Creativity, innovation, and entrepreneurship are interrelated concepts. Creativity involves generating new ideas through imagination and critical thinking. Innovation is applying creative ideas to problems and opportunities to create value. Entrepreneurship involves starting a business based on an innovative idea. The document discusses defining and distinguishing creativity, innovation, and types of innovation like incremental vs radical. It also covers sources of innovation, frameworks like the 4 Ps of innovation, and open vs closed innovation models. Barriers to innovation for small businesses and benefits of creativity are also summarized.

1. C18TP Enterprise:
Concepts and Issues
L5: Creativity,
Innovation and
Entrepreneurship

2. Use any device to open joinmyquiz.com

3. Lecture aims
Understand Creativity and innovation and how it relates to entrepreneurship
Distinguish Imagination/Creative/ Innovation
Understand Sources of Innovation
Understand the 4 P of innovation
Distinguish incremental and radical innovation
Distinguish open and closed innovation
Critically discuss innovation benefits & challenges for SMEs

5. Defining ‘Creativity’
Creativity = is imagination applied: doing something, or making something, with that initial
conception.
1. The process of generating new ideas that are valuable.
2. A genuine creative process involves critical thinking as well as imaginative insights.
(Columbus Museum of Art)
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. (Franken 1994, p. 396)
Imagination = The capacity to conceive of what is not.
“…the ability or quality displayed when solving hitherto unsolved problems,
when developing original and novel solutions to problems others have
solved differently, or when developing original and novel… products”
(Parkhurst, 1999, p.18).
Creativity requires Critical Thinking, the purposeful and reflective process of
synthesizing, analyzing, and evaluating

6. Defining ‘Creativity’
What does the definition tell us?
Creativity can be about developing new products AND developing new
solutions
1. new processes to help us do something better
2. new ways of using existing products
3. new services to supply to new or existing customers etc.
New ways of thinking about things!
In the world of business: supports commercial opportunities!

7. Why is Creativity
important?
• All business sectors seek novelty
• Even seemingly conventional
sectors respond to novelty, e.g.,
medicine.
• Some novelty may be “better”,
e.g., better medicine, some is
simply a response to the desire
for something new, e.g., fashion.
• Creative thinking is key to
success.

9. Defining ‘Innovation’
Creativity is the ability to think about a task or a problem in a
new or different way, or the ability to use the imagination to
generate new ideas.
Innovation
Creativity that progresses, changes, or impacts the world.
Imagination = The capacity to conceive of what is not.
Creativity is the starting point whether it is associated with invention or
opportunity spotting. This creativity is turned to practical reality (a product, for
example) through innovation. Entrepreneurship then sets that innovation in the
context of an enterprise (the actual business), which is something of recognised
value (Bolton and Thompson, 2000)
“Innovation is the process by which new ideas are successfully exploited to create
economic, social and environmental value.” (UK Department for BIS, 2014)

10. “When an enterprise produces a good or service or uses a method or input
that is new to it, it makes a technical change. The first company to make a given
technical change is an innovator. Its action is innovation.” (Schmookler, 1966)
“Innovation by definition must be successful in the market. The test of
innovation, after all, lies not in its novelty, its scientific content, or its cleverness. It
lies in its success in the marketplace.” (Drucker, 1993)
It is the creativity of an entrepreneur that results in invention [creation of new
knowledge] and innovation [application of knowledge] to create new products,
services or processes.
Defining ‘Innovation’

11.  An innovation is a novel solution to a problem.
 It is more effective, efficient, sustainable, or just than present
solutions.
 Innovations improve the way you do things and what you achieve
 The process of translating an idea or invention into a good (product)
or service that creates value or for which customers will pay.
(Commercialization; Rogers 1998)
 Must be replicable at an economical cost
 Must satisfy a specific need
 Involves deliberate application of information, imagination and initiative in
deriving greater or different values from resources and includes all
processes by which new ideas are generated and converted into useful
products.
Characteristics of Innovation
 Innovation is not simply about products/services but also the process of
commercializing ideas (in contrast to invention)

12. Dimensions of innovation 4P Framework
 Rapidly changing
environment
 The Unexpected
 Incongruities
 Demographics
 Industry/ Market Structures
 Changes in Perception,
Mood, Meaning
 New Knowledge
 Evolving needs of
customers
Sources of
Innovation
Characteristics
of Innovation
 novel
 more effective,
efficient, sustainable,
or just than present
solutions
 improves lives
 creates value for
which customers will
pay.
 Is replicable at an
economical cost
 Satisfies a specific
need
 derives greater or
different value than
resources
 useful
Dimensions of innovation
4P Framework
Radical or incremental?

