1.

Creative Thinking - A way of looking at problems or situations from a fresh

perspective that suggests unorthodox solutions (which may look unsettling at
first). Creative thinking can be stimulated both by an unstructured process such as
brainstorming, and by a structured process such as lateral thinking.

2. Personal Creativity - Creativity - the generation of ideas that results in

improved efficiency or effectiveness of a system.

3. Innovation - The process by which entrepreneurs convert opportunities into

marketable ideas.
- The process of creating something new, which is central to the entrepreneurial
process.
- Innovation is a capability of the many. That capability is utilized when people
give commitment to the mission and life of the enterprise and have the power to do
something with their capabilities.

4. Innovative Idea - A product or an idea becomes innovative when it stands out

from the rest and truly makes the customers' lives easier. A successful change that
can convert knowledge and ideas into benefit � in the form of new or improved
products / services is capable of being innovative.
- new, original idea
- the introduction of something new

5. Invention - A basic type of innovation that involves the creation of a new

product, service or process that is often novel or untried.
- something new, that did not exist previously and that is recognized as the
product of some unique intuition or genius
- A product of the imagination. Something that has never been made before.

6. Opportunity Recognition - The process of perceiving the possibility of a

profitable new business or a new product or service.
- means proactively brainstorming a new business venture or expansion idea. A
small-business owner typically engages in opportunity recognition at the point
where he realizes he has an idea, strength or capability that matches well with a
particular target market.
- is actually a process that's found in the way that individuals and businesses
with an entrepreneurial mindset approach new business ventures or ideas. In many
ways, it is a constant brainstorming in which individuals look for ''new and
improved ways'' of addressing problems.

7. Opportunity Identification - The ability to recognise a viable business

opportunity within a variety of good ideas.
- It identifies entrepreneur's personality traits, social networks, and prior
knowledge as antecedents of entrepreneurial alertness to business opportunities.
- is a competency that can be developed as are other unique competencies

2. Give the types of innovation and explain each.

Galing sa book nyo
� invention � the creation of a new product, service or process, often one that is
novel or untried; such concepts tend to be revolutionary
� extension � the expansion of a product, service or process already in existence;
such concepts make a different application of a current idea
� duplication � the replication of an already existing product, service or process;
the duplication effort, however, is not simply copying but adding the
entrepreneur�s own creative touch to enhance or improve the concept to beat the
competition
� synthesis � the combination of existing concepts and factors into a new
formulation; this involves taking ideas or items already invented and finding a way
so together they form a new application.
Galing sa ibang book pero meron din nung ^^^^
� Radical innovation is the launching of major breakthroughs that radically
transform an industry, such as wireless Internet, iPods, videophones, Post-it�
notes, disposable nappies, optical fibres, CT scanners, mobile phones, NutraSweet
and even overnight mail delivery. They were all radical innovations at the early
stages of their diffusion and adoption. They took experimentation and determined
vision. They could be �managed� only with difficulty, but they had to be
recognised, nurtured and guided.
� Incremental innovation refers to the systematic transformation of an existing
product or service into newer or larger markets. These are all products at advanced
stages of their product life cycles. Examples include the newest version of
Microsoft Windows, the Nespresso coffee system, microwave popcorn, packaging beads
(to replace Styrofoam), frozen yoghurt and so forth. Sometimes an incremental
innovation will actually take over after a radical innovation introduces a
breakthrough (see Figure 8.4). Think of how many incremental versions of Microsoft
Windows there have been! The structure, marketing, financing and formal systems of
a company can help implement incremental innovation. As Sir Richard Branson said,
�Business opportunities are like buses; there�s always another one coming�; Virgin
Airlines is like that. It is the airline famous for service innovation. Nothing
radical, just incrementally better than the others � constantly.

