Entrepreneurship Unit 1: Entrepreneurial Theory

Module 3: Creativity and Innovation

Done by Jada Henry 6B3

 What is creativity?

● Stern-berg and Lubart (1999) define creativity ● “Innovation is the specific instrument of
as “the ability to produce work that is both entrepreneurship. The act endows resources
novel (i.e., original, unexpected) and with a new capacity to create wealth.
appropriate (i.e., useful, adaptive concerning Innovation, indeed, creates a resource.”
task constraints)” (Drucker)
● Creativity is an act, an idea, or product that
● Entrepreneurship is all about innovation
changes an existing domain, or that transforms
● Innovation is economic or social, rather than a
an existing domain into a new one, and
creative person is whose thoughts or actions technical term
bring these changes. (Csikszentmihalyi) ● Creativity may also be defined as the ability to
● Creativity leads to innovation bring something new into existence.
Scarborough (2011) defines
creativity as the ability to use the
imagination to develop new ideas
and to discover new ways of looking
at problems and opportunities. It
utilizes one’s imagination to
construct in thought, something new
in its entirety or something that will
add value to a good or service that
already exists. Kuratko (2014)
explains that Creativity is the
generation of ideas that results
improved efficiency or
effectiveness of a system.
 The Creativity Process

1. Preparation
2. Investigation
3. Transformation
4. Incubation
5. Illumination
6. Evaluation
7. Implementation
 Preparation

This stage is based on the thinking that ideas do not arise from an intellectual vacuum. Preparation involves exposing
the mind to many new things. This allow it to increase skills relating to Listening, Attention, Reasoning and
Planning. At this stage, exposing the mind to the particular area that you are interested in, along with those outside of
the area, is wise. So if you are in the area of Entertainment: Amusement Parks, the Entrepreneur will read as much as
he/he can about it, join trade associates, visit Amusement Parks all around the world etc. Make sure that all ‘creative
distractions’ are eliminated. The normal interruptions from phone calls, e-mails and visitors, will limit the ability to
be creative. Following all of the above will be the ‘springboard’ for creativity.
 Investigation

This stage requires that the Entrepreneur develop a concrete understanding of the problem or decision at hand.
 Transformation

Observe the connectivity and differences amongst each aspect of data that is collected.
 Incubation

In this stage, the Entrepreneur steps back and allow his/her mind to rest. There is no conscious thinking of the
problem at hand. It is believed that at this stage, when information on the subject at hand. It is believed that at this
stage, when information on the subject at hand is in the ‘back of the head’, and mind is left to wander, the mid
laterally accesses cognitive resources.
 Illumination

This is the exciting stage when the “Eureka” occurs. A great idea comes to the conscious mind. It comes at the least
expected moments. It is wise to keep a notebook right beside your bed or “on your person’, so that whenever the
bright idea comes, you will be ready and able to record the details. However, all the details may not come at once.
 Evaluation/Verification

At this stage the Entrepreneur gives much further thought to the idea and those it will influence. He/she decides
whether to pursue the idea. The entrepreneur considers whether the idea is realistic or not. Consultation and advice
are needed in this stage.
 Implementation

In this stage, the Entrepreneur engages in the hard task of working on and testing the idea. This is where thoughts are
transferred to a final product.
 What does creativity have to do with entrepreneurship?

Everything! Creativity enables entrepreneurs to differentiate their businesses from competitors so that customers will
notice them. Creativity is the basis for invention, which is discovering something that did not exist previously, and ,
innovation which is finding a new way to do something, or improving upon an existing product or service. Creativity
is also fundamental to problem-solving. Today entrepreneurs face a rapidly changing environment brought about in
large part by the speed of technological change and economic uncertainty. The combination of rapid change and the
resulting uncertainty about what the future holds present a fertile ground for new opportunities. Creativity therefore
is a critical skill for recognizing or creating opportunity in a dynamic environment and for problem solving which is
necessary to satisfy customers’ needs.
 What is Innovation?

