BBA 204: TECHNOLOGY AND CREATIVITY

LESSON 1: KEY TERMS AND CONCEPTS

Technology
Technology is a body of knowledge devoted to creating tools, processing actions and the
extracting of materials.
Technology is the collection of techniques, skills, methods and processes used in the
production of goods and services or accomplishment of objectives such as scientific
investigation.
It can also be the knowledge of techniques, processes or it can be embedded in machines to
allow for operation without detailed knowledge of their workings.
Innovation

This is the introduction of new techniques, product/production or distribution processes that

may be followed by a spread process of diffusion.

Invention
Invention means discovery or devising of a new product, process or system. It is an
identifiable discrete contribution to technical knowledge and to technical change although it
is not the only way in which technology changes e.g. small improvements and adaptations
changes technology.
Creativity
Creativity is the process of bringing something new into being.

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.

Creativity involves two processes: thinking, then producing.

Technological Innovation:

 is a continuous process, within an internal or external venture, build-out to create

value with innovation;
 starts with the ideation process and ends-up with the commercialization of a
viable product or service, in response to a proven market need;
 is a guide for the venture management to decide what technology directions to
take, based on portfolio management, and execution monitoring;
 is driven by entrepreneurial / intrapreneurial spirit, supported by internal / external
funding
Design
This is a structured process that transforms creative ideas into concrete products, services and
systems and as such links creativity to innovation.

The concept of design has been defined in different ways either focusing on design as an
economic activity or more general as the translation of the ideas generated by creativity into
new products and processes.
It links creativity and innovation.
Design definitions are based on design professions with the following ensembles; fashion
design, graphic design, interior design, product design etc.
Creativity is the generation of new ideas, design is the shaping (or transformation) of ideas
into new products and processes and innovation is the exploitation of ideas i.e. the successful
marketing of these new products and processes.

LESSON 2: TECHNOLOGY

2.1 Introduction

Technology is essential not only for the development of smaller enterprises but the overall
economy of any nation. A study by Denilson (1962) revealed that economic growth highly
depends on technology. These controversial findings have since then generated much debate
on the relationship between economic growth and technical progress in relation to the growth
of modern businesses and economies.
Although this casual relationship between growth and technical progress in still in doubt,
many development economists as well as policy makers in developing countries have
considered the transfer of technology from developed countries as an important element for
growth and prosperity.
Many different types of people and organizations are involved in generating, transferring and
using technology including scientists, engineers, technicians, entrepreneurs, civil servants etc.
All these have different objectives and roles to play in the technology development.
To a business, the most important element is the use of technology to make money for the
firm. The underlying question therefore is whether technology can be managed to help a
company/ firm increase its competitiveness or if it can be managed to promote industrial
development.
2.1.1 Defining Technology
Technology is a general term for the process by which human beings fashion tools and
machines to increase their control and undertakings of the material environment.
According to Heinsohn (1977), as quoted by Lewis (1991), technology is the creation of
useful things. It evolves secondarily from a scientific discovery and may be defined as the
totality of the means employed to provide for human sustenance and comfort (Cole & Merrill
1982 quoted by Lewis 1991). Technology is always a social construction and is the
application of organized knowledge to practical tasks by ordered systems of people and
machines.

This means the term technology is imprecise in terms of definition and is perhaps one of the
most misunderstood concepts in the day-to-day application. Different authors have defined
technology differently but all pointing to the same direction.
According to Arora et al (2000), the imprecision in definition is due to the fact that
technology comes in different forms. It can take the form of “intellectual property’’ (patents)
or intangibles e.g. software programs or a design, or it can be embodied in a product e.g.
prototype or a device to perform certain operation or it can take the form of technical
services.
Technology transcends the engineering art to include forms of organization of human
endeavor, methods of rational analysis and structure/system for achieving determined
objectives. Technology is the principle means of achieving / attaining development.
In summary: -
 Technology is the science and art of getting things done through the application of
skills and knowledge (Smille, 1991).

 It is a body of knowledge, techniques, methods, tools, processes and designs (Aduda

& Kaane 1999).

 Technology is also the means by which man undertake to change or influence the
environment.

 Technology is the knowledge, tools and machines available for the production of
goods and services or simply the application of knowledge to practical acts or applied
science.
2.1.2 Origins
The term technology is derived from a Greek word “Tekhnic” for “techno” which refers to an
art or craft and “Logia” for “logy” meaning an area of study. Thus technology literally means
the study or science of crafting. It is also associated with a French word “Technique”
meaning the totality of methods rationally arrived at and having efficiency in every field of
human activities.

2.1.3 Technology Dimensions

Technology may be viewed in 5 different dimensions.
i. Hardware – tools and equipment

ii. Soft ware – Manuals, instructions, management skills- for operating hardware skills

iii. Live ware – Technical skills acquired by operators to operate hardware.

iv. System ware – The supportive infrastructure - that which makes the hardware work.

v. Innovation Ware – The know-how to improve or renovate on the hardware

Technology = Hardware + Software + Live ware + System ware + Innovation ware.

According to Jeans (1999) technology encompasses
a) Techniques – specific configuration of machines and equipment required to produce a
good service (hardware)

b) Knowledge – Knowledge of science and technology, skills, experiences know-how,

attitudes (software)

c) Organization – The institutional arrangement by which the technique and knowledge are
combined and the means by which they are managed partly hardware, software and
knowledge.

Exercise:
Students to identify various small and medium business technologies and break them into the
various dimensions.
For example, Mobile phone;
- Hand set – Hardware

- Sim card – Software

- Skills/know-how to use a mobile- Liveware

- Network – System ware

- Ability to use mobile in other ways – Innovation ware

2.2 Technology Related Terms

i) Science
Science is the organized search for understanding what nature is really like. It is also the
acquisition of new innovations or the use of acquired knowledge methodologically e.g.,
through experiments. Science is knowledge or information in mind. All science is knowledge
but not all knowledge is science, but has some element of art.

ii) Invention
Invention means discovery or devising of a new product, process or system. It is an
identifiable discrete contribution to technical knowledge and to technical change although it
is not the only way in which technology changes e.g., small improvements and adaptations
changes technology. It is usually a stage of technological development at which an idea has
advanced sufficiently for the inventor to draw up plans, construct a working model or in some
way establish technical feasibility. At this stage, technology is patentable and technological
research is the most important source of inventions. Entrepreneurs should be exposed to
research opportunities to develop inventive minds.
iii) Innovation
This is the introduction of new techniques, product/production or distribution processes that
may be followed by a spread process of diffusion.
iv) Patent
This is a governmental legal register/gratuity for a specific period, monopoly (exclusive)
property rights for the exploitation of an invention. Patents only protect knowledge to the
extent that it is embodied in a tangible item which is patentable. Patents are frequently
appropriated and exploited by large businesses or Trans National Corporations and Multi
National Corporations. Local entrepreneurs rarely enjoy their technological inventions due to
lack of awareness. For instance Kyondo and Kikoi in Kenya.