3. What are the principles of innovation, briefly explain each also.

� Be action oriented: Innovators always must be active and searching for new ideas,
opportunities or sources of innovation.
� Make the product, process or service simple and understandable: People must
readily understand how the innovation works.
� Make the product, process or service customer-based: Innovators always must keep
the customer in mind. The more an innovator has the end-user in mind, the greater
the chance the concept will be accepted and used.
� Start small: Innovators should not attempt a project or development on a
grandiose scale. They should begin small and then build and develop, allowing for
planned growth and proper expansion in the right manner and at the right time.
� Aim high: Innovators should aim high for success by seeking a niche in the
marketplace.
� Try/test/revise: Innovators always should follow the rule of try, test and
revise. This helps work out any flaws in the product, process or service.
� Learn from failures: Innovation does not guarantee success. More important,
failures often give rise to innovations.
� Follow a milestone schedule: Every innovator should follow a schedule that
indicates milestone accomplishments. Although the project may run ahead or behind
schedule, it is still important to have the schedule in order to plan and evaluate
the project.
� Reward heroic activity: This principle applies more to those involved in seeking
and motivating others to innovate. Innovative activity should be rewarded and given
the proper amount of respect. This also means tolerating and, to a limited degree,
accepting failures as a means of accomplishing innovation. Innovative work must be
seen as heroic activity that will reveal new horizons for the enterprise.
� Work, work, work: This is a simple but accurate exhortation with which to
conclude the innovation principles. It takes work � not genius or mystery � to
innovate successfully.

4. Where do innovative ideas come from?

� Trends: Trends signal shifts in the current paradigm (or thinking) of the major
population. Observing trends closely will enable an entrepreneur to position an
idea fitting with the trend and recognise a potential opportunity. Trends need to
be observed in society, technology, economy and government. Following are some
examples of such trends:
� societal trends: ageing demographics, health and fitness growth, senior living,
social media
� technology trends: smart phone technology, e-commerce, Internet advances, drones,
miniaturisation
� economic trends: higher disposable income, dual wage-earner families, performance
pressures, rising fuel costs
� political trends: increased regulations, terrorism, sovereign debt, military
alliances, free trade agreements
� environmental trends: global warming, drought, increased severity of storms,
increased frequency of bushfires, pollution.
� Unexpected occurrences: These are successes or failures that, because they were
unanticipated or unplanned, often end up proving to be a major innovative surprise
to the business. For example, Alexander Fleming was surprised to note that a
contamination of a bacterial plate culture suppressed the growth of his bacteria.
He identified the contamination as penicillin mould. Later, Australian scientist
Howard Florey drew on Fleming�s observation to create the industrial-scale
manufacture of penicillin.
� Incongruities: These occur whenever a difference exists between expectations and
reality.
Innovation is the creation of solutions to incongruities. In the 1980s Ken Kutaragi
was watching his daughter playing with a Nintendo Entertainment System which
produced poor quality sound and relied on a magnetic tape drive and wondered why
such a good game had such terrible sound. Ken knew from his research with Sony that
he could develop a better product for Nintendo. Attentiveness to this incongruity
led Nintendo to contract Sony for its next generation machine that incorporated
better sound and floppy disk technology. Although Kutaragi nearly lost his job for
contracting to a competitor, eventually this led to the development of Sony�s
Playstation product range which was a key pillar in Sony�s profitability for many
years.
� Process needs: For example, process gaps or bottlenecks. These occur when an
answer to a particular need is required. Venture capitalists often refer to these
as �pain� that exists in the marketplace. The entrepreneur must recognise an
innovation solution, or �painkiller�. Examples include the creation of new medical
devices, health foods, pharmaceuticals, timesaving devices and eco-sustainable
green manufacturing.
� Industry and market changes: Continual shifts in the marketplace occur, caused by
developments such as consumer attitudes, advancements in technology, industry
growth and the like. Industries and markets are always undergoing changes in
structure, design or definition. An example is found in the healthcare industry
where hospital care has undergone radical change and where home healthcare and
preventive medicine have replaced hospitalisation and surgery as primary focus
areas. The entrepreneur needs to be aware of and seize these emerging
opportunities.
� Demographics: These arise from trend changes in population, education, income
changes, age, occupations, geographic locations and similar factors. Demographic
shifts are important and often provide new entrepreneurial opportunities. For
example, as the average population age in Australia�s Gold Coast has increased (due
largely to the influx of retirees), land development, recreational and healthcare
industries have all profited.
� Perceptual changes: These changes occur in people�s interpretation of facts and
concepts. They are intangible yet meaningful. Perception can cause major shifts in
ideas to take place. For example the increasingly popular perceived need to be
healthy and physically fit has created a demand for both health foods and health
facilities. Another example is people�s desire to use their personal time better.
As a result, the travel industry has capitalised on consumers�current need to see
the world while they are young and healthy, so time-share holiday destinations and
travel clubs have increased.
� Knowledge-based concepts: These are the basis for the creation or development of
something brand new. Inventions are knowledge-based; they are the product of new
thinking, new methods and new knowledge. Such innovations often require the longest
time period between initiation and market implementation because of the need for
testing and modification. For example, today�s smart phone technology has advanced
to transform the mobile phone into a camera, Internet access resource and music
provider. This has revolutionised the way we use different technologies today.

