Topic 2:

Creativity and
Innovation in
Entrepreneurship

Assoc. Prof. Dr. Norashidah

Hashim
 Objectives:
• Discuss the main components of creative
process, ways to develop creativity & methods
to generate creativity.
• To identify barriers to creativity
• Discuss 4 types of innovation.
• Review some of the myths associated with
innovation & to explain 10 principles of
innovation.

Assoc. Prof. Dr. Norashidah

Hashim
 Introduction
• To be in business & to manage a business
successfully, entrepreneurs must be creative &
innovative.
• In today's hyper-competitive business world the
need to be creative & innovative is very
important. The more creative & innovative an
entrepreneur is, the better (more competitive)
• The ability to be creative & innovative will place
an entrepreneur a step ahead of his competitors.

Assoc. Prof. Dr. Norashidah

Hashim
 Introduction
• Therefore, the ability to be creative &
innovative is a key to the survival of a
business.
• Example:
– An entrepreneur will be left behind if his
competitors are ahead of him in applying
creative & innovative methods of operation, if
competitors are more effective, efficient &
more productive & if the competitors are able
to produce better & higher quality products
which enableAssoc.
to attract more customers.
Prof. Dr. Norashidah
Hashim
 Definition of Creativity
• Creativity is the generation of ideas that result
in the improved efficiency or effectiveness of
a system (Kuratko & Hodgetts 2005)
• Efficient means better usage of resources such as
materials, time, space, money so that the cost will be
minimized, therefore you get greater output with the
same input.
• Effective means you are able to achieve your
aim/objective.

Assoc. Prof. Dr. Norashidah

Hashim
 Creativity
• There are two important aspects of creativity:
Process & People.
• Process is designed to attain a solution to a
problem.
• People are the resources that determine the
solution.
• Usually, the process remains the same, but the
approach people use will vary.
• For example: sometimes people adapt/follow an
old solution , and at other times people will
formulate a new & highly innovative solution to a
problem.
Assoc. Prof. Dr. Norashidah
Hashim
 The Creative Process
• Ideas are not produced spontaneously, most
of the time an idea is produced/developed
through a “Creative Process” (Kuratko &
Hodgetts 2005)
• Phase 1: Background or Knowledge
Accumulation
• Phase 2: The Incubation Process
• Phase 3: The Idea Experience
• Phase 4: Evaluation and Implementation
Assoc. Prof. Dr. Norashidah
Hashim
 The Creative Thinking Process

2.Incubation

1.Knowledge Creative 3.Idea

Accumulation Process experience

4.Evaluation
and
Implementation
Assoc. Prof. Dr. Norashidah
Hashim
 Phase 1: Background or Knowledge
Accumulation
• Creative process started by gathering
information! Research, investigation &
extensive reading, conversations with
others, attending meeting, workshops &
general absorption of information relative
to the problem or issue at hand.
• However, additional investigation in both
related and unrelated issue is sometimes
useful.

Assoc. Prof. Dr. Norashidah

Hashim
 Continue – Phase 1
• Several methods to gain
knowledge/information:
• Read in variety of fields
• Join professional groups & associations
• Attend professional meetings & seminars
• Travel to new places
• Talk to anyone and everyone about your subject
• Scan magazines, newspapers and journals for articles
related to the subject
• Develop a subject library for future reference
• Carry small notebook and record useful information and etc.
Assoc. Prof. Dr. Norashidah
Hashim
 Phase 2: Incubation Process
• Entrepreneurs do not engaged directly in the
activities that has the connection with the
subject/problem in phase 1. Forget about the
problem.
• At this phase, entrepreneurs allow their
subconscious mind to mull over the tremendous
amounts of information they gather during phase 1.
• Getting away from the problem & letting the
subconscious mind to work on allows creativity to
trigger.
• Some of the most helpful steps to induce incubation:
• Engage in routine ‘mindless’ activities (ex:cutting
grass, painting, exercise, cooking, fishing, relaxing,
sleeping etc.)