V) Industrialization
Process leading to the capitalist mode of production based on the division and specialization
of labour, development of productive forces, improvements in technology, skills and
productivity. Generally, starts in high industrial activities and represent fundamental change
in the structure of an economy particularly in the redeployment of resources away from
agriculture.
vi) Know-how
Practical, unpatented, technical knowledge, professional experience and accumulated skills
for the production and distribution of commodities and services
vii) Productivity
Is a measure of the rate at which output flows from the use of a given amount of in-put. It’s
measured by expressing output as a ratio to a selected input e.g. labor productivity, capital
productivity. Entrepreneurs should utilize technology to improve business productivity.

viii) Technical change

An advance, a change in technique, change in methods of production or adoption of a
different technique. It is the production of a given output with a different amount or
proportion of inputs such as labor, capital etc.
Technical change may involve any of the following: -
 Shift in or along production function

 Introduction of a new product or process

Technical change occurs by way of innovation and diffusion and does not necessarily mean/
involve new technology.
ix) Technical progress
These are effects of change in technology i.e. shifts in the production function as a role of
technological change in the growth process. Technical progress is an aggregate factor
comprising anything that increases the output per unit of factor inputs that contribute to the
growth of total productivity in a business e.g., effects of training of the labour.

Technological progress in that matter is the process of transmission of technology (technical

knowledge), its absorption, diffusion and reproduction by a different productive apparatus
form the one that has produced it. It is worthy noting that transfer of technology seldom
occurs in LDCs as compared to common process of commercialization of technology.
i) Technology management
This is the utilization of management techniques to support technological innovation process.
Technology management is where needs and opportunities are identified; solutions are
planned, designed, developed and implemented.
It is a process whereby technological research activities are managed and results are
transferred to productive units. What is important for competitiveness (and productivity) is
the capacity to place technological development (innovations, technical progress) within the
framework of the enterprise’s strategy. Small business entrepreneurs are faced with myriad of
challenges in managing technology.
ii) Technology assessment
Process of systematic analysis, forecasting and evaluation of a wide range of impacts in
society, the environment and the economy concerning the choice of techniques and
technological change, with the purpose of identifying public policy, investment and
production options. Technology assessment involves: -
i) Evaluation of the social environment and economic costs of existing technologies in the
form of pollution, social disruptions infrastructure cost etc,

ii) Anticipation of probable detrimental effects of new technologies to businesses,

iii) Devising methods of minimizing technology costs to businesses,

iv) Evaluation of possible benefits of new or alternative technologies in connection with

social and economic needs etc
iii) Trademark Name, symbol or a design that an enterprise by an exclusive legal right,
utilizes and attaches to its product or services in order to differentiate them from others

2.3 Role of technology

It has become a vital and integral part of every business plan. From the MNC who maintain
mainframe systems and databases to small businesses that own businesses that own a single
computer, IT plays a role.
Some of the roles include;
1. Communication – a number of communication tools have evolved that allow staff and
other stakeholders in businesses to communicate.
2. Inventory management – in management of inventory organisations need to maintain
enough stock to meet demand without investing in more than they require.
3. Data management – organisations or companies store digital versions of documents
on servers and storage devices.
 4. Management information systems – storing data is only of benefit if that data can be
used effectively. Progressive companies use that part of data as part of their strategic
planning process as well as the tactical execution enable companies to track sales
data, expenses and productivity.
5. Customer relationship management
Companies are using IT to improve the way they design and manage customer
relationships. CRM systems capture every interaction a company has with a customer
so that a more enriching experience is possible.

2.4 Technology Life Cycle

The technology life cycle (TLC) describes the costs and profits of a product from
technological development phase to market maturity to eventual decline. Research and
development (R&D) costs must be offset by profits once a product comes to market. Varying
product lifespans mean that businesses must understand and accurately project returns on
their R&D investments based on potential product longevity in the market.

Due to rapidly increasing rates of innovation, products such as electronics and

pharmaceuticals in particular are vulnerable to shorter life cycles (when considered against
such benchmarks as steel or paper). Thus, TLC is focused primarily on the time and cost of
development as it relates to the projected profits. TLC can be described as having four
distinct stages:

Technology life cycle chart: This chart illustrates the stages in the technological life cycle.

 Research and Development – During this stage, risks are taken to invest in
technological innovations. By strategically directing R&D towards the most promising
 projects, companies and research institutions slowly work their way toward better
versions of new technologies.
 Ascent Phase – This phase covers the timeframe from product invention to the point at
which out-of-pocket costs are fully recovered. At this junction the goal is to see to the
rapid growth and distribution of the invention and leverage the competitive advantage
of having the newest and most effective product.
 Maturity Stage – As the new innovation becomes accepted by the general population
and competitors enter the market, supply begins to outstrip demand. During this stage,
returns begin to slow as the concept becomes normalized.
 Decline (or Decay) Phase – The final phase is when the utility and potential value to
be captured in producing and selling the product begins dipping. This decline
eventually reaches the point of a zero-sum game, where margins are no longer
procured.

Product development and capitalizing on the new invention covers the business side of these
R&D investments in technology. The other important consideration is the differentiation in
consumer adoption of new technological innovations. These have also been distributed into
phases which effectively summarize the demographic groups presented during each stage of
TLC:

Technology adoption life cycle: This adoption chart highlights the way in which consumers
embrace new products and services.
  Innovators – These are risk-oriented, leading-edge minded individuals who are
extremely interested in technological developments (often within a particular industry).
Innovators are a fractional segment of the overall consumer population.
 Early Adopters – A larger but still relatively small demographic, these individuals are
generally risk-oriented and highly adaptable to new technology. Early adopters follow
the innovators in embracing new products, and tend to be young and well-educated.
 Early Majority – Much larger and more careful than the previous two groups, the early
majority are open to new ideas but generally wait to see how they are received before
investing.
 Late Majority – Slightly conservative and risk-averse, the late majority is a large group
of potential customers who need convincing before investing in something new.
 Laggards – Extremely frugal, conservative, and often technology-averse, laggards are a
small population of usually older and uneducated individuals who avoid risks and only
invest in new ideas once they are extremely well-established.

Taking these two models into consideration, a business unit with a new product or service
must consider the scale of investment in R&D, the projected life cycle the technology will
likely maintain, and the way in which customers will adopt this product. By leveraging these
models, businesses and institutions can exercise some foresight in ascertaining the returns on
investment as their technologies mature.

2.5 Technology acquisitions

This involve bringing in new technologies from external sources rather than using the firm’s
internal research and development activities. By its nature technology acquisition is a
technology transfer with transactions costs associated with various stages of the acquisition
process.

