The actual founding principles of creativity and innovation are also closely related. Creativity is defined by Ned Hermann as ‘a dynamic, whole brain activity that involves conscious and subconscious mental processing in both generating an idea and making something happen as a result’ (Lumsdaine and Binks, 2007, page 21). An effective means of attempting to think creatively is to adopt a lateral approach, whereby one diverts themselves away from the regular linear path, and ‘thinks outside of the box’, and only then will inspiration hit. The use of creative thinking exercises stimulates this part of the brain and encourages such a practice. It often derives from the need to solve problems, and furthermore proceeds to lead on to another key factor, innovation, which builds on this process as it is seen as ‘the practical application of creativity in an organisation’ (Lumsdaine and Binks, 2007, page 20). This is demonstrated in the phone industry for instance whereby existing means of technology are now being incorporated onto handsets. Keyboards which were previously just associated with computers are now becoming a regular addition, proving to be a great time saver against the traditional old methods and very innovative for the market in its nature.
The general thinking behind this suggestion is that when the creative mind is at work, nothing is truly put into product development and as these are simply thoughts, the risk for potential fail is substantially high. Yet innovation involves progressing on what is deemed to be a ‘safe’ idea, and so is simply building on. Sir George Cox summarises this theory when he stated, ‘While creativity is the generat ion of new ideas, which we have in abundance, innovation is the successful exploitation of them’.
In relation to this, Schumpeter discusses a strand of entrepreneurship that was somewhat strong in nature. Defined as ‘a fundamental step change in a product or process that could not be traced back to the original version’, he describes it as ‘creative destruction... the notion of dynamic progress and development’ (Lumsdaine and Binks, 2007, Page 15), above all encompassed by his term of ‘Catalytic Entrepreneurship’. A very evident example of this is Tim Berners Lee, who ‘invented the world wide web, an internet-based hypermedia initiative for global information sharing while at , the European Particle Physics Laboratory, in 1989. He wrote the first web client and server in 1990’ (). Such an initiative was simply astounding and nothing like this had ever been seen before, resulting in a change in the way information is displayed to this very day. The development of such a theory has strong links with the skill of creativity as both display an emphasis on composing something completely new which is previously unseen or related to something in the current market.
Of stark contrast to this, the Austrian School of Economics proposed a differing perspective of the view of an entrepreneur, more associated with innovation, called ‘allocating entrepreneurs’. They see it as a term to people ‘observe the changes in conditions and are alert to the opportunities they present – because they realise new ideas and concept through innovation in economic activity’ (Lumsdaine and Binks, 2007, Page 16). This approach means that rather than look to use creativity to develop a new service or product, they rely on spotting potential market gaps, and exploiting them by being the first to attack a new market, using innovative strategies of product development, maximimising profit acquired.
Despite the obvious distinctions being in place between the two types of entrepreneurship presented, a relationship is still present in how the product would be made a strong market force. The Catalytic side would be responsible for creating the new idea as a result of creative thinking, which would then be put into practice by those who are allocators, as they will have seen the potential in it and been innovative in bringing about economic development via successful marketing and product development, similar to that of the relationship between creativity and innovation.
Innovation can further be related to achieving economic development in that when applied to a business model, the resultant effect on the direction of the business is that it can greatly enhance performance. For example, the idea from Dell to sell computers straight to the consumer without the need for other retailers such as Currys to do it for them, thus lowering costs for themselves and maximising economic development of the company. In order to be able to select the most efficient business model to develop upon, the Pugh Method could be used to make a suitable comparison. In basics terms, it is ‘a creative concept technique that uses criteria in an advantage-disadvantage matrix’; effectively meaning the model is chosen based on the greatest score attained (Lumsdaine and Binks, 2007, Page 71). So in this instance it may have weighed up that the potential increased revenue by not paying suppliers would stand them in a more advantageous position then the possibility of having a greater ease of availability to the consumer, as an example of some of the factors that could be used.
Another process that is particularly useful in developing, entrepreneurial type thinking is Kirk’s Space, focusing on the pre concept stage of innovation. It is a graph whereby the vertical axis represents the extent to which we know our problem or need, whereas the horizontal axis represents the extent of our ability to address the actual problem. When applied to the music industry for instance, the CD would be located in the top right of the graph as a superior solution already exists, and so this area would be known as the ‘red ocean’. Whereas the Mp3 would be located in the bottom left as the capabilities are not yet truly known, meaning it is the area of greatest opportunity and so has a more calming name attributed to it of the ‘blue ocean’. This process is not only particularly useful as it focuses our mindsets on directing towards entrepreneurial behaviour, but also as it shows a link from the problem solving factors as it involves selecting the most profitable areas to work with. (Lecture Notes)
Above all, a fundamental observation of these factors is when entrepreneurship is accomplished successfully, it leads to economic development. This is not mere opinion either, as studies under taken at the University of Arizona have found some quite conclusive evidence. Among their findings it was shown that those who undertook entrepreneurial study had Annual Incomes that are 27% higher and owning 62% more assets, in addition to being in large firms, earning about $23000 per year more than their counterparts (Lumsdaine and Binks 2007, Page 6). This shows a direct link between entrepreneurship leading to economic development as the facts show those in the knowledge are earning a greater salary as a result.
However, when Schumpeter’s belief’s on what makes an entrepreneur apply, this relationship is actually altered. According to him, ‘everyone is an entrepreneur when he actually carries out new combinations, and loses that character as soon as he has built up his business’ (Lumsdaine and Binks, 2007, Page 13). In effect, this suggests that rather than entrepreneurship and economic development be seen as having a continual positive link, instead it is a progression from which once economic status is achieved, you lose any entrepreneurial association to yourself and the link is terminated.
In conclusion, the relationship between entrepreneurship, innovation and economic development on the whole shows a positive correlation throughout, whereby an increase in one factor, does usually constitute resultant positive impacts on the other two. The normal method of procedure for this would be how increasing levels of innovation leading to a greater opportunity with less competition for entrepreneurship business to develop, which ultimately mean the value of such an idea would be greater as the potential returns would be more than sufficient. That said, I believe creativity and problem solving, rather than complementing the other factors, do add equal weight into this equation. Creativity is the basis of innovative development in that it takes what it deems to be ‘safe’ creative ideas forward, and works from there. Problem solving is too almost a divine inspiration from which creativity blossoms, and without such a factor the means at which creative energy is able to work would be the whole process would be considerably slowed due to the close knit nature of all the factors.
References
Neuropsychological Terms and Definitions,
Lumsdaine, E and Binks, M (2007). Entrepreneurship from Creativity to Innovation. Effective Thinking Skills for a Changing World. Oxford, UK, Trafford Publishing.
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ak1992 (student)