13. Types of Innovation
Incremental versus radical Innovation
Battery that lasts longer
Smaller phone
Cheaper baby cloth
Restaurant closer to campus
Tesla Model T
iPod
SpaceX

14. Sources of Innovation
Adapted from: Chesbrough (2006)
• Rapidly changing environment (M-Kopa)
• The Unexpected (Kickstarter)
• Incongruities (Snapchat)
• Demographics (GetAround)
• Industry/ Market Structures [Growth, Maturing, Converge, Model)
• Changes in Perception, Mood, Meaning (OYO Rooms)
• New Knowledge (Google Glasses)
• Evolving needs of customers (TaskRabbit)
Inside
(require
deep
industry
knowledge)
Outside
Schumpeter

15. What are barriers to innovation?
https://tinyurl.com/C18TPbrainstorm

16. Individual Level
• Fear of failure
• Risk
• Convention
• Self-doubt
Barriers to Innovation
Organizational Level
• Fear of failure
• Information barrier (lack of knowledge)
• Lack of leadership
• Cognitive barrier (inability to see need for innovation)
• Internal restrictions (workload, R&R, ..)
• Short-term thinking
• Lack of (financial) resources
• Lack of available skilled labor
• Lack of collaboration
• Bureaucratic hurdles
• Lots of ideas, no delivery to market.

17. Ability to be
CREATIVE
Ability to spot
OPPORTUNITIES
CREATIVITY
INNOVATION
SUCCESS
ENTREPRENEURIAL ENVIRONMENT
Types of Innovation
Open versus Closed Innovation

18. Closed Innovation
(Chesbrough, 2006)

19. (Chesbrough, 2006)
Open Innovation

20. Benefits to open / Closed innovation?
https://tinyurl.com/C18TPbrainstorm

21. Types of Innovation
Open versus Closed Innovation
Adapted from: Chesbrough (2006)
Mostly internal ideas
Few new businesses
Low role of Venture capital
Control IP
Both internal and external ideas
Many new businesses
Active role of Venture capital
Profit from licensing IP or buying IP of appropriate

22. The closed innovation paradigm has eroded due to the following factors:
• Increased mobility of skilled workers
• Expansion of venture capital
• External options for unused technologies
• Increased availability of highly-capable outsourcing partners
Types of Innovation
Open versus Closed Innovation

23. Small Firms and Innovation
ADVANTAGES DISADVANTAGES
Management: Lack of bureaucracy;
greater risk acceptance; entrepreneurial
management; rapid decision-making
Lack of formal management skills
Marketing: Nearness to markets
ensures fast reaction to changing market
requirement; may dominate niche
markets
Little or no market power; poor
distribution and servicing facilities;
geographic market expansion may prove
prohibitively costly
Technical manpower: Considerable
scope for cross-functionality;
technologists often ‘plugged-in’ to other
departments
Often lack suitably qualified specialists
(which may also constrain external
networking); often unable to support
formal R&D efforts
Communications: Efficient and informal
internal communication facilitates rapid
internal problem-solving
Lack of time and resources to forge
external technological linkages

24. ADVANTAGES DISADVANTAGES
Finance: SMEs often considered more
‘R&D efficient’ (i.e. innovation can be
relatively less costly); ‘boot-strapping’
possible
Difficulties accessing external finance;
cost of capital relatively high; reliance
upon short-term debt; inability to spread
risk
Growth: Potential for growth through
‘niche’ or differentiation strategies
Difficulties accessing finance for growth;
entrepreneurs often unable to manage
growth
Government schemes: Government
schemes established to facilitate small-
firm innovation
High transaction costs involved in
accessing schemes; few resources
available to manage collaborative
schemes; lack of awareness
Regulation: Some regulations are
applied less rigorously to small firms
In general, however, the relative unit cost
of regulatory compliance is higher for
small firms; patent system prohibitively
complex and costly
Small Firms and Innovation (cont.)