2.5.1 Steps involved in technology acquisitions

The process of technology acquisition require;

1. Identification of attractive technologies or partners with technological capabilities.

2. Assessment of these opportunities, selection of the most promising and consideration
of the terms of the acquisition.
3. Negotiation of the terms of acquisition between acquirers and sellers.
4. Transfer of technology to the acquirer, if these negotiations have been successful.
 The assessment and negotiation stages form a cycle as it is expected that terms discussed
during negotiations will need to be re-assessed before acceptance.

2.5.2 Motivations for technology acquisitions

1. Developing new technological capabilities.
2. Increasing strategic options – increasing a company’s technological capabilities gives
this company more strategic options, allowing it to select the best available
technology. For example,
 acquisitions encourage innovation, countering inertia and rigidity and
increasing R&D productivity.
 Acquisitions can open new markets, allowing the knowledge of new
customers, channels, inputs, processes and markets to be exploited.
 Acquisitions may help to deal with uncertainty and risk.
3. Gaining efficiency improvements - this can reduce the time to market thus enabling a
firm to be more responsive to market demands.
 There are often cost advantages to acquiring technologies externally. Firms
substitute fixed investment costs with variable acquisition costs and such costs
can be recovered via profits from new businesses that follow a partnership-
based strategy.
4. Responding to the competitive environment – firms are more likely to consider
technology acquisitions as environments become more hostile, when there is rapid
technological change and fast-moving competition in their market areas. Acquiring
technologies helps the firm feel less vulnerable and more competitive. In such an
environment it is likely there will be a greater use of partnerships, collaborations and
outsourcing as a substitute for in-house activities.
2.5.3 Sources of technology
Technology can be acquired from a number of different kinds of sources including;

1. Universities – are increasingly interested in the commercialization of research but

are generally inexperienced in commercializing intellectual properties.
2. Start-up companies – can be an important source of ideas for larger companies,
however they are typically lacking resources and business knowledge and are
often subject to the influence of their investors. They may be more flexible but
also more ‘volatile’ than established firms. They may own only one technology
 and fear of losing control over it might lead to over protective attitudes.
Partnerships between start-ups and established firms can be mutually beneficial.
3. Consortia – a firm gets together with other types of organizations typically to
tackle complex technological issues which would be difficult to deal with in
isolation.
2.5.4 Technology acquisition options
The acquisition options include;

1. Future technology development – in most technology transactions, technology is

still immature and needs to be enhanced and developed to fit the needs of the firm.
Knowledge has to pass between one party and the other at some point during this
development.
There are three main approaches to this;
 the technology can be developed internally by the acquiring company;
 it can be done externally by the technology provider or
 it can be carried out collaboratively between the two.
The choice of development path will depend on a number of things including the
type of technology involved, the resources available, the degree of control the
acquiring firm needs to maintain over the technology and the strategy driving the
acquisition.

2. Contracts and relationships – this concerns the relationship between the parties
involved. The form the relationship takes will vary according to the nature of the
technology transfer. This may range from a simple contract for R&D services at
one end of the scale, to a joint venture or even take-over by one company of
another.
3. Ownership of intellectual property – can take three different forms;
 The IP can belong to one party only.
 The IP can be shared between parties who collaborated to develop it.
 The IP can be owned by everyone and is donated to the public.
4. Technology exploitation – decisions concerning the ownership of IP are
intrinsically linked with decisions over how to exploit it. Two possibilities, not
mutually exclusive exist;
 A firm may want to exploit a technological IP by embedding it in products
and services.
  A firm may want to exploit the technology with a number of business
models and ‘sell’ it in its disembodied form (i.e. licensing it).
5. Rights to use a technology – dividing up the rights to use the IP in different ways
can compensate for a lack of formal ownership. The IP can be exploited along
multiple dimensions, ensuring that each party gains the rights they need to make
use of the IP in their particular area. The parties can have exclusive or non-
exclusive rights to use the IP for each dimension.
6. Acquisition ‘currency’ – the acquirer can offer the seller a number of different
kinds of benefits in exchange for the technology – not necessarily financial. There
are three main kinds of ‘currency’ that are used in exchange for technology;
financial (lumpsum, cash linked to milestones or royalties) rights over something
(markets, other technologies, applications, product parts, design etc.); other forms
of help (to find customers, to develop other technology, knowledge of markets,
technologies etc.)
7. IP protection

2.6 Technology Transfer

The transfer process of technology can be tied to the general innovation process. The steps
can be defined as follow:
 Identifying appropriate technology
 Evaluate the technology
 Secure /Protect the technology
 Produce prototype
 Obtain technology awareness training
 Product specific training
In order to apply these steps in a more general environment Cooke and Mayes defined the
major steps of the technology transfer process as being:
 Searching
 Finding
 Evaluating
 Acquiring
 Customizing
 Operating

A transfer project is a unique endeavour until the technology is operational in the company.
Companies should therefore ensure that they are familiar with project management principles
in order to ensure a smooth transfer process.
2.6.1 Step 1: Recognizing a need or opportunity
As mentioned before, the initial step in the transfer of technology process is the recognition
of a need. This need must be satisfied by current technology applied differently, or it must be
satisfied by new technology. Needs can arise from the following;
:
 Scientific changes
 Competition
 The market
 Legislation
 Human inquisitiveness
 Innovation as company policy

Scientific changes can bring about new products, utilizing new technologies. An example
would be the development of nylon, which made it possible to solve needs in a
technologically advanced way.

Competition together with the market may be one of the greatest initiators of the need to
transfer new technology. This means that an organization’s products or services must be
tailored to address the specific needs of individuals. If an organization does not have the
technological capability to do so, it will lose that market to its competitors. Technology can
give a business the competitive advantage it needs, to secure its position in the market.

Legislation may also create a need that has to be solved by obtaining new technology. If we
think about the aviation industry in general there are, for example, restrictions on the noise
levels of aircraft over populated areas surrounding airports. This legislation disqualifies older
aircraft from using these airports. A new need arose and subsequently engine noise was
reduced by developing 'hush kits', which at that stage was a new technology in the aviation
industry. Human inquisitiveness together with innovation as company policy (R&D) always
ensures advances in technology.

2.6.2 Step 2: Searching for technology

After defining a need, an organization must search for appropriate technology that will best
satisfy the need. There are several strategies that can be followed and they can be divided into
two major groups. The first is developing the technology yourself and the second is looking
for the technology outside the organization.

Sources of information
Information plays a big role in the search for new, or the most applicable technology.
Organizations are particularly interested in information on products, research activities,
finance and patent information.

1. Higher education institutions

One of the successful sources of information and co-operation is higher education institutions
in the form of universities. Partnerships with these institutions help companies to:
• Access new technologies
• Keep abreast of new technologies
• Access consultancy skills
• Develop new technologies jointly
The transfer of technology from university to industry can be established in several ways.
One must keep in mind that knowledge, which is part of technology, is part of a person and
resides in their mind. Therefore technology can be transferred through the movement of
people.

