CREATIVITY AND INNOVATION

Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities

that may be useful in solving problems, communicating with others, and entertaining ourselves
and others.

Creativity concerns the creation of novelty and value. Entrepreneurship is concerned with
novelty in business, new business ideas and the reality of achieving positive returns in market
and in existing and new business models.

Creativity enables entrepreneurs to find some of the path-breaking discoveries. As such, it's
essential to allow collisions and blur to take place to transcend boundaries set by disciplines. That
way, it's easier for an entrepreneur to get new perspectives towards solving a financial or
operational problem.

Creativity is one of the things that every leader and entrepreneur need.

In fact, people rarely laud entrepreneurs for their creativity in problem-solving

processes. Creativity is often seen as the forte of those in both the writing and design domain.

The role of creativity in entrepreneurship

Creativity eliminates the limits to the mindset and skill set of an investor.

However, a lot of people associate creativity with lack of restraint and believe it can cause chaos.

Conversely, leadership is all about control and order.

As such, entrepreneurship and creativity form a perfect combination. It no longer takes number-
crunching skills and practicality to run a successful business.

Over time, creativity has become an integral component of good business acumen. Lack of
creativity could easily drag your business into the stagnation mode.

Here is why creativity is critical to entrepreneurs.

High overall success

There is a misconception that people only needs intelligence to achieve everything they need in
life.

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However, it takes time for aspiring entrepreneurs to realize that creativity plays an integral role
as well.

Unfortunately, a lot of learning institutions stress more on intelligence than creative thinking. It
could perhaps be because intellectual knowledge is measurable whereas creativity can be
challenging to spot. Nonetheless, dynamics are changing, and entrepreneurs are beginning to
realize the importance of bringing creative people on board. Creative workers can be a game
changer in your company if you harness and shape their skills adequately.

Increase productivity

Creativity allows an entrepreneur to disconnect from the accustomed and move into uncharted
territories with an aim to discern unique and useful solutions.

It has, therefore, become essential for both leaders and employees to develop creative skills.

Entrepreneurs are providing the necessary technological resources such as visual collaboration,
which is often confused with video conferencing to help their workers discover innovative
solutions and ideas.

In fact, this is an extremely cost-effective strategy to increase workplace productivity. Innovation

and creativity bring an entrepreneur to the success path.

Exploit employee potential

You are probably utilizing only half of your employee’s potential by not encouraging workplace
creativity.

Fortunately, entrepreneurs increasingly realize the ocean of creative ideas that remain untapped
and dormant.

Tapping all these opportunities can result in improved financial strategies, increased profitability,
and quick decision making. Creativity also enables an enterprise to stay ahead of the curve.

Transcend boundaries

Creativity enables entrepreneurs to find some of the path-breaking discoveries.

As such, it’s essential to allow collisions and blur to take place to transcend boundaries set by
disciplines.

That way, it’s easier for an entrepreneur to get new perspectives towards solving a financial or
operational problem.

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Creativity lets an entrepreneur connect distinct aspects and extrapolate feasible solutions from
unrelated concepts.

Encourage critical thinking

Creativity is slowly turning out to be one of the best ways to alleviate problems plaguing today’s
enterprises.

Problem-solving works best when coupled with highly disciplined and focused thinking.

Entrepreneurs can think in either divergent or convergent thinking mode.

Convergent thinking (“thinking inside of the box”) involves in-depth analysis and enables an
entrepreneur to find the most feasible solution to a managerial or financial problem.

It allows entrepreneurs to use various data sources such as accounting software and computer
systems.

In contrast, divergent thinking, (“thinking outside of the box”) encourages creativity by enabling
business owners to explore possible solutions for the same problem.

While entrepreneurs can combine both thinking modes, divergent thinking ensures an enterprise
gets the best resolution.

Foster innovation

Manufacturers create unique products to not only meet customer expectations but exceed them
as well.

As such, entrepreneurs need to be cautious to ensure their products are relevant and useful to
the users.

While it may be hard to spot this from the beginning, things start to get more evident as your
idea turns into a reality.

In fact, this is the time an entrepreneur begins to realize how innovation and invention differ.

The invention refers to a new, unique concept while innovation is an idea which is as unique and
useful as the original one.

You need to be creative and view an idea differently to be innovative. That way, it’s easier to turn
a concept into a reality.

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PRINCIPLES of CREATIVITY

Creativity: the ability to develop new ideas and to discover new ways of looking at problems and
opportunities; thinking new things.

Creativity is the act of turning new and imaginative ideas into reality. Creativity is characterized
by the ability to perceive the world in new ways, to find hidden patterns, to make connections
between seemingly unrelated phenomena, and to generate solutions.

The Creative Process

Step 1: Preparation:

This is the first stage at which the base for creativity and innovation is defined; the mind is
prepared for subsequent use in creative thinking. During preparation the individual is encouraged
to appreciate the fact that every opportunity provides situations that can educate and
experiences from which to learn.

The creativity aspect is kindled through a quest to become more knowledgeable. This can be
done through reading about various topics and/or subjects and engaging in discussions with
others. Taking part in brainstorming sessions in various forums like professional and trade
association seminars and taking time to study other countries and cultures to identify viable
opportunities is also part of preparation. Of importance is the need to cultivate a personal ability
to listen and learn from others.

Example: An individual becomes aware of environmental issues probably in his or her

community, becomes more environmentally conscious and wants to provide creative solutions
to protect the environment. That individual is immersed in finding information and becoming
knowledgeable about the environment and environmental issues by reading and asking
questions of experts and others about the environment.

Step 2:

Investigation: This stage of enhancing entrepreneurial creativity and innovation involves the
business owner or learner taking time to study the problem/issue at hand and what its various
components are.

Example: The individual investigates or undertakes basic research on elements of the

environment and may report on the findings with interested parties.

