CREATIVITY AS A PREREQUISITE TO INNOVATION.
Definition. Creativity is coming out with new ideas
Innovation is the process of transforming the ideas into products, services, processes and markets. Ideas have little value until they are converted into new products; services or processes. Innovation is therefore transforming creative ideas into useful applications, but creativity is a prerequisite to innovation.
The creative Process
Entrepreneurs need new ideas to pursue. Ideas do not always materialize accidentally. Ideas evolve through a creative process whereby imaginative people germinate ideas, nurture them and develop them into successful products. There are five stages of the creative process:
Ideas. (1) Germinate (2) They are prepared (3) They are incubated (4) Illumination (5) Verification.
(1) Idea Germination
This stage is a seeding process. Not like planting a seed the way a farmer does plant corn but, more like the natural seeding that occurs when pollinated flower seeds, scattered by the wind, find fertile ground to take root and germinate.
Most creative ideas can be traced to an individual’s interest in and curiosity about a specific problem or area of study. The objective of curiosity is to find answers to a particular problem.
2. Preparation
Once a seed of curiosity has taken form as a focused idea, creative people embark on a conscious search for answers. They start to seek information about the problem and how others have tried to resolve it. If it’s an idea about a new product or service the process becomes the equivalents of a market research. Investors will set up lab experiments, designers will begin engineering new products, marketers will study consumer behaviour. In rare cases, the preparation stage will bring results. The effort is important because you gather information and knowledge that is vital for an eventual solution.
3. Incubation
People usually do not concentrate on an idea, more often they allow ideas time to grow without intentional effort. It’s a stage where you let the sub-conscious intellect assume control of the creative process. The sub conscious mind is allowed to wonder and pursue fantasies, and is therefore open to unusual information and knowledge that we cannot assimilate in a conscious state. This subconscious process is called the art of synectics, a Greek word meaning a “joining together of different and often unrelated ideas. Therefore when a person has consciously worked to resolve a problem without success, allowing it to incubate in the subconscious will lead to a resolution of that problem
4. Illumination:
It occurs when ideas resurfaces as realistic creations. When we says “Oh, I see”. Illumination may be triggered by an opportune incident, when the importance of the idea can be recognized. It’s important to note that most creative people go through many cycles of preparation and incubation, searching for an incident that may act as a catalyst to give their idea full meaning. When the cycle does not result into a catalyst event, the cycle is repeated until the idea blossoms or dies. Reaching the illumination stage separates day dreamers and thinkers from creative people who find a way to transmite value.
5. Verification
The idea then has to be verified as realistic and useful. Entrepreneurial effort is required to do this. It’s the development stage of refining knowledge into application. The process is often tedious and many ideas may fall by the way side as they prove to be impossible or of little value. At times existing products of the same type may cause competition. They may even have been patented. These stages may be diagrammatically be represented as below:
IDEA GERMINATION Preparation conscious INCUBATION
The seedling search for knowledge Subconscious
ILLUMINATION VERIFICATION
Realization Validation
(Figure 1)
INNOVATION AND ENTREPRENEURSHIP
Creativity is the seed that inspires the entrepreneur, innovation is the process of entrepreneurship .
According to Drunker: Innovation is the means by which the entrepreneur either creates new wealth producing resources or endows existing resources with enhanced potential for creating wealth.
Innovation is the process of doing new things. Innovation implies action and not just conceiving new ideas. When people have passed through the illumination and verification stages of creativity they may become inventors, but they are not innovators.
The difference between invention and innovation is explained better by the diagram below:
New
Innovation The transformation of an Results in new products
application
(Figure 2)
Inventors are not just those who create new products, it includes those who identify new technological process, new form of plant life, new designs. Each of those can lead to new patents. For a new idea to be a value, it must be proven useful or be marketable, the idea must be developed.
Innovation is the development process.
It requires persistence in analytically working out the details of product design, or service, to develop marketing, obtain finances and plant operation, materials, staff and establishing an organization.
ELEMENTS OF THE INNOVATION PROCESS
Analytical Organizing Implementation Commercial
To identify To obtain To accomplish; To produce;
Product design materials organization prod. Value to customer
Market strategy Technology design Reward for employees
Financial need HR manufacturing Revenue to investors
Capital services Satisfaction to founders
(Figure3)
Technological Innovation entrepreneur
Innovation is usually explained in technical terms. Tangible products or process that result from technical development. There is usually a preoccupation with rational, analytical innovation models.