The transfer mechanisms include;

a) graduate employment
At university level people build up a knowledge base in their respective field and this
knowledge base is then transferred to industry by employing that person. Industry will often
make grants available for people to complete their university studies. In this way they assure
a smooth transfer process.
b) Sabbaticals
These enable university lecturers to work in a company. This is a reciprocal transfer
mechanism. The lecturer's knowledge is exploited in the company and the university is
exposed to the industry, through the lecturer's practical experience.
c) Consulting services
These may be offered by the universities, contract research, industry/university research
units, university or industry liaison units and forums for the exchange of information.

2. Technology transfer agencies

These are agencies that offer a wide variety of services from searches on information,
products and patents, to legal advice and consultancy. They can be very useful for some of
them specialize in certain industry areas and therefore have extensive knowledge in that area
of industry. For an organization that does not have specialized skills in the area of technology
transfer, this is an excellent alternative to consider. In some cases an external party has a
more objective view on the industry and can therefore deliver a more objective opinion, as
opposed to individuals inside an industry.

A tremendous amount of research goes into universities, research bodies and industry. For
any organization it is essential that this research be exploited and transferred, in order to
strengthen their technological function. Organizations that do not have the capability of doing
their own research should seriously consider partnering with these institutions, in order to
have access to relevant research.

2.6.3 Step 3: Identify and Monitoring Information

Before a technology can be identified that may satisfy a newly identified need senior
personnel must have an accurate knowledge of not only the company's technological
position, but also knowledge about the market and competitors. This strategy will ensure a
well-organized approach in obtaining new technology.

2.6.4 Step 4: Evaluating the Technology

When identifying technology it should be evaluated in order to find the most suitable
technology. Aspects that should be addressed in the evaluation process include:
• Strategic implications
• Effect on market and customer
• Operational changes
• Personnel
• Training
Before starting the transfer process an evaluation criterion should be defined in order to
evaluate each identified technology. The team responsible for the transfer of the technology,
should define aspects to be evaluated and the measurement criteria for each aspect. It is
important to involve as many people as possible, especially those that will work with or will
be affected by the new technology. By involving all concerned, an objectively defined
opinion should be possible and the most appropriate technology can be selected. It must be
stressed that the evaluation criteria should consist of objectives and specifications already
defined, after the identification of the need. This will aid in the transfer process, for each
aspect in the transfer process will be measured or evaluated according to the defined criteria.

2.6.5 Step 5: Transfer

Transfer of technology takes place via certain mechanisms. These mechanisms can be
identified per area of technology as follows:

Technology in the form of knowledge can be conveyed through the following mechanisms:
• In print through technical journals
• Scientific magazines
• Patents
• Orally at conferences
• In discussions with colleagues, acquaintances and consultants
• On television or radio
• Courses
• Service bulletins
• Specifications

Technology in the form of skills is acquired by doing something. It can be conveyed by:
• Watching someone doing something
• Watching a video of someone doing something
• Demonstrations at courses
• Hands on training

Technology in the form of equipment is conveyed via the following mechanisms:

• Products
• Trade magazines
• Trade conventions
• Sales representatives
• Advertisements
• Direct mail

2.6.5.1 Company-to-Company Transfer

Technology can be transferred between countries or regions, but most technology transfer
happens between companies. Not only is research and development done by institutions in
the public domain like universities, but also by private companies outside the public domain.
Research done by private companies not always delivers the results they anticipated. For
instance technology was developed to be used in a product that does not fit in with their
current product portfolio, or the return on a product is too small.
This potential product may however, be suitable to another company to develop further.
Somehow the cost of research must be covered and if a company cannot properly utilize a
product, the cost of research will be lost.
A good strategy would be joint ventures with other organisations, which benefits both parties.
Company-to-company transfer is usually beneficial to both parties, except in the case where
transfer is attempted between a large established company and a small start-up company.
Larger companies are reluctant to put effort into a smaller company to help with their
development without a proportional stake. Many governments, however, believe that the
future prosperity of their countries, will depend on the speed and effectiveness of small
companies to implement technology spin-offs from larger private and public institutions. The
success will therefore be dependent on the relationship between the companies.

It is clear that the collaboration between companies is the major technology transfer
mechanisms in the private to private domain. There are several forms of collaboration,
a) Technical collaboration.
One form of technical collaboration is where partners increase their expertise through sharing
knowledge, skills and equipment.

b) Another form is where one partner is in possession of technology, which the other
needs for its new product.

Cooke and Mayes identified the main aims of collaboration between companies as follows:
• Sharing risk and cost
• Growing of technological knowledge
• Helping in product development
• Developing industry standards together
• Acquiring and/or penetrating new markets
• Improving speed to market

Developing new products is a risky and costly business and therefore companies will rather
share the risk and cost involved in these projects. Companies also feel more assured if they
concentrate on a business area they are familiar with, while leaving other aspects to partners
that are more familiar with business in those areas. Collaboration in itself can be risky
because of the fact that companies differ in several aspects. The biggest of the differences
may be company culture.

Collaboration can be a major strategy in an organization in obtaining relevant technology.

One of the most promising collaboration agreements is one where you move away from the
traditional client vendor partnership, into a more mutually beneficial relationship.
Remuneration will still be sought, but the main benefits for both parties will be the
technology transfer between the parties. The transfer will not be one way, but both ways. This
is called reciprocal technology transfer.
.
Each party will have an active role to play in negotiations and in decision making. These
partnerships are characterized by mutual goals. Often the one party will be strong in the
knowledge field and the other in implementing the knowledge. They will therefore not
compete for the same technology, but rather work together applying their specialized
expertise to reach the communal goal. These partnerships are often found between
universities and industry. Universities need industry in applying their knowledge, and
industry needs universities to effectively apply their skills. Both parties need each other and
this factor may have very positive effect on any partnership.
2.6.5.2 Modes of Transfer
All transfer modes can be divided into two major categories: passive and active. This
classification refers to the level of activity in applying the technology in the transfer process.

If the technology transfer mechanism presents the technology to the potential user, without
assistance regarding its application, then the mode is said to be passive. In the passive mode
only the knowledge part of technology is transferred. The skills surrounding the technology
are not transferred. These mechanisms can include presentations in a report.

If, on the other hand the provider of the technology assists with the application of the
technology, then the mode is said to be active. These mechanisms include training, etc. The
boundaries between passive and active are not easy to define and therefore a semi-active
mode is also defined.

Passive Mode
The most widely used mechanism in the passive mode is the instruction manual or
"cookbook" approach. This is the only contact between the originator of the technology and
the user. Millions of products are made and sold with transfer occurring in this form.