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Step 3: Transformation:

The information thus accumulated and acquired should then be subjected to convergent and
divergent thinking which will serve to highlight the inherent similarities and differences.
Convergent thinking will help identify aspects that are similar and connected while divergent
thinking will highlight the differences. This twin manner of thinking is of particular importance in
realizing creativity and innovation for the following reasons:
- One will be able to skim the details and see what the bigger picture is.
- The situation/problem's components can be reordered and in doing so new patterns can
be identified
- It will help visualize a number of approaches that can be used to simultaneously tackle
the problem and the opportunity
- One's decision-making abilities will be bettered such that the urge to make snap decisions
will be resisted
Example: The individual analyzes the findings about the environment through discussions,
brainstorming sessions etc. and then says what he/she likes and doesn’t like about his/her
environment and how he/she think the environment can be improved. This session should not
be more than forty minutes.

Step 4:Incubation:

At this stage in the quest for creativity and innovation it is imperative that the subconscious
reflect on the accumulated information, i.e., through incubation, and this can be improved or
augmented when the entrepreneur or learner:
- Engages in an activity completely unrelated to the problem/opportunity under scrutiny
- Takes time to daydream i.e., letting the mind roam beyond any restrictions self-imposed
or otherwise
- Relax and play
- Study the problem/opportunity in a wholly different environment
Example: The individual is engaged in other activities while reflecting on what he/she can do to
improve the environment. This may take hours or days. The individual needs the opportunity to
think about the problem/issue and how it can be solved.

Step 5: Illumination:

This happens during the incubation stage and will often be spontaneous. The realizations from
the past stages combine at this instance to form a breakthrough. The learner begins to
understand the problem/issue and to arrive at creative ideas to solve the problem/issue.

Example: The individual comes up with creative, or novel ideas or solutions as to how one can
deal with protecting the environment. These solutions can then be recorded.

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Step 6: Verification:

This is where the entrepreneur or learner attempts to ascertain whether the creativity of thought
and the action of innovation are truly effective as anticipated. It may involve activities like
simulation, piloting, prototype building, test marketing, and various experiments. While the
tendency to ignore this stage and plunge headlong with the breakthrough may be tempting, the
transformation stage (3rd) should ensure that the new idea is put to the test.

Example: The individual test the idea(s) on a small scale. This may involve the use of prototypes.

Step 7: Implementation:

This is where the product of creativity and innovation is made into a reality and it's what defines
the difference between inventors and entrepreneurs. At this stage the learner puts what has
been created into practice.

Example: The idea(s) on environmental protection are implemented on a large scale in the
community or the community is provided with the solution on dealing with particular problem of
environmental degradation.

The Roles of Creativity

1. It encourages problem solving in innovative ways.

2. It helps develop one’s imagination and inventive capability.
3. It develops one’s ability to think convergently, (within the box) and divergently (outside
the box).
4. It increases the products of individual capabilities.
5. It develops the capacity for entrepreneurship.
6. It liberates human energy.
7. It helps organizations to take advantage of opportunities which develop as a result of
changing environmental conditions.
8. It fosters new approaches to problem solving.
9. It fosters the creation of novel products, processes and practices.
10. It enhances the possibility of skill development, business development capitalizing on
opportunities for income generation and social cohesiveness.

Importance of Creativity

1. Creative problem solving is needed when faced with changing situational factors which
require new ways of approaching situations.

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2. Organizations are embracing creativity in mitigating the constant effects of change, especially
where the problems are new and there are no definite ways of dealing with them.

3. Enhanced creativity can provide a venture with a competitive edge. (Majaro 1991)

4. According to Van Gundy (1987) a ventures growth and survival is related to the organization’s
ability to be creative (produce and implement new products and processes)

5. Creativity facilitates the development of problem solving and decision-making strategies that
enables enterprises to be competitive.

6. Creativity is important for entrepreneurs and leaders in order to identify new product-market
opportunities; to meet customer needs and wants; to improve motivation in the organization.
Creativity all the functions that the entrepreneur has to perform.

PRINCIPLES of INNOVATION

Innovation: the ability to apply creative solutions to problems or opportunities to enhance or to

enrich people’s lives; doing new things. Innovation can also refer to as something new or to a
change made to an existing product, process, idea, or field.

The Importance of Innovation

1. To remain competitive, survive and aspire to market leadership an organization must

focus on innovating its products and services, processes, as well as its goals and strategies
so as to create value for the organization.

2. Innovation is the key to ensuring that a venture’s products are differentiated from those
of its competitors.

3. Innovation can provide a venture with first mover advantages in the market.

4. Innovation is important at the societal level because it is the avenue for new and
improved goods and services e.g., in the field of technology, medicine, education, work
methods and processes. These have a positive impact on productivity, income generation
and the standard of living.

5. Schumpeter (1934) describes innovation as a key driver of new demand and new wealth
creation.

6. Drucker (2002),” Innovation is the effort to create purposeful, focused change in an

enterprise’s economic or social potential.”

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Types of Innovation

There are also 4 P’s of innovation. They are (Product, Process, Position and Paradigm). Let’s go
at each of them and see what they mean. Better yet, let’s take a virtual case study and look at
them in real situations.

Let’s take a simple example, something everybody can relate to easily. How about a small bakery?
Wherever you live, you can visualize the bakery you stop by every day. Also, let’s take one more
parallel example. How about your local registry office, or to be more precise, the office where
you go to get your birth certificate? Let’s call them from now on ‘bakery’ and ‘birth certificate’.

Product

So how would you innovate your product if you are running a bakery? First that comes to mind
is that you would try new baked products, new ingredients, new shapes, colors and so on. That
sounds ok, and if these new products are selling well, you got yourself real innovation. But like
with its brother ‘Marketing P’, with ‘Innovation P’, there are many other aspects we can look at.
Here we can also improve on packaging, delivery methods, freshness of the product, and so on.
So is with anything related to your bakery’s products that could be improved (made better).

Now let’s think about ‘birth certificates. Yes, they have a product which is a printed sheet of
paper, but the essence of this ‘product’ is the service, you as citizen, are provided. Of course,
they can change the look of the certificate and make it prettier, more colorful and stylish, but is
that where product innovation is hidden? As a citizen-customer you would probably be more
interested in other aspects, like product delivery speed (waiting in lines), quality of service
(smiling clerks), and hours of operation (24 hours ???). Any changes, or new ideas applied in these
areas would definitely make you a happy citizen and qualify these new ideas as innovations.