Assoc. Prof. Dr. Norashidah

Hashim
 Phase 3-The Idea Experience
• Most exciting phase. At this phase the idea
which individual is seeking is discovered.
Sometimes referred as ‘eureka factor’
• This idea might be discovered suddenly,
while the person is busy doing something
unrelated to the problem (taking a shower,
driving or walking).
• However, idea that emerged during this
phase is still considered to be “raw idea”
that needs to go to the next phase.

Assoc. Prof. Dr. Norashidah

Hashim
 Phase 4-Evaluation &
Implementation
• Most difficult phase & requires a great deal
of courage, self-discipline and
perseverance.
• Usually idea produced from Phase 3 is in
rough form, it needs to be modified,
evaluated or tested to put it in final shape.
• Entrepreneurs will fail several times before
they successfully develop their best ideas.

Assoc. Prof. Dr. Norashidah

Hashim
 Methods to generate creative ideas

• 1) Focus Group
• 2) Brainstorming
• 3) Problem Inventory Analysis

Assoc. Prof. Dr. Norashidah

Hashim
 1) Focus Groups
• Being used since 1950s. Focus Group is made up of
between 8-14 people, experts of different background of
different knowledge & skills is grouped together to
discuss & find solution to a certain problem).
• Moderator is needed to guide & focus the discussion by
asking simple & provoking questions related to the
problems or topic of interest.
• Provoking questions by the moderator will generate
more ideas & feedback from the group. Everyone will
give their comments & opinions.
• Finally only the best idea will be recommended for
implementation.

Assoc. Prof. Dr. Norashidah

Hashim
 2) Brainstorming
• The popular technique- A group method for obtaining
new ideas & solutions
• Usually useful for generating ideas related to products
or markets.
• The brainstorming method is conducted in a conducive
way, enjoyable and free from pressure. However it must
comply with 4 important rules;
1. Criticism & negative comments are not allowed. –
these will stop the flow of ideas.
2. Free flow of ideas are encouraged. – even funny/silly
ideas!!
3. Quantity of ideas is desired. The more the ideas the
better.
4. Combination of ideas are also encouraged.
Assoc. Prof. Dr. Norashidah
Hashim
3) Problem Inventory Analysis
• A method for obtaining new ideas &
solutions by focusing on problems.
• Instead of generating new ideas
themselves, the company usually ask the
customers to provide the feedbacks on
problems of the product.
• The customers are then asked to identify
and discuss the problems of the product.
• Through this method, new ideas to rectify
or to solve the problems of the product can
be obtained easily.
• Problem Inventory Analysis can also be
used to test a new product idea.
Assoc. Prof. Dr. Norashidah
Hashim
 Barriers to creativity
There are several barriers to creative thinking:
• Late to react - nowadays everything is moving at a faster pace. To
be creative one must react & think fast. Otherwise will be left behind.
• Risk averse – tend to take safe action/decision to minimize risk.
Avoiding risk, too scared of failure/criticism are barriers to creativity.
• Stereotype thinking- i.e. not to have something that is different from
others, afraid of changes & stereotype inclination. According to E.de
Bono (1970), human must change the way they think to increase
creativity. Try something different!! New ways, new methods.
• Judging by perception/assumption- Don’t make decision based on
perception/assumptions. Decision should be made based on reality.
However, good decision can be achieved through a combination of
intuition & logic. (heart & mind).

Assoc. Prof. Dr. Norashidah

Hashim
 The Creative Climate/environment
 A management that trusts their employees (not
overcontrolling).
 Open channels of communication in organization.
 Open communication with outside the org.n
 Diversity of personalities
 A willingness to accept change
 Enjoy trying new ideas (experimenting)
 Fearless of mistakes or failures
 Rewards and promotion of employees based on their
creativity
 Applying the techniques that encourage ideas,
eg:suggestion system & brainstorming
 Sufficient financial, managerial, human and time
resources to accomplish
Assoc. Prof. goals.
Dr. Norashidah
Hashim
 Innovation
• The process by which
entrepreneurs convert
opportunities into marketable
ideas.
• More than just a good idea.