Just think of one's own motor car. These self-teaching manuals used in this mode all have one
thing in common: they presume that the user has some level of knowledge and competence in
the specific technological area. It is an important point in this mode of transfer. A mechanic
can assemble a component perfectly from an instruction manual. This becomes more intricate
when we think of other technologies like glassblowing, sheet metal work and woodwork. In
these areas the skill that lies with the user must be far greater. This is important to keep in
mind if you want to transfer technology. The skill resting in the user of the technology must
be clearly defined by the originator, because this will have a definite impact on the success of
the transfer process. If you give someone who does not know how to drive a motor car, that
technology, it will be useless to the person, because it cannot be used.

Semi-Active Mode
In the semi-active mode there is intervention from a third party in the transfer process. This is
usually in the form of a transfer agent. In the semi-active mode the role of the transfer agent
is limited to that of adviser. Very often in the semi-active mode, the transfer agent only
screens information in the relevant field of interest and passes it on to the final user. He
therefore ensures the relevance of the information, because of his knowledge, not only about
the user's needs, but also because of his knowledge about the technology. The role of the
transfer agent is therefore one of communicator between the technology and the user. If his
role is beyond this, then the mode of transfer becomes active.

The most widely used source of technical information is in the form of written technical
documentation and therefore the passive mode of transfer is the most widely used. Because of
this, care should be taken in the writing of these documents. Very often data banks and
published material are searched in order to obtain information on relevant subjects.
Experience has shown that what the first would-be user wants to read is a non-technical
description of the technology. Because the reader will be trained in one or more technical
disciplines, it will be easy for him to judge the relevance of the document. Because of the
increasing amount of data this becomes more relevant. This is a time consuming effort and
often it is 'outsourced' to a transfer agent. He will then be responsible for identifying relevant
information and transferring it to the user. The transfer agent can be in the form of one or
several people working in a team, each within their own field of expertise. An additional
benefit of using a transfer agent, is that the user of the technology may have interpreted the
problem incorrectly and this is leading them along the wrong path in their search for a
solution. Here the agent can be of help because of his knowledge of the user's needs.

The passive and semi-active modes are therefore recognized by the fact that no third party
participates in the application of the technology. Only limited assistance in identifying
relevant technologies is experienced in the semi-active mode.

2.7 Technology Commercialization Factors

Commercializing Innovative Products

Commercialization is the process or cycle of introducing a new product or production method

into the market. Commercialization is often confused with sales, marketing, or business
development. In the context of innovation, commercialization is the process of introducing a
new product or service to the public market. Innovations are defined as new products or
services that improve upon their predecessors, and the process of integrating them into the
current market is a critical component of successfully bringing them to market. Great
innovations are not always brought to market due to a lack of feasibility or poor planning.
Long-term planning is crucial in the commercialization process because this is when the most
money will be spent—on advertising, sales promotions, and other marketing efforts after the
launch of a new product.

The Commercialization Process

The commercialization process has three key aspects:

 Carefully select, based upon comprehensive market research, which products can be
sustained financially in which markets for long-term success.

 Planning for various phases and/or stages in the commercialization process is key.
Consider geographic distribution, different demographics, etc.

 Finally, identify and involve key stakeholders early, including consumers.

Key Strategic Questions

When bringing a product to market, a number of key strategic questions need to be answered
satisfactorily long before substantial costs are incurred for commercialization. These
questions are simple to ask but complex to answer, and business analysts and market
researchers will spend a considerable amount of time approaching them via research models
and careful financial consideration.

 When: The company has to time introducing the product perfectly. If there is a risk of
cannibalizing the sales of the company’s other products, if the product could benefit
from further development, or if the economy is forecasted to improve in the near
future, the product’s launch should be delayed. Similarly, many items are seasonal
(e.g., fashion) and so should be timed appropriately to maximize revenue.
 Where: The company has to decide where to launch its products. This can be in a
single location, in one or several larger regions, or in a national or international market.
This decision will be strongly influenced by the company’s resources; larger
companies can reach broader geographic audiences. It is important to keep in mind
where the early adopters will be and where competitive gaps may exist. In the global
marketplace, this question is increasingly complex.
 To whom: The primary target consumer group will have been identified earlier through
research and test marketing. This primary consumer group will include innovators,
early adopters, heavy users, and opinion leaders. Their buy-in will ensure adoption by
other consumers in the marketplace during the product growth period.
 How: The company has to decide on an action plan for introducing the product by
implementing these decisions. It has to develop a viable marketing mix and create a
respective marketing budget.

While these questions are key considerations in the commercialization process, remember
that they should have been answered long before the commercialization stage. After all, if the
need is not sufficiently widespread or the market not sufficiently developed, there is little
reason to have pursued a given innovation in the first place.

Factors Affecting Technology Innovation and Its Commercialization in Firms

Commercialization of innovative technologies is the heart of technology entrepreneurship. It

is the process of transforming an innovative technology into a commercial product/service or
improving an existing product/service by incorporating the innovative technology into it for
commercial gain. Although there is an emphasis on technological innovation in current
business theory and practice, the commercialization of it carries the same weight of
importance

There are different elements that could affect technology innovation and its
commercialization in firms. These elements can be organized under a classification that is
composed of nine major factors and their constituents.

1. The first factor is ‘individual’ factor of a firm.

This factor is about characteristics of individuals in a firm who have a role in the general
scheme and process of technology innovation and its commercialization. This factor could be
further decomposed into its constituents that are:
• Social skills and teamwork: richness in social skills and ability to work in teams
• Education: educational background
• Diversity: demographic diversity and diversity in professional, personal and cultural
background and life experiences of these individuals.

2. The second factor is ‘ideology’ factor of a firm.

It deals with the foundation that a firm is built upon, the values it stands for, its approach
toward business, its configuration and constitution and in general, its philosophical approach
toward business. The constituents of this factor are:
• Vision and mission: the ideal image that the firm holds and aspires to become and what it
wants to fulfill by becoming that
• Values: the principles that the firm stands for and conducts itself based on
• Culture: the manner by which the firm’s employees carry themselves, handle social
transactions among each other and with outsiders
• Flexibility: the degree by which the firm’s organization structure could change to adapt
itself to innovations and disruptive changes in the industry

3. The third factor is ‘organization’ factor of a firm.

It involves the structures and arrangements which put the ideology and philosophy of the firm
into effect and brings them into practice. The constituents of this factor are:
• Strategy: the business strategy that is formulated based on the firm’s long–term and mid–
term objectives by considering its resources and the industry’s environment and is
implemented through the firm’s organization
• Learning: the ability of the firm to learn continuously from the environment and its own
doings and moving the organization forward based on what is learnt
• Processes: the business processes which are implemented to carry out the firm’s activities
• Stakeholders: the cooperation between the firm’s stakeholders, their relationship, their
interaction, and their attitude and behaviour towards the firm and its objectives
• Social capital: the formal and informal network of connections among the firm’s
stakeholders and also their connection with members of other influential external entities and
people