Even at this first example, you can see the importance of making everybody in the organization
part of this, so called, innovation culture. In short, you need everybody to innovate. Why?
Because in the bakery only the salesclerks are in direct communication with the customer. In
today’s economy happy customer is the synonym for profitability, and there is no way around it.
So, when making questionnaires for your employees, make sure your first question is: “What can
you personally do, or improve, to have our customers smiling, when walking out of the store with
our baked products”.

Needless to say, the same applies to the registry office. What is the main goal of the registry? To
provide the customer with a certificate in the most effective and efficient manner. The smiling
contented citizens are the same method of gaining profitability for the registry office, as are for
the bakery.

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Process

What are the processes in the bakery? We can think of preparing the doe, baking and so on. But
there are many other processes, like all the processes connected with supplying, selling,
recruiting, and even accounting. Here you can see that 4 P’s of innovation are not strictly
differentiated. A lot of the issues on ‘product innovation’ we discussed earlier, are itself
processes, so we can talk about them here too. So, ‘process innovation’ is anything we can do to
improve processes in our organization, so they are quicker, more efficient, or cheaper. All in all,
it’s any new ideas that applied to the existing processes result in increased profitability. It also
means innovating new processes to add to, or replace, the existing ones.

What about ‘birth certificates’ office? I am sure you would like to go there and look into their
processes (running with the speed of bureaucracy). For any organization, to run efficiently, it’s
about all external and internal processes. How they communicate between themselves, with
their clients, how are they managed, or what about their decision-making processes, and so on?

Position

You may consider ‘position’ similar to ‘promotion’ in marketing mix, but it is not. Position is
related to our own perception. It is a psychological category, and promotion is just one of the
processes in the organization that affects this aspect of the innovation. Let’s look at the bakery.
What is the perception their customers have about them? What about their employees, or
business partners, or subcontractors? Do they pay their bills on time, or their employee salaries?
So many things could affect people’s perception. Today, on the global marketplace, position is
everything. What makes the organization profitable is not how good its products or services are,
but what their customers perceive about them. Again, it’s all about smiles on the faces of your
satisfied customers. Positioning tells one how the product is viewed by customers when
compared with similar products.

Same applies to the registry office example. Happy citizens-customers are also happy voters.

Paradigm

This is somewhat specific innovation category. It concerns the change (sometimes radical) in the
way something is done in the organization. It could be anything. For the bakery it may be in the
way the products are sold, from off the counter, to catering system, or to selling from a mobile
outlet to selling via the Internet. On-line bakery, can you imagine! Again, to be an innovation, it
has to be profitable. Radical changes don’t necessarily mean better business except if it is
satisfying an emerging consumer trend. Shifting your product selection to vegetarian diet
wouldn’t work well in the neighborhood full of meat eaters.

As per the registry office, they can also innovate by shifting the paradigm in the way they do

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‘business’. They may use Internet to enable on-line application for birth certificates and even
payment for services. Document delivery may be worked out over the post office. Can you
imagine getting your birth certificate over your computer instead of standing in long lines or
waiting for it to be processed for weeks.

Don’t forget that these ‘Innovation P’s’ are not narrow categories. Their borders are foggy and
intertwined. Company or organization can use some of them, or all of them at the same time.
Improving the processes could result in better products. Better products would result in better
position. What is important is that all of them have one single purpose, to make you and your
organization better, more efficient, and at the end more profitable.

APPROACHES TO INNOVATION

I. Innovation occurs when two questions are answered: “What is possible?” and “What is
needed?” Two approaches to answer these questions are:

a. Closed Innovation
i. Donald Stokes: “[Basic research is the] powerful dynamo of technological
progress as research and development convert the discoveries of basic science
into technological innovations to meet a full range of society’s economy, defense,
health, and other needs.”
ii. The principles of research and development can be applied to any
company.
iii. Closed Paradigm for Managing Industrial R&D:
1. Hire the best and brightest people.
2. Make discoveries as a manager.
3. Be the first to discover something.
4. Invest great amounts into R&D.
5. Control intellectual property.

b. Open Innovation
i. Implies that the firm is not solely reliant upon its own resources for new
technology, product, or business development purposes. Rather, the firm acquires
critical inputs to innovation from outside resources.

Example: Licensing agreements in which a firm sells its technology and/or acquires
technology from others, joint ventures, corporate spinoffs that are enabled by the
firm’s resources but are not central to the firm’s strategy.

ii. The more a manager is connected to others, both inside and outside the
firm, the better the chance to obtain superior information about opportunities in
their environment.

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What is Open innovation?

Open innovation is about combining internal resources with external ones to boost innovation
culture in the company. For example, big companies like GE, Cisco or Microsoft, etc. tend to have
8-12 different value pools, for instance, think suppliers, startups, customers or universities, etc.
to consider for their open innovation efforts.

In other words, open innovation is a business model that encourages you to connect with outside
sources so you can profit from exciting new startups and product opportunities, get broader pool
of talent, collaborate with others to come up with innovation that you could never do just by
yourself.

Actually, now, large multinationals including Kraft, KLM, Pfizer, and Siemens actively and openly
participate in collaborative, online innovation communities where seekers and solution providers
work together. Much the way tech companies use hackathons to get outsiders to contribute to
their goals, OI-committed businesses announce proudly that they’re taking full advantage of the
global innovation community. That transparency demonstrates to the market that they have a
clear strategy for the future and they’re aggressively pursuing it out in the open.

Open innovation may seem to be for big business. But it is an approach that can be used by all
companies, especially start-ups and small businesses. It may be as simple as inviting a trusted
supplier to help you develop ideas or launching a website, etc.

So, find the right collaborators! One of the most visible open innovation actions these days are
suggested web sites or special places on the web that invite customers and the general public to
submit ideas on how to improve a company’s products and services. And then, on these websites
companies publish a hackathon info to find the right partner with the most brilliant idea.

Benefits of Open Innovation

1. Creating new products and services

Especially when you’re a startup, there’s nothing more exciting than getting your first product
out on the market. But it’s easy to get stuck, focusing all your efforts on selling your first product
rather than thinking of what else you could provide for your customers. It can be scary to invest
time and resources into creating a new product, especially taking into account that startups have
limited budget. Yet, by investing your resources and the resources of the third parties into
creating something new, that you know will bring value to your community. This move may help
you increase your profits and create buzz around you.