Assoc. Prof. Dr. Norashidah

Hashim
 Innovation
• Innovation is a process of creation and
implementing new idea (Hellriegel, Jackson &
Slocum, 2002)
• Innovation is the process by which
entrepreneurs convert opportunities into
marketable ideas.
• Creativity becomes the pre-condition/pre-
requisite to innovation.

Assoc. Prof. Dr. Norashidah

Hashim
 Using Your Brains
• The right brain hemisphere
helps an individual understand
analogies, imagine things, and
synthesize information.
• The left brain hemisphere helps
the person analyze, verbalize,
and use rational approaches to
problem solving.
Assoc. Prof. Dr. Norashidah
Hashim
 Processes Associated with the
Two Brain Hemispheres
Right Hemisphere
Left Hemisphere • Nonverbal
• Verbal • Synthesizing
• Analytical • Seeing Analogies
• Abstract • Nonrational
• Rational • Spatial (space,
• Logical size, shape of
• Linear objects)
• Intuitive
• Imaginative
Assoc. Prof. Dr. Norashidah
Hashim
Assoc. Prof. Dr. Norashidah
Hashim
• Invention
-The creation of a new product, service or
process which is novel and untried.
Ex:Wright Brothers-Airplane, Thomas
Edison-lightbulb
• Extension (Pengembangan)
-The expansion of existing product, service or
process. Such concepts make a different
application of a current idea.Ex:
Mobilephone-Size, function, colour: shampoo
–Pantene new product with conditioner.

Assoc. Prof. Dr. Norashidah

Hashim
 Types of Innovation
• Duplication (Penyalinan)
-The replication of an already existing product, service and
process. The duplication effort is not simply copying but
adding the entrepreneur’s own creative touch to enhance
or improve the concept to beat the competition. Existing
product becomes the reference. Eg: Marrybrown
• Synthesis (Sintesis)
-The combination of existing concepts and factors into a
new formulation. Taking a numbers of ideas or items
already invented and finding a way to form a new
application. Eg:Internet (computer & telecomunication
system)

Assoc. Prof. Dr. Norashidah

Hashim
 Sources of Innovation *
• 1)Unexpected Occurrences
• 2)Incongruities
• 3)Process Needs
• 4)Industry and Market Changes
• 5)Demographic Changes
• 6)Perceptual Changes
• 7)Knowledge-Based Concepts

Assoc. Prof. Dr. Norashidah

Hashim
 Demographic changes
• Changes in population, age, education
levels, types of occupations, geographic
locations, etc.
• Demographic shifts are important &
provide entrepreneurial opportunities to
the entrepreneurs.
• Eg: Demographic changes become a
source of innovation to entrepreneurs.
Nurseries for children, private colleges,
tuition centres, Health & Care centers for
older people, etc.
Assoc. Prof. Dr. Norashidah
Hashim
 Unexpected Occurrences
• The unexpected, unanticipated or unplanned
event. Might end up to be a major innovative
surprise to the firm or entrepreneurs.
• Innovation may arise when something good
happens without prior planning (unexpected).
• Happens when you give attention to something
else but other ideas may emerge that can also be
beneficial.
• Originally computer was invented to make the
process of documentation, database & to make
calculation easier, but later it becomes tool for
office management, entertainment &
communication.
Assoc. Prof. Dr. Norashidah
Hashim
 Process needs
• Process needs exist whenever a demand
arises for entrepreneurs to innovate &
answer a particular need.
• Eg; the process of taking good care of our
health leads to: the creation of health
food, sugar-free drinks, supplementary
foods, minerals & vitamins, etc.

Assoc. Prof. Dr. Norashidah

Hashim
 Industry & Market Changes
• Innovation due to changes in consumer
behaviors or attitudes, advancements in
technology, industry growth.
• Industries & markets are always undergoing
changes
• Eg: strong market demand for organic foods,
demand for compact & economical car, etc.

Assoc. Prof. Dr. Norashidah

Hashim
 Knowledge-Based Concepts
• Invention & innovation based on knowledge (R&D)
• Inventions are considered as knowledge-based;
producing product based on new ideas, new way
of thinking, new methods and new knowledge.
R&D requires long period of time to materialize,
need to test & modify, making improvement & re-
test.
• Usually done by experts in certain disciplines.
• Ex: robotic usage in manufacturing, hybrid cars,
bio-fuel etc.