4. The fourth factor is ‘management’ factor of a firm.

It is about how the management of the firm handles different aspects of it and deals with
different situations. The constituents of this factor are:
• Style: the management’s type of approach toward making decisions and also dealing with
people
• Knowledge management: capacity of managing knowledge–related activities and processes
of the firm, from knowledge production up to capturing and sharing it. Also, taking
advantage of external produced knowledge and knowledge spill overs
• IP management: the ability of the management to handle and make proper use of different
types of intellectual property such as patents, copyrights, trademarks and trade secrets
• HR (human resource management): ability to manage the employees and especially the
firm’s talents and also spotting talented individuals outside the firm and attracting and
employing them
• Risk management: minimizing the impact of uncertainty in the internal and external
environment on the firm’s assets and resources
• Financial management: managing the firm’s financial resources to support and foster the
firm’s activities and also tapping into external financial sources if needed

5. The fifth factor is ‘technology’ factor of a firm.

It involves the technological domain in which the firm innovates. Moreover, it includes
technological aspects that influence the ability of the firm to innovate. The constituents of
this factor are:
• Complexity: the amount of complexity in a technology in different facets of it such as
production complexity, components numerousness and usage complexity
• Readiness level: the level of maturity of a technology from being still in basic research level
up to being ready for lunch
• Dependency: the reliance of a technology on other technologies and if those technologies
are internal or external to the firm
• Transfer: the level of facility by which the technology could be transferred from or to the
firm
• Facilities: the technological facilities and instruments that the firm possess or have access to
which could help the firm in creation and production of technology from doing research and
development up to manufacturing

6. The sixth factor is ‘knowledge’ factor of a firm.

It incorporates all the aspects regarding the firm’s knowledge which is the essence and
foundation of technological innovation. The constituents of this factor are:
• acquisition: the ability of the firm in acquiring knowledge from external sources and
benefiting from knowledge spill overs
• production: the capacity of the firm in knowledge creation and production by different
processes such as research and development, know–how creation and organizational learning
• HRD (human resource development): the improvement of human capital’s knowledge by
providing proper and relevant education
• Capture: the capacity of the firm in recording the produced and acquired knowledge in a
usable and accessible manner
• Transfer: the ability of the firm to spread and share its knowledge capital among its human
resources
 7. The seventh factor is ‘support’ factor of a firm.
It deals with the firm’s attitude toward technological innovation and how it embraces it and
provides for it. The constituents of this factor are:
• Encouragement: promotion of technology innovation in the firm and stimulating the
employees’ participation in its process with permissive policies
• Communication: supporting the communication of the firm’s technological requirements
and obstacles. Also, making an environment in which the employees easily communicate and
ideas, problems and solutions are discussed comfortably. Additionally, enhancing the
communication among different departments and teams of the firm
• Finance: supporting innovative technological initiatives and projects
• Facilitation: Assisting innovative technological initiatives and projects by facilitating
interdisciplinary relationships and enabling technological projects, events and programmes
• Reward: implementing a reward system for initiators and participants in commercially
successful innovations
• Failure: tolerating early failures in innovative projects and programmes and also ensuring
that failed projects and programmes do not discourage the employees from further
participation in innovation process

8. The eighth factor is ‘market’ factor’.

It is about keeping the firm’s technological innovative course in line with the market needs
and also learning from what is happening in the market and incorporating it in the innovation
process. The constituents of this factor are:
• Consumers: the firm understands of the consumers and their needs
• Competitors: the firms’ knowledge of its competitors and their strengths and weaknesses
• Trends: in which direction the market is moving and what kind of products and services are
desired
• Position: the firm’s desired position in the market and also noticing unoccupied market
positions
• Demand: the appetite of market for a certain product or service
• Size: the total market size for a certain product or service
• Growth: the market’s potential size and demand for a certain product or service in the future
• Substitutes: products and services which could take the market away from a certain
technology and shrink the market size and demand.

9. The ninth factor is ‘environment’ factor.

This factor regards elements of the firm’s external environment which could affect the market
or how the firm performs. Also, this factor could create new opportunities or diminish them.
The constituents of this factor are:
• Political: political stability, the government’s involvement in the economy in general and,
especially the policies toward facilitation of technology innovation such as taxation policies
and providing financial support
• Economic: the economic factors which affect the market and the firm’s decisions, such as
interest rate and inflation
• Legal: the legal system affecting the firm, such as labour law, consumer law and
environmental law
• Social: the different aspects of the society in which the firm operates in and targets toward
such as cultural aspects, age distribution, educational level and workforce status

THEORIES OF CREATIVITY AND INNOVATION

The following are theories and models that guide the concept of creativity and innovation.

1. Componential theory of organizational creativity and innovation

The most important premise of this theory is that work environments impact creativity by
affecting components that contribute to creativity which represent a basic source for
organizational innovation (Amabile, 1997).
There are three major components contributing to individual or small team creativity:
expertise, creative-thinking skill, and intrinsic motivation. In contrast, the main components
of the wider work environment that influence employee creativity are organizational
motivation to innovate, resources (including finances, time availability, and personnel
resources), and managerial practices, such as enabling challenging work and supervisory
encouragement (Amabile, 1997; Amabile & Conti, 1999).
This model has received some empirical support in terms of the role of its motivation
component as a psychological mechanism underlying influences from the work environment
on employees’ creativity, though the other components have not received as much research
attention as the motivation component (Zhou & Shalley, 2010; Shalley , Zhou, & Oldham,
2004).

2. Interactionist perspective of organizational creativity

According to Woodman, Sawyer and Griffin (1993) the interactionist perspective of
organisational creativity stresses that as complex as creativity is, it is an interaction between
the individual and their work situation at different organisational levels. The levels include
individual, team and organisatinal.
At individual level, individual creativity is as as result of antecedent conditions (e.g.,
biographical variables), cognitive style and ability (e.g., divergent thinking), personality (e.g.,
self-esteem), relevant knowledge, motivation, social influences (e.g., rewards), and
contextual influences (e.g., physical environment).
At the team level, creativity is a consequence of individual creative behavior, the interaction
between the group members (e.g., group composition), group characteristics (e.g., norms,
size), team processes, and contextual influences (e.g., organizational culture, reward
systems).
At the organizational level, innovation is a function of both individual and group creativity
(Woodman et al., 1993).This has been one of the most frequently used conceptual
frameworks in emphasizing the interactions between the contextual and individual factors
that might enhance or inhibit creativity at work (Shalley , Gilson, & Blum, 2009; Yuan &
Woodman, 2010; Zhou & Shalley, 2010).
 3. Model of individual creative action
Ford (1996) argued that employees have to consider between two competing options- to be
creative or to undertake merely routine, habitual actions. According to this framework, there
are three groups of factors that might influence this decision: sense-making processes,
motivation, and knowledge and skills. Individual creative action is thus argued to be a result
of the joint influence of these factors, in the case any of them being lacking, an individual
would not engage in creative action. The motivation to initiate a creative or habitual action is
further determined by goals, receptivity beliefs (e.g., expectations that creativity is valued –
creative actions are rewarded), capability beliefs (e.g., expectations that one is capable of
being creative or confident in creative ability), and emotions (e.g., interest and anger as
facilitators of creativity whereas anxiety constraints creativity). Although this model has not
attracted as much research attention as the componential or interactionist frameworks have,
perhaps partly because the model is complex and hence it may be challenging to empirically
test it as a whole, portions of it have received some empirical support over more recent years
(e.g., Janssen, 2005; Unsworth & Clegg, 2010).