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2. Innovating old products and services

Sometimes, you don’t need to create new products. Sometimes, your older service has a
potential to be better, has potential to attract a lot of clients. This is when you need to get a
creative team together to improve your idea. One of the benefits of open innovation is that the
process never ends. You’re always thinking about how you can make your organisation better.

3. Building a strong community

Lego is a great example of how a company can engage their fans on a wide scale by using open
innovation. No matter the size of your organization, a great benefit of open innovation is taking
the time to get in touch with your fans and your soulmates, news talents. Get to know what your
community wants, and then give it to them. In the process, you will find that enthusiastic
community members are willing to dedicate their time and ideas to helping you create something
better. These relationships are key and will help your company build a strong community
dedicated to your project.

4. Keeping your employees engaged

One of the main sources of employee dissatisfaction is a lack of feeling of ownership on the
projects they work on. Sometimes, your team may have some great ideas but might not feel
comfortable bringing them forward. By bringing an open innovation initiative to your workplace,
your team can get involved in big picture planning, make it their project. When people feel more
invested in the bigger goals of the organisation, it makes them more excited to come to work in
the morning and put their heart and their soul in it.

5. Staying ahead of the competition

By keeping your team and your community engaged and on the lookout for new ideas, you make
sure that your organisation stays helpful and relevant to your community. Using open innovation
can help you find your niche that makes your organisation uniquely valuable to the community.

6. Costs reduction

When you work with other companies, you split the costs. Moreover, you become more efficient
because each company, each member works on what he is good at.

7. Time-to-market acceleration

Instead of figuring out how to make a desired product, train your people, buy equipment, etc.,
you just start collaboration with company that already has all this, that allows you to bring
product to market faster.

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8. New revenue streams

Did you know that some businesses get more revenue from secondary products rather than from
the primary ones? Working with other companies will allow you to enter new market with an
idea and product you have.

9. Innovation risk reduction

Any innovation has risks, but if you work with experts you minimize your risk of failure, especially
if you agile and get feedback from your target on a regular basis.

Open innovation and open source innovation: What are they ?

• In an open source innovation project, the problem or opportunity itself is the central
point of focus, so people and organizations all connect to each other rather than working
through one central organization. Examples: Android - mobile phone platform, Magento
- ecommerce website platform, VLC - multimedia file playback.

• The term open innovation means a situation where an organisation doesn't just rely on
their own internal knowledge, sources and resources (such as their own staff or R&D for
example) for innovation (of products, services, business models, processes etc.)

Sources of Innovation

Adapted from The Discipline of Innovation (HBR, May-June 1985) and Innovation and Entrepreneurship by Peter
F. Drucker

There are, of course, innovations that spring from a flash of genius. Most innovations, however,
especially the successful ones, result from a conscious, purposeful search for innovation
opportunities, which are found only in a few situations. Four such areas of opportunity exist
within an organization or industry: unexpected successes and failures, incongruities, process
needs, and industry and market changes. Three additional sources of opportunity exist outside a
company in its social and intellectual environment: demographic changes, changes in perception,
and new knowledge.

True, these sources overlap, different as they may be in the nature of their risk, difficulty, and
complexity, and the potential for innovation may well lie in more than one area at a time. But
together, they account for the great majority of all innovation opportunities.

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1. The Unexpected Success or Failure

Consider, first, the easiest and simplest source of innovation opportunity: the unexpected
success or failure.

In the 1940s, when everyone believed that computers were designed for advanced scientific
work, business unexpectedly showed an interest in a machine that could do payroll. Univac,
which had the most advanced machine, spurned business applications. But IBM, realizing it faced
a possible unexpected success, redesigned what was basically Univac’s machine for such
mundane applications as payroll. And within five years, it became a leader in the computer
industry.

The unexpected failure may be an equally important source of innovation opportunity. Everyone
knows about the Ford Edsel as the biggest new car bust in automotive history. What very few
people seem to know, however, is that the Edsel’s failure was the foundation for much of the
company’s later success. When the Edsel bombed—despite a considerable amount of planning,
market research and design that had gone into it—Ford realized that something was happening
in the automobile market that ran counter to the basic assumptions on which GM and everyone
else had been designing and marketing cars. No longer was the market segmented primarily by
income groups; the new principle of segmentation was what we now call “lifestyles.” Ford’s
response was the Mustang, a car that gave the company a distinct personality and reestablished
it as an industry leader.

Unexpected successes and failures are such productive sources of innovation opportunities
because most organizations dismiss them, disregard them, and even resent them. The German
scientist who around 1905 synthesized novocaine, the first nonaddictive narcotic, had intended
it to be used in major surgical procedures like amputation. Surgeons, however, preferred total
anesthesia for such procedures; they still do.

Instead, novocaine found a ready appeal among dentists. Its inventor spent the remaining years
of his life traveling from dental school to dental school making speeches that forbade dentists
from “misusing” his noble invention in applications for which he had not intended it. This is a
caricature, to be sure, but it illustrates the attitude managers often take to the unexpected: “It
should not have happened.”

2. Incongruities

Incongruities are the next source of innovation opportunity.

Alcon Laboratories was one of the success stories of the 1960s because Bill Conner, the
company’s co-founder, exploited an incongruity in medical technology. He knew that the cataract
operation was among the world’s most common surgical procedures. That’s partly because

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doctors had systematized it to the point that the only “old-fashioned” step left was the cutting
of a ligament. Eye surgeons had learned to cut the ligament with complete success, but it was so
different from the rest of the operation—and so incompatible with it—that they often dreaded
it. It was incongruous.

Doctors had known for 50 years about an enzyme that could dissolve the ligament without
cutting. All Conner did was to add a preservative to this enzyme that gave it a few months’ shelf
life. Eye surgeons immediately accepted the new compound, and Alcon found itself with a
worldwide monopoly. Fifteen years later, Nestlé bought the company for a fancy price.
Such an incongruity within the logic or rhythm of a process is only one possibility out of which
innovation opportunities may arise. Another source is incongruity between economic realities.
For instance, whenever an industry has a steadily growing market but falling profit margins—as,
say, in the steel industries of developed countries between 1950 and 1970—an incongruity exists.