Assoc. Prof. Dr. Norashidah

Hashim
 Incongruities.
• Occur whenever a gap exists between
expectations & reality.
• Eg: Mail delivery at night was at first
thought to be not suitable for express-mail
business, but FedEx want something
innovative. They tried overnight mail
delivery (deliver mails 24 hours – day &
night). This innovation turned out to be a
profitable business. So don’t be afraid to
do something different!!.
Assoc. Prof. Dr. Norashidah
Hashim
 Perceptual Changes
• Changes occur in people’s interpretation of
facts & concepts.Perceptions can cause
major changes in market demand, thus
generate ideas for innovation.
• Eg: Perception about obesity can lead to
health problems offer opportunities to
entrepreneurs. This perception creates high
demand for health equipment/facilities &
fitness classes (gyms). - ‘fitness craze’
phenomena.
Assoc. Prof. Dr. Norashidah
Hashim
 5 Major Innovation Myths
• Myth 1: Innovation is planned & predictable
• This myth is based on the old concept that
innovation should be left to the R&D Dept. In
reality, innovation is unpredictable & anyone can
come out with innovative ideas.
• Myth 2: Technical specifications should be
thoroughly prepared
• Thorough preparation often takes too long. Quite
often it is more important to use a try/test/revise
approach.
• Myth 3: Creativity relies on dreams & blue-sky
ideas
• Innovators are very practical people, not day
dreamers. They convert ideas into realities.
Assoc. Prof. Dr. Norashidah
Hashim
 5 Major Innovation Myths
• Myth 4: Big projects will develop better innovations than
smaller ones.
• This myth has been proven false. Larger firms are now
encouraging their people to work in smaller groups,
easier to generate creative ideas.
• Myth 5: Technology is the driving force of innovation &
success.
• Technology is certainly one source of innovation but
customers & market also are the driving force behind
any innovation. In fact, market-driven or customer-
based innovations have the highest probability of
success. A good example is Polaroid ‘s Polarvision, a tv
camera that allowed for instant playback of the film.
Polaroid hit the market with its technological advance at
the same time as when video cassette recorders (simple
tech) being introduced. At last, it has been rejected &
company lost millions of dollars.
Assoc. Prof. Dr. Norashidah
Hashim
 Principles of innovation
1. Be action oriented.
Innovators must be active & always searching for ideas,
opportunities or sources of innovation.
2. Make the product, process or service simple &
understandable.
People must easily u/stand how the innovation works.
3. Make the product, process or service customer-
based.
Entrepreneurs must keep customers in mind. The more
user-based the product, the more it will be accepted.
Assoc. Prof. Dr. Norashidah
Hashim
 Principles of innovation
4. Start small.
Innovators should attempt to do small scale projects.
Incrementally tries to proceed with big project in
the future.
5. Aim high.
Innovators should aim high for success & seek niche
in the m/place.
6. Try/test/revise.
Always follow the rule of try, test & revise. This will
help work out any flaws/defects in the product,
process & service.
7. Learn from failures.
Innovation does not guarantee success. Failures often
give rise to innovations.

Assoc. Prof. Dr. Norashidah

Hashim
 Principles of innovation
8. Follow a milestone schedule.
Follow schedule that indicates milestone
accomplishments. Although a bit ahead or behind
schedule, it is still important to have a schedule in
order to plan & evaluate the project.
9. Reward heroic activity.
This principle applies more to those involved in
seeking & motivating others to innovate. Innovative
activity should be rewarded & given proper amount
of respect. Management must tolerate & accept
failures in carrying out an innovation work.
Innovative work must be seen as heroic activity.
10. Work, work, work.
It takes work, not genius or mystery to innovate
successfully.

Assoc. Prof. Dr. Norashidah

Hashim
 Issues in Creativity and
Innovation
• What are the issues ?
• Examples
• How to handle the issues?
• suggestions

Assoc. Prof. Dr. Norashidah

Hashim