Research has shown that for technical innovations to succeed there are those three important people and seven important conditions to satisfy. The three people are: -
(1) The creative source
(2) The champion
(3) The sponsor.
The creative source: The inventor or originator of the idea that led to knowledge or vision of something new, he is the artist of creative endevour.
The Champions: The entrepreneur or manager who pursues the idea, planning its application, acquiring resources, establishing its markets through persistent, planning, organizing and leadership.
The sponsors: The person or organization that makes it possible for the champion’s activities and the inventor’s dream through support, including finances, contacts and advice to become a product..
· The creative sources is the individual:
· The champion is also an individual.
· The sponsor may be investor
The seven condition required for success in technological innovation are related partially to the success of the three key people or innovated and partially to the environment in which innovation takes place.
They are as follows:
1. An outstanding person is an executive leadership position to support strategic decisions that encourage creativity and innovation development.
2. An operation leader to carry the essential tasks of converting knowledge into a commercial application.
3. A clear need for the application by sufficient potential consumers to warrant the commitment of resources to the innovation.
4. The realization of the product, process or service as a useful innovation providing value to society.
5. Good co-operation among the crucial players and among diversified functions in an organization, all of whom together must bring the idea to fruition.
6. Availability of resources and the supporting technology to succeed in the endevour.
7. Co-operation and support from industrial sources who can influence the success of an innovation, including government agencies, investors, vendors, suppliers, and creditors.
OPPORTUNITIES THROUGH CHANGE
Entrepreneurs tend to be strategic thinkers who recognize changes and see opportunities where others do not see. They create new ventures based on strategic changes in the environment. They exploit these changes. Major sources of change include:
(i) Scientific Knowledge: It’s generally at the heart of many new enterprises. For example Charles Babbage created a mechanical calculate more than a century ago. It’s a fore runner of mechanized adding machines. He is the pioneer of computers as he helped to revolutionize mechanical manipulation. Contemporary history of computing includes literally thousands of scientific innovations, each one making computers better, faster, more accurate to use and less expensive.
(ii) Process Innovation
Innovation process like data processing is a product of scientific knowledge. An example of this is that Computers had very little applications until symbolic languages were created to encode, manipulate, and store data. IBM developed a process intended to make computers useful hence has become dominant among hardware computer entrepreneurs. William Gates founded and developed Microsoft Corporation and set industry standards in MS-DOS operating system.
(iii) Industrial changes.
Industrial changes occur through natural events such as discovery of oil or as a result of human events for example in posts & Telecommunication, Telephone repairs PBX systems.
(iv) Market Changes that may include Privatization of government services : An example of this is the recent trend where government has private some of the services it feels are better performed by the private sector eg refuse collection in the city centre
Demographic changes
Demographic changes in age, sex, ethnic characteristics, education status, income of the nation’s population causes new needs to arise which entrepreneurs in society identify and respond to and start businesses. Examples of such demographic changes may include
(i) Shrinking family size Creates demand for smaller housing units better access to child care Eating habits that imply Convenience type foods
(ii) More older people living longer are also retiring earlier spending more of their improved retirement benefit Opportunity for pre-retirement counseling Benefit planning Estate management.
Social Cultural changes
The industrial revolution made changes in: -
The way the people lived, spent their money, recreated.
Craftsmen became industrialists.
Entrepreneurs have found opportunities in social changes for example dual-career families and working professional women. These changes do open doors for entrepreneurs to respond to and establish businesses to meet new needs for example the need for child care centers
WINDOWS AND CORRIDORS FOR NEW VENTURES
A window is a time horizon during which opportunities exist before something happens to eliminate them. A unique opportunity that can create wealth will attract competitors. If it is easy to enter into that opportunity the industry will become saturated. For example bicycles were originally meant to be used to carry the owner: Later they have become means popular means of commercial transport both in rural areas and in smaller towns.
When this happens, many entrepreneurs rush into the business to take advantage of the WINDOW of opportunity. Every new production has a period of time for commercialization. If you enter too early before the market is ready, you loose and fail, if you delay and enter late, you also fail.
Entrepreneur must enter when windows still exist.
THE CORRIDOR PRINCIPLE:
Opportunities evolve from entrepreneur being positioned in similar work or having had experience with related ventures so that when a window opens, it is easy for the entrepreneur to move quickly into a new venture. Entrepreneurs who are active and are watching for changes are more likely to recognize opportunities when they occur.