The innovative response: steel mini-mills.

An incongruity between expectations and results can also open up possibilities for innovation.
For 50 years after the turn of the century, shipbuilders and shipping companies worked hard both
to make ships faster and to lower their fuel consumption. Even so, the more successful they were
in boosting speed and trimming their fuel needs, the worse the economics of ocean freighters
became. By 1950 or so, the ocean freighter was dying, if not already dead.
All that was wrong, however, was an incongruity between the industry’s assumptions and its
realities. The real costs did not come from doing work (that is, being at sea) but from not doing
work (that is, sitting idle in port). Once managers understood where costs truly lay, the
innovations were obvious: the roll-on and roll-off ship and the container ship. These solutions,
which involved old technology, simply applied to the ocean freighter what railroads and truckers
had been using for 30 years. A shift in viewpoint, not in technology, totally changed the
economics of ocean shipping and turned it into one of the major growth industries of the last 20
to 30 years.

3. Process Need

The next innovation opportunity is the process need—that is, perfecting an already existing
process by replacing a weak link or creating a new link.

What we now call the media, for example, had its origin in two innovations developed around
1890 in response to process needs. One was Ottmar Mergenthaler’s Linotype machine, which
made it possible to produce newspapers quickly and in large volume. The other was a social
innovation—modern advertising—invented by the first true newspaper publishers: Adolph Ochs
of the New York Times, Joseph Pulitzer of the New York World and William Randolph Hearst.

Advertising made it possible for them to distribute news practically free of charge, with the profit
coming from marketing.

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4. Changes in Industry or Market Structure

Another source of innovation opportunity is industry and market changes. Managers may believe
that industry structures are static, but these structures can—and often do—change overnight.

When an industry grows quickly—the critical figure seems to be in the neighborhood of 40%
growth in 10 years or less—its structure changes. Yet established organizations, concentrating
on defending what they already have, tend not to counterattack when a newcomer challenges
them. Indeed, when market or industry structures change, traditional industry leaders again and
again neglect the fastest growing market segments. (Think about the way the old record
companies responded to the advent of digital music.)

New opportunities rarely fit the way the industry has always approached the market, defined it
or organized to serve it. Innovators therefore have a good chance of being left alone for a long
time.

5. Demographics

Of all the innovation opportunities, demographics are among the most reliable. That’s because
demographic events have known lead times; for instance, every person who will be in the
American labor force by the year 2035 has already been born. Yet because policy makers often
neglect demographics, those who watch them and exploit them can reap great rewards.

For instance, everyone in the developed world knew around 1970 or so that there was both a
baby bust and an education explosion going on; about half or more of the young people were
staying in school beyond 12th grade. Consequently, the number of people available for
traditional blue-collar work in manufacturing was bound to decrease and become inadequate by
1990. Everyone knew this, but only the Japanese acted on it, and they therefore gained a 10-year
lead in robotics.

Managers have known for a long time that demographics matter, but they have always believed
that population statistics change slowly. However, they don’t. Indeed, the innovation
opportunities made possible by changes in the numbers of people—and in their age distribution,
education, occupations, and geographic location —are among the most rewarding and least risky
of pursuits.

6. Changes in Perception

“The glass is half full” and “The glass is half empty” are descriptions of the same phenomenon

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but have vastly different meanings. Changing a manager’s perception of a glass from half full to
half empty opens up big innovation opportunities.

All factual evidence indicates, for instance, that in the last 20 years, Americans’ health has
improved with unprecedented speed —whether measured by mortality rates for the newborn,
survival rates for the very old, the incidence of cancers (other than lung cancer), cancer cure
rates, or other factors. Even so, collective hypochondria grips the nation. Never before has there
been so much concern with or fear about health. Suddenly, everything seems to cause cancer or
degenerative heart disease or premature loss of memory. The glass is clearly half empty.

Rather than rejoicing in great improvements in health, Americans seem to be emphasizing how
far away they still are from immortality. This view of things has created many opportunities for
innovations: markets for new health care magazines, for exercise classes and jogging equipment,
and for all kinds of health foods.

A change in perception does not alter facts. It changes their meaning, though—and very quickly.
It took less than two years, for instance, for the computer to change from being perceived as a
threat and as something only big businesses would use to something one buys for doing income
tax. Economics do not necessarily dictate such a change; they may even be irrelevant. What
determines whether people see a glass as half full or half empty is mood rather than fact, and a
change in mood often defies quantification. But it is not exotic. It can be defined. It can be tested.
And it can be exploited for innovation opportunity.

7. New Knowledge

Among history-making innovations, those that are based on new knowledge—whether scientific,
technical or social—rank high.

They are the superstars of entrepreneurship; they get the publicity and the money. They are what
people usually mean when they talk of innovation, although not all innovations based on
knowledge are important.

Knowledge-based innovations differ from all others, however, in the time they take, in their
casualty rates and in their predictability, as well as in the challenges they pose. Like most
superstars, they can be temperamental, capricious and hard to direct. And they have the longest
lead time of all innovations— often decades.

To become effective, innovation of this sort usually demands not one kind of knowledge but
many. The computer, for example, required no fewer than six separate strands of knowledge:
binary arithmetic; Charles Babbage’s conception of a calculating machine; the punch card; a type
of electronic switch called an audion tube; symbolic logic; and concepts of programming and
feedback developed by the military during World War I. Although all the necessary knowledge
was available by 1918, the first operational digital computer did not appear until 1946.

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Long lead times and the need for convergence among different kinds of knowledge explain the
peculiar rhythm of knowledge- based innovation, its attractions, and its dangers. During a long
gestation period, there is a lot of talk and little action. Then, when all the elements suddenly
converge, there is tremendous excitement and activity and an enormous amount of speculation.

It may be difficult, but knowledge-based innovation can be managed. Success requires careful
analysis of the various kinds of knowledge needed to make an innovation possible.

NURTURING and MANAGING INNOVATION

Conditions for effective innovation:

Conditions for Effective Innovation on the Micro Level/Organizational Level

Conditions to nurture innovation at the organizational level are incentives for innovating; internal
policy; and organizational culture: - inspiration; - observation; - listening to consumer; and -
organizational structure.