4. Theorizing on cultural differences and creativity

The question of whether there are differences in creativity in different cultures has significant
implications for management practice, international business and economic development
(Morris & Leung, 2010; Zhou & Su, 2010). However, theorizing and research in this regard
have lagged behind practical needs. This significant research-practice gap has led to repeated
calls for greater research attention on cultural differences and creativity (Anderson et al.,
2004; Shalley et al., 2004; Zhou & Shalley, 2003), especially on similarities and differences
in creativity between the East and the West (Morris & Leung, 2010).

Regarding individuals’ creativity, theorizing has focused on cultural differences in individual

creativity, such as how task and social contexts moderate the relation between individuals’
cultural values (e.g., individualism/collectivism, power distance, and uncertainty avoidance)
and creativity (Erez & Nouri, 2010), how culture moderates influences of leaders,
supervisors, coworkers, and social networks on creativity (Zhou & Su, 2010), how culture
influences the assessment of creativity (Hempel & Sue-Chan, 2010), and how culture affects
the entire process of creativity (Chiu & Kwan, 2010).

Regarding team creativity, Zhou’s (2006) model of paternalistic organizational control

derives from international research into cultural differences between work teams in Western
and Eastern countries. It is interesting in regard of this point-of-departure as it conceptualizes
how different forms of paternalistic control at the organizational level of analysis may
impinge upon creativity produced by teams embedded in the organizations. In this model,
paternalistic organizational control is theorized as the level of control exerted by top
management over personnel and task-related decisions within work teams.

Zhou (2006) suggests that the impact of such control on team intrinsic motivation and
consequently, on team creativity, differs in terms of national culture. She suggests that
paternalistic organizational control fosters team intrinsic motivation and creativity for teams
in the East, whereas for teams in the West, such organizational control acts as an inhibitor of
group intrinsic motivation and thus creativity. This is one of the first models published in the
mainstream organizational science literature that takes a multi-level approach to directly
address the role of national culture as it may influence how organizational control at the
organizational level of analysis affects team creativity at the team level of analysis.
Even so, empirical examination of it has been rare, perhaps partly because its multi-level
theorizing requires that researchers collect data from a large number of teams embedded in a
good number of organizations in Eastern and Western countries. On the other hand,
conceptual works positing positive impact of teams’ cultural diversity on team creativity have
received more research attention and empirical support (Stahl, Maznevski, Voigt, & Jonsen,
2009). Consistent with the “value-in-diversity” thesis in the diversity literature, this line of
work essentially argues that cultural diversity promotes divergence in teams, and divergence
leads to creativity (Stahl et al., 2009).

While the above focus on creativity mainly the following will lay emphasis on innovation

5. Four Factor Theory of Team Climate for Innovation

West (1990) alludes the following four team climate factors that facilitate innovation: vision,
participative safety, task orientation and support for innovation. Innovation is enhanced if (1)
vision is understandable, valued and accepted by the team members, (2) team members
perceive they can propose new ideas and solutions without being judged or criticized, (3)
there is a stimulating debate and discussion of different possible solutions within the team
which at the same time will more likely be carefully examined, and finally (4) team members
perceive support for innovation (Anderson & West, 1998; West, 1990). This theory has been
widely applied in the team innovation research and has received support from both primary
and more recently from meta-analytic studies (Hülsheger, Anderson, & Salgado, 2009).

6. Ambidexterity Theory
Bledow, Frese, Anderson, Erez, & Farr (2009a, 2009b) recently advocated ambidexterity
theory to explain the process of managing conflicting demands at multiple organizational
levels to successfully innovate. Ambidexterity refers to “the ability of a complex and adaptive
system to manage and meet conflicting demands by engaging in fundamentally different
activities” (Bledow et al., 2009a). Generally ambidexterity represents successful management
of both, exploration (e.g., creating new products) and exploitation (e.g., production and
implementation of products). In terms of integration of activities, Bledow et al. (2009a)
distinguish between active management on one hand and self-regulatory processes on the
other and suggest that both are required for the integration of activities performed by sub-
systems or at different points in time (Bledow et al., 2009b). Some support has already been
published for the major precepts of ambidexterity theory (Rosing, Frese, & Bausch, 2011)
and this perspective therefore holds potential for future studies most notably into leadership
effects in innovation processes.

References

Amabile, T. M. (1997). Motivating Creativity in Organisations: On doing what you love and
loving what you do. California Management Revies, 40, 39-58.

Amabile, T. M., & Conti, R. (1999). Changes in the work environment for creativity during
downsizing. Academy of Management Journal, 42, 630-640.
Shalley , C. E., Zhou, J., & Oldham, G. R. (2004). The effects of personal and contextual
characteristics on creativity: Where should we go from here? Journal of Management,
30, 933-958.

Zhou, J., & Shalley, C. E. (2010). Deepening our understanding of creativity in the
workplace: A review of different approaches to creativity research. In S. Zedeck, APA
Handbook of industrial and organisational psychology (Vol. 1, pp. 275-302).
Washington: APA.

INNOVATION
This is the introduction of new techniques, product/production or distribution processes that
may be followed by a spread process of diffusion.

Types of Innovation

1. Product innovation
This is a good or service that is new or significantly improved. This includes significant
improvements in technical specifications, components and materials, software in the product,
user friendliness or other functional characteristics.

2. Process innovation
This is a new or significantly improved production or delivery method. This includes
significant changes in techniques, equipment and/or software.

3. Business model innovation

This reframes an established value proposition to the customers or a company’s established
role in the value chain or both – e.g. Gillette’s move from razors to razor blades, apple move
to consumer retailing etc.

4. Marketing innovation
This is a new marketing method involving significant changes in product design or
packaging, product placement, product promotion or pricing. Improves customers touching
processes, be they marketing processes e.g. Use of the web/e-commerce or consumer
transaction, use of auction, e-commerce etc.

