexibility Managers Share/Train Employees Get Closer to Customers Be More Productive With Less

Establishing Intrapreneurship Establish Strong Support Structure Tie Rewards to Performance Implement Evaluation System

Evaluating Intrapreneurship Proposals  Corporate Fit  Initial Investment  Experienced Venture Champion  Experience With Product/Service  Competitive Threat  Proprietary Technology  Gross Margin  Rate Of Return

Intrapreneurship Characteristics Understands the environment. Visionary and flexible. Creates management options. Encourages teamwork. Encourages open discussion. Builds a coalition of supporters. Persists.

Dimensions of Intrapreneurship (Antonic and Hisrich, 2003) DimensionDefinition New VenturesCreation of new autonomous or semi- autonomous units or firms. New BusinessesPursuit of and entering into new businesses related to current products or markets Product/Service Innovativeness Creation of new products and services Process Innovativeness Innovations in production procedures and techniques

Dimensions of Intrapreneurship (Antonic and Hisrich, 2003) DimensionDefinition Self-renewalStrategy reformulation, reorganization and organizational change Risk TakingPossibility of loss related to quickness in taking bold actions and committing resources in the pursuit of new opportunities ProactivenessTop management orientation for pioneering and initiative taking Competing Aggressiveness Aggressive posturing towards competitors

Barriers To Intrapreneurship Inherent Nature of Large Organizations No Long-Term Commitment Lack Of Autonomy For Decision Making Lack of Intrapreneurial Talent Inappropriate Compensation Methods Constrained Environment

Problems and Benefits of Intrapreneurship Problems Performance Benefits Resources Successes 3M, HP, IBM