1. Incentives for Innovating: Incentives for innovation – incentives generally encourages

persons to find new ways of doing things without fear of failure. Rewards for such effort
signals to the owner/employee that his ideas and work are appreciated and welcomed.
This further encourages owner/employees to be more expressive and willing to share
ideas with other employees encouraging further innovation. u Some incentives that can
be given are: Cash Prizes Gift Vouchers Lunch with the chief Executive Officer Awards-
E.g., Employee of the month, employee of the quarter Recognition at staff meetings.

2. Internal Policy: Organizational practices are guided by its policy, which can support or
discourage innovative behaviour. In an environment where the policy encourages open
thinking and sharing of ideas across departments, more innovation usually takes place. In
an environment with many restrictions, innovation tends to be non-existent or at best
minimal.

3. Organizational Culture: Organizational culture is a system of shared assumptions, values

and beliefs which governs how people behave within an organization. The leaders in the
organization must make a deliberate attempt to build a culture of innovation within the
origination. This can be done through -inspiration; - observation; - listening to consumer;
and - organizational structure.

4. Inspiration: Persons perform best when they are driven by inspiration. One way of
inspiring employees to innovate is by placing before them, using creative means, famous
innovators that they can emanate. Workers will observe the recognition of, the lifestyle

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 and financial rewards of those innovators and wish to follow suit. Publicizing and
celebrating leadership’s innovative efforts will also help.

5. Observation: Build a culture where employees, leaders, customers, suppliers and other
stakeholders, keep a watch out for and share their opportunities to innovate.

6. Listening to Consumers: Build a mechanism that allow for the constant flow of innovative
ideas. This could be done verbally or through the use of a suggestion box.

7. Organizational Structure: Instead of setting up a structure where there is much

bureaucracy, establish one that is “flatter” and encourage the smooth flow of
communication back and forth. A democratic approach would best nurture innovation

Source Entrepreneurship for Advanced Caribbean Examination, L. McLeod, 2016

Conditions for Effective Innovation on the Macro/National Level

On the national level, policies must be developed to encourage organizations to be

innovative. The nation must be made to understand that increased economic development and
growth can only come about when all entities enter into partnership to accomplish such
goals. There must be the development of policies in the areas given below.

Social/Cultural

Social policies of the nation must be conducive for innovation to take place. Policies must
surround areas such as: gender, age, ethnicity, changing demographics etc. One area that is
currently in focus is the supply of women and youth entrepreneurs. Women and youth have been
found to be very entrepreneurial and should be significant drivers of economic growth. However,
they are faced with problems such as lack of financing and the inability to access the formal
business network which results in the slow growth of their businesses. It is recommended that
Caribbean governments need to increase the availability of finance and the infrastructure to help
women and youth entrepreneurship to grow and flourish. Respect for indigenous customs and
practices can also be promoted to help spur cultural innovation.

Political

Governments must offer good and stable governance to encourage and sustain
entrepreneurship in Caribbean economies. Many governments tend to struggle with eradicating
corruption from inside and outside of government. Caribbean heads of governments must
partner to come up with policies such as anti - corruption ones to increase their overall
prosperity.

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Economical

This includes setting up or encouraging laws, regulations, entrepreneurship policies institutions

etc. that will increase effective innovation. For e.g., through the provision of protection of
intellectual property. They can also provide grants and subsidies to reduce the cost of innovation
in businesses.

Legal/Ethical

Governments can institute laws and policies which will promote entrepreneurship and
innovation. In addition, they can ensure adherence to sound ethical business principles and
business practices.

Environmental

Environmental policies are a must to protect against the gradual breakdown of

the country’s environmental systems as a result of innovation. They consist of laws and
regulations that protect and sustains the environment. They establish environmental
responsibility thus saving the country from incurring unnecessary social cost as a result of
innovation.

Methods of Protecting Creativity and Innovation

Innovation is crucial for our society. Technological developments in every area of life have
completely transformed the way that we communicate, travel, work, eat, and so much more.
Without realizing it, we count on inventors like Steve Jobs and Elon Musk to improve and
transform our daily lives. What we also don’t realize is that one of the driving forces behind
innovation is intellectual property (IP) protection.

Types of Intellectual Property Protection

The key types of enforceable protections in the field of IP Law are patents, trademarks,
copyrights, and trade secrets.

Patents grant an exclusive right, for up to twenty years, over the invention described in the issued
patent claim. A key aspect that distinguishes patents is that the published patent documentation
must enable a consumer of ordinary skill to make and use the invention.

A trademark is a word, name, logo, symbol, device, or any combination thereof, that can be used
as a method of identification for goods or services. Trademarks allow prospective customers to
weigh the reputation of the producer of the goods or provider of the services they seek to
purchase.

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Copyrights protect original artistic works, such as literature, music, films, software, and
architecture. They grant their authors the exclusive right to reproduce and distribute copies,
prepare derivative works, as well as perform or display the work publicly. Copyright authors do
not need to register their work in order to obtain the initial copyright, as they develop under
common law, but they federally registered in order to enforce against infringement.

Trade secrets are legally protected pieces of information that companies keep internally for
protection. These secrets include formulas, patterns, compilations, programs, devices, methods,
techniques, processes, etc.

Patent Protection → Creativity

Patents are perhaps the biggest vehicle that IP law has to offer innovators seeking to create.
Patents provide a powerful method of legal recourse, via federal protection, for innovators who
have a unique invention that they want to protect as their own.

Additionally, having the exclusivity of a patent over your idea, product, or invention for 20 years
is an incredible way to generate profits. This exclusivity allows you and your company to price
your product or service with plenty of margin for profit, as there will literally be no competition.

These unique aspects of exclusivity and ownership encourage innovators to publicize the
inventions that they dream up, transforming the world in the process.

JD Houvener, CEO and Founder of Bold Patents, says that “The world operates in an ecosystem
that focuses on what’s new. The patent system is a singular platform that facilitates the
publication of the latest and greatest inventions. Without the patent system, no method for
centralizing, compiling, and categorizing the latest technologies would be published so freely.”
In this way, the patent system fosters innovation and creativity by getting the word out to the
world about the latest inventions and gadgets. These inspire other innovators out there to see
the existing model and come up with new and useful improvements- which they will later patent.
The cycle continues on and on, and our world sees great progress as a result.

