Enterprise & Opportunity

Creativity & Innovation

Week 4
Lecturer: K Pradhan
Session Objectives
• Identify Creativity as a process; in firm &
individual level.
• Understand Creativity as part of Innovation
• Identify attributes for adoption of Innovation
• Understand links between idea, opportunity and
Venture.
• Identify transformation types as Creative process.

2
 Creativity
— Defined in dictionary as “characterised by originality of
thought; having or showing imagination”.
— It is the process of generating a novel or useful idea.
— Opportunity recognition may be, at least in part, a
creative process.
— Also considered as one of the key personal characteristics
of an entrepreneur.
— Furthermore, Gianforte & Gibson (2007, cited in Read et
al., 2010) suggest, through their studies, that ‘constraints’
can increase creativity’ – the maxim: “Necessity is the
mother of invention.”

Barringer & Ireland (2016: 79) 3

 Creativity – Individual Level
— At individual level, the creative process can be
broken down into five stages:

Barringer & Ireland (2016: 79) 4

 Creativity – Individual Level
— Preparation: is the background, experience, and knowledge that an
entrepreneur brings to the opportunity recognition process; research suggest
that as much as 50% – 90% of start-up ideas emerge from a person’s prior
work experience.

— Incubation: is the stage during which a person considers an idea or

thinks about a problem; it is the “mulling things over” phase - may be
conscious or subconscious churning of ideas.

— Insight: is the flash of recognition when the solution to a problem is seen

or an idea is born - the “eureka” experience; in a business context, it is when
an entrepreneur recognises an opportunity. This may push the process
forward, or actually revert individual to the preparation stage.

Barringer & Ireland (2016: 80) 5

 Creativity – Individual Level –contd.
— Evaluation: is the stage during which an idea is subjected to scrutiny
and analysed for its viability; Particularly challenging stage of the creative
process as it requires an entrepreneur to take a candid look at the viability of
an idea – feasibility assessment - (some skip this to implement the idea).

— Elaboration: is the stage during which the creative idea is put into a
final form: details are worked out and the idea is transformed into
something of value, such as a new product, service, or business concept - In
the case of a new business, this is when a business plan is written.

Barringer & Ireland (2016: 80) 6

 Innovation & Creativity
— Distinction between Innovation and Creativity.
— Innovation refers to the successful introduction of new
outcomes by a firm.
— In contrast, Creativity is the process of generating a
novel or useful idea;
— however, creativity does not require implementation of
an idea. In other words, creativity is the raw material
that goes into innovation.

Barringer & Ireland (2016: 85) 7

 Creativity – Firm Level
— With in an existing Firm, team of employees may come
up with many creative ideas on new products or
services, however, only one may be eventually
implemented - it may actually take hundred creative
ideas to discover the one that ideally satisfies an
opportunity.
— Though creativity is usually considered as an
individual attribute, it can be encouraged or
discouraged at the firm level - extent to which a firm
encourages & rewards creativity affects the creative
output of its employees.
Barringer & Ireland (2016: 85-86) 8
 Creativity – Firm Level

Barringer & Ireland (2016: 87) 9

 Creativity – Firm Level

Barringer & Ireland (2016: 87) 10

 Adoption of Innovation
— Rogers (2003), in his research on new products across products,
industries & time, identified 5 attributes of innovation that are
highly predictive of whether they will be adopted:
1. Relative advantage: Is it perceived as better than what it
replaces?
2. Compatibility: Is it consistent with the values, experiences
& needs of potential adopters?
3. Complexity: Is it perceived as difficult to use?
4. Trialability: Is the user able to experiment with it?
5. Observability: Are the results of innovation visible to users?
— These are good, common-sense tests of whether “the dogs are
going to eat the dog food.”

Read et al. (2010: 14) 11

 Idea-to-Venture Formula
— IDEA = Anything + You
o Venture start with an idea, and ideas generally start with a transformation
of the means your already have.
— OPPORTUNITY= Idea + Action
o Gathering information does not count as action. Action is proposing a deal
with client; it is getting a supplier to knock together a prototype.
— ACTION = Function (Interaction) on money, product, partners….
o Action is convincing a co-founder to join the business. It goes beyond
observation & calculation to invoke transformation, manipulation,
fabrication – it’s a function of interaction with the world.
— VIABLE VENTURE= Opportunity + Commitment
o Finally, what turns an opportunity into a viable business is commitment.
These result in revenue, hiring, and production lines starting up at
suppliers.

Read et al. (2010: 17) 12

 Idea-to-Venture Formula
The formula is dynamic
& iterative; most
enduring firms started
very differently from
where they are today.
Founders repeatedly
implemented the formula
to interactively create
more valuable
opportunities than their
original ideas would
have allowed them to
ever imagine.

Read et al. (2010: 18) 13

 Creative Template
— Goldenberg (1999:200), researching ‘creativity and innovation’
described 5 templates that are basis of about 70% of all new
product ideas:

1. Subtraction, 2. Multiplication & 3, Division, each of which is a

specific approach to deleting & supplementing (discussed later.)

4. Task unification (making some aspect of an artefact do more

than one task) and

5. Attribute dependency change (changing a linage between the

artefact & the environment) which are both specific approaches to
exaptation in that they both involve changing what a product or
component is capable of doing (explained later).

Read et al. (2010: 14) 14

 Transformation Types – Creative Process
— There are 4 most common transformation types employed by
expert entrepreneurs:

— Deleting/Supplementing: Recombination-adding to & subtracting from

something existing – as transformation. These could including supplementing
elements related to the original product/service or surprising combinations
from unrelated domains. Eg: Ruth Owades, weeding out traditional florist,
using FedEx to mail flowers directly to customers from growers.

— Composing/Decomposing: Reorganising material that is already there

– decomposing and recomposing it (in contrast with the first approach, which
takes away Or adds material to or from existing set). In context of new
venture, this means taking stock of what you have to offer – a product, a
service, the way you work – and pulling it apart to recombine it in a new way.
Eg: composition and decomposition of recipes for healthy diet.

Read et al. (2010: 85-87) 15

 Transformation Types – Creative Process
Further Transformation Types:
— Exaptation: meaning using something for a purpose for which it was not
originally designed or intended – may include using existing technologies,
products, services or elements thereof for use they were not intended to serve.
Eg: Researchers at Bayer, in 1897, found acetylsalicylic acid to be excellent
painkiller & fever reducer - called it aspirin!

— Re-weighting: involves increasing & decreasing the relative emphasis of

features or attributes of a product Or market. Eg: BMW gradually increasing
emphasis on ‘driver appeal’ emphasising “Ultimate Driving Machine’, while
Volvo, in contrast, emphasises the safety features of its cars

— Additional Transformation Types – Next Slide:

Read et al. (2010: 89-90) 16

 Additional Transformation Types

Read et al. (2010: 94) 17

 Ending Thoughts + Seminar Activity
— If you are struggling to make connections to others, or to find
ways to put affordable loss, contingency and pre-commitments
to work, then transforming what you have got into something
new may be just what you need to do.

— You do not have to invent something from nothing.

— Instead, transform something or several somethings into
something else.

— For Next Seminar – Prepare to Share a viable

‘Transformation’ of something you have always used.
— Be ready to justify using ‘Adoption of Innovation’
attributes.
Read et al. (2010: 95) 18