Every organization needs to innovate. Innovation is “innovation refers to the process of bringing any new
as relevant to a hospital, movie theatre, or press problem solving idea into use...it is the generation,
acceptance, and implementation of new ideas,
office as it is to a manufacturing plant or product
processes, products, or services”.
design department. Innovation is the process of
making changes to something established by ● Innovation - Is the process of making changes,
introducing something new that adds value to the large and small, radical and incremental, to
products, processes, and services that results in
customer. Innovation is not to be confused with
the introduction of something new for the
invention. organization that adds value to customers and
contributes to the knowledge store of the
However, innovation is about “a process of organization.
developing and implementing a new idea” (Van de ● Innovation - The process of translating ideas
Ven & Angle, 1989, p. 12). They go on to write that into useful-and used new products, processes
and services.
Scarborough (2011) defines
innovation as the ability to apply
creative solutions to problems and
opportunities to enhance or to enrich
people's lives. He explained that
creativity speaks to thinking while
innovation speaks to doing new
things. Economists Peter Drucker
explained that purposeful innovation
results from analysis, systematic
review and hardwork, he added that
it can be taught, replicated and
learnt.
 DIFFERENCE BETWEEN
INNOVATION & INVENTION Invention - Coming up with a new idea or creating
something new that has never existed before.
 Innovation and Creativity

Creativity is regarded as a key building block for innovation (Rosenfeld & Servo, 1991) and is an inherent capability
in all human beings. Creativity is a mental process that results in the production of novel ideas and concepts that are
appropriate, useful, and actionable. The creative process can be said to consist of four distinct phases: preparation,
incubation, illumination, and verification (Wallas, 1926). Later revisions of this process have added a final phase,
elaboration (Kao, 1989), in which the idea is structured and finalized in a form that can be readily communicated to
others. Creativity entails a level of originality and novelty that is essential for innovation. Although creativity is a
fundamental part of innovation, it is wrong to interchange the terms. Innovation encourages the further processing of
the output of the creative process (the idea) so as to allow the exploitation of its potential value through
development.
 Innovation and Entrepreneurship

The terms entrepreneurship and innovation are often used interchangeably, but this is misleading. Innovation is often
the basis on which an entrepreneurial business is built because of the competitive advantage it provides. On the other
hand, the act of entrepreneurship is only one way of bringing an innovation to the marketplace. Technology
entrepreneurs often choose to build a startup company around a technological innovation. This will provide financial
and skill-based resources that will exploit the opportunity to develop and commercialize the innovation. Once the
entrepreneur has established an organization, the focus shifts toward its sustainability, and the best way that this can
be achieved is through organizational innovation. However, innovation can be brought to market by means other than
entrepreneurial startups; it can also be exploited through established organizations and strategic alliances between
organizations.
Categories of Innovation
The term innovation is often associated with products. When we think about innovation we think about a physical
product: a television, car, or digital music player. However, innovation can also occur in processes that make
products, services that deliver products, and services that provide intangible products. Many services don’t involve
physical products at all. For example, a hospital or government department offers a range of services without
producing products.
 Innovation can take many forms but it can be reduced to four dimensions (the 4Ps of innovation).

● Product Innovation - Changes in the things ● Paradigm Innovation - Changes in the

(product/services) which an organization underlying mental models which frame what
the organization does. This is somewhat
offers. For example a car with an automatic
specific innovation category. It concerns the
transmission compared to “conventional” one. change (sometimes radical) in the way
● Process Innovation - Changes in the ways in something is done in the organization. It could
which things (products/services) are created be anything. For the bakery it may be in the
and delivered. For example, automobile way the products are sold, from off the
counter, to catering system, or to selling on the
produced by robots compared to that produced
Internet. Online bakery, can you imagine!
by human workers. Again, to be an innovation, it has to be
● Position Innovation - Changes in the context in profitable. Radical changes don’t necessarily
which products/services are introduced. mean better business. Shifting your product
selection to vegetarian diet wouldn’t work well
in the neighborhood full of meat eaters.
 Sources of Innovation

1. New Markets
2. New Technologies
3. New Political Rules
4. Limited Options (Running Out of Roads)
5. Change in Sentiments or Behaviours
6. Deregulations/Shifts in regulatory regimes e.g. Changes in the business models
Methods of Protecting Innovation and Creativity
 Intellectual Property