Trademarks → brand value

Trademarks signify brands to consumers, and they can last as long as a company lasts.
Trademarks and patents work together to foster innovation. When a company publicizes and
patents its innovations, it uses its trademark when it markets and sells the invention to
consumers.

Sometimes, the trademark itself is so powerful that the company has the freedom to innovate
knowing that its customers will trust its judgment. For example, think of Nike. Nike’s trademarks-
the swoosh and the phrase “Just Do It” – are so powerful that when it comes up with a crazy new

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shoe that utilizes a brand-new technology, customers will flock to purchase it because the brand
is so popular and well-respected.

This brand value can provide a lot more confidence to inventors, especially when they are in the
beginning stages of a product.

Creativity can also come about under the design of trademarks. There’s a lot that can be done
artistically to create a lasting and memorable logo. Think of McDonald’s- when you picture the
name, you picture golden arches.

Copyrights → inspiration

Copyrights inspire creativity by giving artists the peace of mind that they are free to share their
creative works without the constant fear of being ripped off or copied. This gives artists the
incentive to be free to innovate, knowing that they have legal recourse if they are plagiarized.

Art is so important to society and culture. The copyright system allows artists to come forward
with their creations for the betterment of society and the overall enjoyment of life. Without
copyright law, people wouldn’t be able to make a living as an artist. Copyright law allows creatives
to monetize their talents.

Trade secrets → cultures of transparency

Trade secrets allow creativity to flourish within the metaphorical walls of a company. Companies
with meaningful assets have new hires sign non-disclosure agreements (NDA) promising to keep
their knowledge in-house and not publicize key pieces of information.

By facilitating an environment where everything is kept in-house, the employees within a

company itself can be more creative. Internally, employees will be less afraid to speak their mind
to share their crazy new idea, showcase their developments to one another, or push the needle
at every turn. This spirit will flow through to developing a better and more efficient company
culture as opposed to a more closed atmosphere. An open and transparent environment in a
company encourages creativity, openness, and facilitates innovation.

Thomas Edison once said, “The value of an idea lies in the using of it.” Edison should know — as
one of America’s most prolific inventors, he accumulated an astonishing 1,084 utility
patents between 1869 and 1933.

Edison’s wise words emulate the sentiment that each invention has a value. The more daring
inventors who wish to give their idea the greatest level of value make their idea become a reality,
turning it into a tangible product that may make the world a better place. IP law protects these
inventions and encourages more innovators to come forward and transform the world.

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Intellectual property: what it is and how to protect it
Article reference: UK-IA-IP01
Last updated: January 2020 | 11 min read

What is intellectual property?

In very simple terms, intellectual property is any intangible property that has value, however
small.

The word that springs to mind most often is "rights". Examples are design rights, rights in a
registered patent or trademark, rights to use a particular name, and so on.
Trading names and domain names

Disputes regarding names usually concern a situation where a trader uses a name that is very
similar to another established trader in the same line of business.

The only exception is that a trader cannot be prevented from trading any product in his own
name. Thus, Joanna Sainsbury can set up selling grocery products wherever she likes, but if you
set up as “Tesco.me”, you might be in line for a lawyer's letter if you sell groceries on the Internet
- despite the large size of the market.

Internet domain names

The Internet presents particular problems in that the law of most trading countries protects a
trade name only within a particular locality.

If "Mighty Beef Burger" trades only in Cornwall, their name is not protected from someone who
wishes to use the very same name in Derbyshire.

Difficulties arise if both firms start selling beef burgers by post on the Internet using the same
trade name. The choice of an appropriate Internet domain name is therefore greatly more
important than the choice of a name for a land-based business limited in physical area.

What is a trademark?
A trademark is the modern word for any sign that can distinguish the goods and services of one
trader from those of another. It can include, for example: words, logo, picture, image or a
combination of these.

Of course, it also includes such items whether they are reproduced on paper, or on a web site, or
in other soft copy.
You can read more about this particular type of IP here.

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Brand rights
Before trademarks were so named, there existed branded products. The oldest recorded brand,
which has been in continuous use in Northern India for 2000 years, is known as 'Chyawanprash',
a herbal paste consumed for its purported health benefits.

Brands have developed since then in different parts of the world to provide recognisable identity
to many goods and works. Hallmarks on goods made of gold and silver are an example. The
artist’s name on a painting is another example.

Brands first came into universal use when manufacturers of goods in the 18th century realised
that they could sell more of their product if it carried their name. In this way a brand became a
trademark - a mark which a buyer could trust.

Bass, the brewers at Burton-on-Trent, claim that their red triangle brand was the world's first
trademark. However, there are many other claimants to that title.

As time passed, the benefit of a strong brand became more obvious, and its value rose. Before
long, mercantile nations realised that they must set up a registry of brands to protect their
traders. So, trademark offices were opened, and laws were made to protect registered marks.

So now, a trademark is a marketing tool so that potential customers can recognise the product
of a particular trader.

To be registerable, a trademark must be distinctive for the goods or services for which
registration is sought. It must not be deceptive, or contrary to law or morality. Of course, it must
not be identical or similar to any other mark already registered for the same or similar goods or
services.

You cannot register a mark consisting of one or more words in common use. That is why
companies with one-word names must also associate the name with a strong image or icon.
“Apple” or “Orange” would not be registrable alone, but “Microsoft” would be (and presumably
is).

Although the detailed rules differ from one jurisdiction to another, it is generally possible to
register a trademark only in the specific categories for which it is used or intended to be used.
But see about Passing off below.

What is a patent?
We often think of a patent as the means of protection of a product. We see the product. But the
protection is actually for the idea or process on which the product depends. So, a patent protects
working parts and processes.

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A patent is a right granted by government to the inventor of a physical product or process for a
term of years, which differs from one country to another. Most countries grant protection for 15
to 20 years. After that, anyone can copy the idea, in any way.

Patents generally cover products or processes that possess or contain new functional or technical
aspects. Patents are concerned with how things work, what they do, how they do it, and what
they are made of, or how they are made. The vast majority of patents are for incremental
improvements to existing knowledge.