7. What are the Major Components in the Creative Process

Phase 1: Background or knowledge accumulation
Successful creativity in our entrepreneurial context is generally preceded by
investigation and information gathering. This usually involves extensive reading,
conversations with others working in the field, attendance at professional meetings
and workshops and a general absorption of information relative to the problem or
issue under study. Additional investigation in both related and unrelated fields is
sometimes involved. This exploration provides the individual with a variety of
perspectives on the problem and it is particularly important to the entrepreneur,
who needs a basic understanding of all aspects of the development of a new product,
service or business venture. People practise the creative search for background
knowledge in several ways. Some of the most helpful are: (1) read in a variety of
fields; (2) join professional groups and associations; (3) attend professional
meetings and seminars; (4) travel to new places; (5) talk to anyone and everyone
about your subject; (6) scan magazines, newspapers and journals for articles
related to the subject; (7) develop a subject library for future reference; (8)
carry a small notebook and record useful information; and (9) devote time to pursue
natural curiosities.
Phase 2: The mind incubation process
Creative individuals allow their subconscious to mull over the tremendous amounts
of information they gather during the preparation phase. This incubation process
often occurs while they are engaged in activities totally unrelated to the subject
or problem. It happens even when they are sleeping. This accounts for the advice
frequently given to a person who is frustrated by what appears to be an unsolvable
problem: �Why don�t you sleep on it?� Getting away from a problem and letting the
subconscious mind work on it allows creativity to spring forth. Some of the most
helpful steps to induce incubation are: (1) engage in routine, �mindless�
activities (cutting the grass, painting the house); (2) exercise regularly; (3)
play (sports, board games, puzzles); (4) think about the project or problem before
falling asleep; (5) meditate or practise self-hypnosis; and (6) sit back and relax
on a regular basis.
Phase 3: The idea experience
This phase of the creative process is often the most exciting. It is when the idea
or solution is discovered. Sometimes referred to as the eureka factor, this phase
is also the one the average person incorrectly perceives as the only component of
creativity. As with the incubation process, new and innovative ideas often emerge
while the person is busy doing something unrelated to the enterprise, venture or
investigation (for example, taking a shower, driving on a highway, leafing through
a newspaper). Sometimes the idea appears as a bolt out of the blue. In most cases,
however, the answer comes to you incrementally. Slowly but surely, you begin to
formulate the solution. Because it is often difficult to determine when the
incubation process ends and the idea experience phase begins, many people are
unaware of moving from phase 2 to phase 3. Here are some ways to speed up the idea
experience: (1) daydream and fantasise about your project; (2) practise your
hobbies; (3) work in a leisurely environment (for example, at home instead of the
office); (4) put the problem on the back burner; (5) keep a notebook at your
bedside to record late-night or early-morning ideas; and (6) take breaks while
working.
Phase 4: Evaluation and implementation
This is the most difficult step of a creative endeavour and requires a great deal
of courage, selfdiscipline and perseverance. Successful entrepreneurs can identify
ideas that are workable and that they have the skills to implement. More important,
they do not give up when they run into temporary obstacles. Often they will fail
several times before they successfully develop their best ideas. In some cases
entrepreneurs will take the idea in an entirely different direction or will
discover a new and more workable idea while struggling to implement the original
idea. Another important part of this phase is the reworking of ideas to put them
into final form. Because frequently an idea emerges from phase 3 in rough form, it
needs to be modified or tested to put it in final shape. Some of the most useful
suggestions for carrying out this phase are: (1) increase your energy level with
proper exercise, diet and rest; (2) educate yourself in the business planning
process and all facets of business; (3) test your ideas with knowledgeable people;
(4) take notice of your intuitive hunches and feelings; (5) educate yourself in the
selling process; (6) learn about organisational policies and practices; (7) seek
advice from others (for example, friends, experts); and (8) view the problems you
encounter while implementing your ideas as challenges to be overcome.