25. ADVANTAGES DISADVANTAGES
Collaboration: Flexibility and rapid
decision-making may make firms
attractive partners
Firms suffer from power asymmetries in
collaboration with larger partners; little, or
no, supply chain influence
Organisation; suffer less from
routinisation and inertia
Suffer more from uncertainties and
associated costs
Human resources: Flat management
structures and local project ownership
are likely
High staff turnover; little formal training
Source: adapted from Rothwell (1989)
Small Firms and Innovation (cont.)

26. Summary
Creativity is the ability to develop new ideas and to discover new ways of
looking at problems and opportunities
Innovation is the ability to apply creative solutions to those problems and
opportunities in order to enhance people’s lives or to enrich society
 Distinguish Imagination/Creative/ Innovation
 Understand Sources of Innovation
 Understand the 4 P of innovation
 Distinguish incremental and radical innovation
 Distinguish open and closed innovation
 Critically discuss innovation benefits & challenges for SMEs
Tutorial Preparation
6 thinking hats

27. Further reading
Bolton, B and Thompson, J. (2000) Entrepreneurs: Talent, Temperament,
Technique, Oxford: Butterworth-Heinemann.
Chesbrough, H. (2006) Open Innovation, Harvard University Press: Cambridge,
MA.
Fagerberg, Jan, Fosaas, Morten, & Sapprasert, Koson. (2012). Innovation:
Exploring the knowledge base. Research Policy, 41(7), 1132-1153.
Fillis, I. (2002) An Andalusian Dog or a Rising Star? Creativity and the
Marketing/Entrepreneurship Interface. Journal of Marketing Research, 18(1), 379-
395.
Parkhurst, H.B. (1999) Confusion, lack of consensus and the definition of creativity
as a construct. The Journal of Creative Behaviour, 33(1), 1-21.
Rothwell, R. (1994). Towards the fifth generation innovation process. International
Marketing Review, 11 (7-31).

28. White hat: Archives, Reports, Media, Articles, Books,
Biographies, Images, Audio & Digital Media
Red hat: Does my Direction Feel Right? Could I be
Looking in the Wrong Place? Asking the Wrong
Questions?
Black hat: What Can I do Different? Is there
Anything More to Look at? What are the
Weaknesses?
Yellow hat: Benefits to Independent Artists?
Why is it Worth it? For Whom is it of Interest?
Why Can it Be Done? Because it Can……
Green hat: Alternative Ways? New
Methods or Tools? New Stance? New
View of Your Original Stance?
Blue hat: What Has Been Done?
What is Still to do? How to
Proceed?
‘Six’ Thinking Hats (De Bono, 1985)
White
Blue
Green
Yellow
Black
Red

35. The Unique Blue Hat
• The blue hat is different from the other hats because it is involved with
directing the thinking process itself
• We use the blue hat whenever we suggest the next hat to be used
• The blue hat need not be acknowledged at every turn however there are
some points which it is often helpful:
• At the outset of a discussion – Lets decide what we want to think about and
which hats we will use?
• At a midpoint to restate the thinking goal – I think we are getting away from
what we wanted to talk about. Can someone recall what we decided to talk
about?
• At the end to summarise what thinking has been done – Think of a sentence
that tells about what we have been doing today?

36. Evaluation Sequence
To discover the positive aspects and negative aspects of an idea. You use the
yellow hat (sunny optimism) before the black hat (caution).
You could follow up with the green hat (new ideas) and red hat (emotion,
feelings) thinking.
Examples: Consider positive and negative
 Not doing homework one night

37. Caution Sequence
Looking critically at situations. You are first considering facts with the white
hat.
Then use the black hat to discover difficulties.
This can be followed up with some blue hat or red hat thinking.
Examples: consider the consequences
 Not letting someone know where you are going.

38. Creating:
– New ideas
– Products
– Improvements to existing designs.
For this, we could use the blue (control), green (creative new ideas) and red
(emotions, feelings) hats.
Design Sequence

39. Red + White
• Comparing fact and opinion
Black + Yellow + Green
• Comparing and synthesising (coming up with new ideas from the known)
White + Blue
• What do we know (facts) and where are we going (planning)
Other Sequence