The term intellectual property refers broadly to the ● literary, artistic and scientific works;
creations of the human mind. Intellectual property ● performances of performing artists,
rights protect the interests of creators by giving them phonograms, and broadcasts;
property rights over their creations. The Convention ● inventions in all fields of human endeavor;
Establishing the World Intellectual Property ● scientific discoveries;
● industrial designs;
Organization (1967) gives the following list of
● trademarks, service marks, and commercial
subject matter protected by intellectual property
names and designations;
rights. ● protection against unfair competition; and
● “all other rights resulting from intellectual
activity in the industrial, scientific, literary or
artistic fields.”
● Intellectual Property Rights
● Trademarks
● Patents
● Copyrights
● Branding
● Registered Design Protection
● Trade Secrets
● Licensing
 The Intellectual Property laws cover the following:

● Trademark
● Copyright
● Patents
 ● A trademark is a distinguishing word, figure,
symbol, design, numeral or a combination of
these that identify particular goods or
services.
● The trademark gives the proprietor the
exclusive right to use the trademark in
Trademark relation to the goods or services for which it
was registered. Trademarks can also be
transferred with or without transmitting the
goodwill of the business. The trademarks
can be established in the market through
brand building activities.
 Copyright

Copyright: The copyright laws protect the legal rights of a person for his or her work of writing or authorship. This
law prevents others from reproducing the work in any other way. The intellectual property under copyright include:

● Literary work (books, articles, manuscripts etc.)

● Dramatic work (drama, dance choreography, costumes etc.)
● Musical work (lyrics, music, graphical notations etc.)
● Artistic work (drawing, painting, sculpture, photographs etc.)
● Cinematographic work (recoding, sound tracks, sound effects etc.)
● Computer work (programmes, tables, databases etc.)
 A patent gives protection to the inventor of a new
product/ process/ design to solely use the copying/
selling/ using of the invention for a limited period
of time. This right acts as an incentive for the
inventors who have worked hard and created
something innovative. The term ‘invention’ is
defined as ‘a new product involving an innovative
step and having industrial application’. In India,
Patents the rights of patents are granted to the person who
first applies. Anything, for which a patent is
desired, should be:
● New: Patents are not granted for things
already well known and well established.
● Useful: Inventions should be beneficial for
people and should be capable of industrial
applications.
 Branding has come a long way from its humble
beginnings as an identification mark to its current
position as a tool for communicating with
consumers. Firms use branding as a way to control
Branding and manage consumers’ perceptions about their
products and image. In many cases, branding
creates sustainable competitive advantage for
firms.
 Registered Design Protection

Design rights are intellectual property rights that ● It must display features of shape,
protect the visual design of objects; i.e. the visual configuration, pattern or ornamentation which
perception of an object by a viewer. Design plays an are applied to an article which has
important role in everyday life: influencing the shape "eye-appeal" (aesthetic appeal);
or decoration of man-made products such as ● The appearance of the article must be such that
household utensils and ornaments, furniture, fabrics, it matters to consumers as a quality distinct
the clothes we wear, the cars we drive; in each case, from its function. Design protection does not
making them easier or more attractive to use. For a extend to features which are prompted purely
design to be protectable it must have particular by function (i.e. solely dictated by the function
characteristics: which the article has to perform), such as the
seat of a chair (although the particular shape of
the seat may be protectable).
 Broadly speaking, any confidential business
information which provides an enterprise a
competitive edge may be considered a trade secret.
Trade secrets encompass manufacturing or
industrial secrets and commercial secrets. The
unauthorized use of such information by persons
other than the holder is regarded as an unfair
Trade Secrets practice and a violation of the trade secret.

In its simplest terms, a trade secret is information

which a business wants to keep secret, because
keeping the information secret helps the business
or the release of the information could harm the
business and help its competitors.
 Licensing may be defined as a contractual
agreement between two parties where one party
having some proprietary rights agrees to transfer
its rights to another party by charging some kind of
fee or royalty in a proper mode. Licensing has
acquired great importance in today’s global world.
Licensing There are many examples where a company
owning the intellectual property of a product,
manufactures it in its country and gives license to
other businessmen in other countries to
manufacture the same product.