Success Factors For Entrepreneurs
Most new ventures succeed because their founders are capable individuals.
(1) The Entrepreneurial Team
Most successful entrepreneurs have not operated alone. They have operated in teams of partners, close associates, extensive net work of advisers, non-technical entrepreneur (personal services, merchandising were all well networked with associates or expert advisers.
There is usually a focal entrepreneur who is normally above the average in education.
Many have had another business before. Most technical entrepreneurs would generally start business related to their previous career position.
Those that are in non-technical areas have experience in marketing or merchandising. Success is closely related to solid knowledge and substantial experience in related fields of endevour. They have well developed business and social relations as illustrated in the figure below:
2. Venture Products or Services
Most successful ventures start small and eventually grow. There is gradually incremental expansion of products and services.
They also tend to stay within the bounds of positive cash flow.
Products tend to have strong profit potential with high initial margins rather smaller margins that require substantial volumes of sales to meet profit objectives. Service businesses retain good margins by effective cost control and well monitored overheads. Most of the successful entrepreneurs do not go into competitive markets, instead, they enter niche markets.
3. Markets and Timing
Entrepreneurs normally have a clear vision of both existing and potential customers. They generally have well documented forecasts of sales volumes based on sensible projections at each stage of incremental growth. They carry our thorough market research. Market potential is generally influence by timing of new products. Timing pertains to how products are introduced, how they are priced, how they are distributed and how they are promoted.
4. Business Ideology
From an entrepreneur’s perspective, every venture has an ideology, a philosophy, or a rational for existing. It’s a system of beliefs about how one conducts the business. These beliefs include: a commitment to providing customers with value, ability to take calculated risks, determination to grow or control the fate of the business, the prosperity to elicit co-operation among team members and the perspective of creating wealth realistically.
REVISION QUESTIONS
1 .Explain the process of creativity
2 Describe how innovation is important as a dimension of creativity.
3 Identify major changes that create opportunities for entrepreneurs.
4 Explain the concepts of “ Windows” and “ Corridors” of new ventures.
5 Describe the main factors that lead to success for new ventures
SAMPLE EXAM
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
Answer any five questions. All questions carry equal marks
1a With the use of suitable examples in the Kenyan market place, distinguish between entrepreneurship and entrepreneurship (4 marks)
b. Compare and contrast benefits and problems associated with buying an existing business
(6 marks)
c.. Explain the importance of entrepreneurship and small business development to the development of a country
(10 marks)
2a Jack Osimbo was in paid employment for 15 years before he left to start his own business as a dog breeder and supplier in Nakuru. At a recent Small Business Network forum he said,
” I wasted my precious time in paid employment, things now are a lot better”
With close reference to the common experiences of owner management of a business, explain why you think Mr. Osimbo made this observation
(10 marks)
b. Explain the major manifestations of an organization that qualifies to be counted among
companies that are leaders in innovative activities.
(10 marks)
3a The business plan is generally referred to as a financial tool. Explain the key areas that a possible financier would be interested in and why (8 marks)
3b. Explain the major characteristics of a franchise that makes it a unique business venture .
(12 marks)
4a. Explain how you would proceed to conduct a market research for a named product.
4b. Explain the start-up stage operating objectives of a typical small business.
(8 marks)
5a..Corporates that are keen to be market leaders would interested in crating an atmosphere where the spirit of entrepreneurship would flourish. Two of the strategies commonly employed by some of them is either through formation of entrepreneurial teams or encouraging spontaneous teams:
(i) Explain how each of these new venture approaches work to encourage entrepreneurship development
(12 marks)
(b) Explain the relationships between the spin offs and the parent company
(8 marks)
6a. Explain FIVE key personal factors that are likely to lead to business failure.
(12 marks)
b. Explain how the following factors would contribute to the success of a an entrepreneurial venture:
(i) The Entrepreneurial Team
(ii) Venture Products or Services
(iii) Markets and Timing
(iv) Business Ideology
(8 marks)
7. With reference to certain critical characteristics of an entrepreneur explain how each of them would be of importance in the starting and managing a business successfully
(12 marks)
b. Explain how an entrepreneur would exploit the following changes in society and create more value for the benefit of society and self.
(i) Scientific Knowledge
(ii) Industrial changes.
(iii) Market Changes
(iv) Demographic changes