The grant of a patent prevents anyone else from making, using, or selling the invention without
the permission of the inventor. When a patent is granted, the right that it creates can be bought,
sold, rented, or hired, just like any other business asset. An obvious application here is the
pharmaceutical industry, where a new drug has a limited life at a high price before all the world
starts to make generic versions.

The technical conditions that an invention must fulfil in order to be patentable are:
• The invention must be new - it must never have been made public in any way, anywhere
in the world, before the date on which an application for a patent is filed.
• It must involve a new step or process - an invention involves an inventive step if, when
compared with what is already known, it would not be obvious to someone with a good
knowledge and experience of the subject.
• It must be capable of application to a physical process or object - an invention must be
capable of being made or used in some kind of industry. This means that the invention
must take the practical form of an apparatus or device, a product such some new material
or substance, or an industrial process or method of operation.

You cannot patent:

• a discovery
• a scientific theory or mathematical method
• an aesthetic creation, such as a literary, dramatic, or artistic work
• a scheme or method for performing a mental act, playing a game, or doing business
• a presentation of information or a computer programme
You can find out more about patents in this article.

Design registration or Registered Design

Design registration protects the outward shape and appearance of a product.

A registered design is a monopoly right for particular features contained in the lines, contours,
colours, shape, texture, or materials, or ornamentation of a product.

Registration in the UK can last for a maximum of 25 years. Like other intellectual property it can
be bought, sold, or licensed. Note that registration of a design is a right additional to any other
design right or copyright protection that may exist automatically in the design.

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In practice, design registration is the Cinderella of intellectual property. Most legal claims use as
their basis the passing off or breach of a patent or copyright, rather than breach of a design right.

What is copyright?
Copyright arises automatically when any of us produce any "work" that is capable of being
protected by copyright. That means that there is no official register for copyright. It cannot be
registered. As a result, there is no action you can or should take to protect your copyright.

Copyright comes into effect immediately, as soon as something that can be protected is created
and "fixed" in some way, e.g., on paper, on film, via sound recording, as an electronic record on
the Internet, and so on. For this reason, it is sensible to mark your work with the copyright symbol
©, followed by your name and date to warn others against copying it. However, this does not
improve or enhance your legal rights in the UK.

The only person who can claim copyright is the originator of the work, or some person to whom
the originator has sold or transferred the copyright. Copyright is an asset that passes on death as
part of the estate of the dead person. Copyright may not have value until exploited by license or
sale or performance, so it is unusual for its value to be subject to inheritance tax unless that value
has been crystalised.

Examples of copyright protected work are:

• literary works, such as novels, instruction manuals, computer programmes, song lyrics,
newspaper articles, but not names or titles
• dramatic works, including dance or mime
• musical works
• artistic works, such as paintings, engravings, photographs, sculptures, collages, works of
architecture, technical drawings, diagrams, maps, and logos
• published editions of works. That is to say the typographical arrangement of a publication
• sound recordings, including recordings of other copyright works such as musical or literary
recordings
• films, including videos
• broadcasts and cable programmes
• electronic arrangements of information such as may be produced by a database

But note that copyright does not protect an idea. It protects the way the idea is expressed in a
piece of work but does not protect the idea itself. An idea has no protection, however valuable
it may be. Secrecy is the only way to prevent someone stealing your idea.

Implications of copyright
Your five-year-old daughter has copyright in the drawings she brings home from school, but your
employer has copyright in the web page you create in the course of your employment. Because
copyright exists everywhere around us constantly, it is both difficult to protect and easy to breach
inadvertently. Hints for the conduct of your business:

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 • Avoid copying other people's work, of any sort.
• If you want to save money by avoiding "reinventing the wheel", then find a source of
satisfactory copyright material that is available for sale or license. For example, the
Internet provides a vast quantity of pictures and graphical representations, which are
available for use at a very modest price.
• A very great deal of material that may apparently be copyright is in fact itself copied from
material produced by someone else at an earlier date. Big companies are fond of flexing
their copyright muscle in a way, which is in fact insupportable. If a copyright claim is made
against you, your first question should be to ask the claimant to provide details of the
circumstances of the copyright creation - when, and by whom.
• A legal action for breach of copyright usually consists in two parts - first damages for
commercial loss, and second for a court order to prevent you from further breach. If your
breach is new and innocent, it is most unlikely that the complainant will be able to prove
money loss.
• There is no copyright in words or representations that cannot be said to constitute a
"work". The scribbled drawing of a five-year-old is unique. This set of notes you are now
reading is unique. Individual phrases from these notes are unlikely to be unique. Lists of
addresses extracted from a directory do not have copyright protection. Even the totality
of the list of names and addresses may not have protection. The ordering of the list and
the way it is laid out and presented certainly does have protection.

Know-how
Know-how is not a term acknowledged in law except as defined in a legal agreement.
Generally, it means the body of knowledge used to produce some good or provide some service.
You could summarise it as “how they do it”. It is inevitably vague and refers to a different
knowledge base every time it is used. But make no mistake - it can be very valuable. If it is valuable
in your business, you should protect it as best you can.

Protect your IP rights

Once an IP right is registered, the fact of registration protects it for the specified period of time
within the limitations of the registration.

Rights that are not registerable, such as copyright, must be safe guarded by vigilance.
If you knowingly accept that someone is using your material, then that user gradually acquires a
good defense to an action by you for his breach of your copyright. Particularisation is impossible.

Just keep your eyes open and seek advice where you think appropriate.

Passing off
Over the years, UK law has established the tort (basis of a claim in court) of passing off. That
means what it says.

If I dress up my product so that a prospective buyer might confuse it with your, original, product,
then you can sue me in a passing off action. A passing off action is a route to protect your

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intellectual property in addition to heads of claim based on registration, breach of copyright, and
so on. The attraction of a passing off claim is that you can claim in the round. Your claim can be
based on the collective effect of many small similarities.

Consequently, your passing off action might claim that my product, relation to yours:
• was used for the same purpose
• was in a similar bottle
• used a similar label, with same fonts, colours and style
• had a similar name
Recognising IP in legal documents

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