5. Structural innovation
Capitalizes on disruption to restructure industry relationships e.g. Deregulation/liberalization
of financial sector brought many players. Family Finance, K-Rep, CFC etc. to offer broader
arrays of products and services to consumers becoming major competitors to established
banks – Equity

6. Entrepreneurial Innovation
The innovation dimension of entrepreneurship refers to the pursuit of creative or novel
solutions to challenges confronting a firm. These challenges can include developing new
products and services or new administrative techniques and technologies for performing
organizational functions (e.g., production, marketing, and sales and distribution).

7. Technological Innovation
This takes place when companies try to gain a competitive advantage either by reducing costs
or by introducing a new technology. Technological innovation has been a hot topic in recent
years, particularly when coupled with the concept of disruptive innovation. Disruptive
innovation is usually a technological advancement that renders previous products/services (or
even entire industries) irrelevant. For example, the smartphone disrupted landlines, Netflix
made Blockbuster obsolete, and mp3s have marginalized CD players.

8. Strategic Innovation
This pertains to processes: how things are done as opposed to what the end product is.
Strategic changes can be disruptive but are more often incremental. Incremental innovation is
the idea that small changes, when effected in large volume, can rapidly transform the broader
organization.
.
9. Organisational innovation

This is a new organisational method in business practices, workplace organisation or external

relations.
10. Social Innovation
This refers to new strategies, concepts, ideas, and organizations that extend and strengthen
civil society or meet societal needs of all kinds—from working conditions and education to
community development and health.

11. Application innovation

Takes existing technologies into new markets to serve new markets to serve new purpose e.g.
Tandem computers which are fault tolerant were taken to banking markets to create ATMs
*Omo for brake fluid, etc.

BENEFITS OF INNOVATION

Improved productivity & reduced costs

A lot of process innovation is about reducing unit costs. This might be achieved by improving
the production capacity and/or flexibility of the business – to enable it to exploit economies
of scale

Better quality

By definition, better quality products and services are more likely to meet customer needs.
Assuming that they are effectively marketed, that should result in higher sales and profits

Building a product range

A business with a single product or limited product range would almost certainly benefit from
innovation. A broader product range provides an opportunity for higher sales and profits and
also reduces the risk for shareholders

To handle legal and environmental issues

Innovation might enable the business to reduce its carbon emissions, produce less waste or
perhaps comply with changing product legislation. Changes in laws often force business to
innovate when they might not otherwise do so.

More added value

Effective innovation is a great way to establish a unique selling proposition ("USP") for a
product – something which the customer is prepared to pay more for and which helps a
business differentiate itself from competitors

Improved staff retention, motivation and easier recruitment

Not an obvious benefit, but often significant. Potential good quality recruits are often drawn
to a business with a reputation for innovation. Innovative businesses have a reputation for
being inspiring places in which to work.

RISKS OF INNOVATION

A strategy of investing in R&D and innovation can bring significant rewards, but it is not
without risk. Amongst the potential pitfalls are:

Competition

An innovation only confers a competitive advantage if competitors are not able to replicate it
in their own businesses. Whilst patents provide some legal protection, the reality is that many
innovative products and processes are hard to protect. One danger is that one research-driven,
innovative company makes the initial investment and takes all the risk – only to find it is
competing with many me-too competitors riding on the coat-tails of the innovation.

Uncertain commercial returns

Much research is speculative and there is no guarantee of future revenues and profits. The
longer the development timescale the greater the risk that research is overtaken by
competitors too.

Availability of finance

Like other business activities, R&D has to compete for scarce cash. Given the risks involved,
R&D demands a high required rate of return. That means that for businesses that have limited
cash resources, the opportunity cost of investing in R&D can be very high.
 Internal and External Innovation

Internal Innovation: simply put, this means change within your organization. This might be
small or large change, something structural within a team, a change in the production process
to increase efficiency, or something financial regarding your budget. This internal change,
however, is done primarily within the organization, although the impacts may be visible both
within the organization and outside of it.

External Innovation: in contrast to internal innovation, this means improvement to a

product or service, for example, which directly impacts the customer. This may mean
introducing new systems of service, or the implementation of a new product line to better
meet your customers’ ever-evolving needs.

Which Type of Business Innovation Costs More?

When it comes right down to overall costs, there is simply no way of determining whether
one will bring more returns on investment (ROI) than the other. Internal innovation is often
cheaper, and usually easier. This is largely because internal innovation does not require the
legwork that external innovation does.
With external innovation, research, development, copyrights, etc., all cost more, and require
significant effort – but again, the result can also be significant.

When it comes to ROI, internal innovation tends to represent significant cost savings, as
opposed to the increase in revenue brought about by external innovation. Increased efficiency
or improved processes can mean substantial reductions in overall output.

In contrast, although external innovation often requires greater investment of resources, and
therefore can represent a decreased ROI in the short term, the long-term impacts are
usually more widely visible, both internally and externally.

Recognizing the ROI benefits, can your organization survive an entirely one directional
strategic innovation strategy?

A prudent business innovation strategy is one that:

 Considers all the opportunities for change.
 Weighs all the resources required to make that change.
 Takes into consideration the company’s overall strategic plan.
These factors ensure that a balanced approach to innovation is maintained.
Business innovation, like internal and external innovation, is not a new concept – nor is it one
that can be ignored if growth and expansion are desired. To stay relevant, you need to adapt.
Improving your internal processes and continually improving your company’s offerings is the
best way to achieve this.
Theories of Innovation
There are many innovations being developed every day around the world. Some make it to
the national and international stage becoming a ubiquitous part of everyday life. Some
innovations become important for select groups of people and unknown to individuals outside
of those user groups. Many more innovations never make it too far outside their close circle
of developers. What causes one innovation to change the manner in which society functions
and another to be cast off into nonexistence has been the subject of research and analysis with
experts drawing different models and developing overlapping theories as to the cause of
successful diffusion of innovations.

This section will highlight the main tenets of four diffusion theories and models – Innovation
Diffusion Theory, Concerns-based Adoption Model, Technology Acceptance Model, and The
Chocolate Model.

1. Rogers’ Innovation Diffusion Theory

Before diving into theories and models for innovation diffusion, it is worth taking a step back
to understand what is meant by innovation, innovation adoption, and diffusion.

In his editorial “What is Innovation?”, Damiano, Jr. (2011) refers to the Merriam-Webster
dictionary definition which defines it as “the introduction of something new” where that
something could be an idea, process, or product.

Straub (2009) describes adoption as when an individual integrates a new innovation into their
life and diffusion as “the collective adoption process over time.”

Straub (2009) notes that adoption-diffusion theories “refer to the process involving the spread
of a new idea over time”.

In 1962 Everett Rogers introduced his Innovation Diffusion Theory (IDT). It provides a
foundation for understanding innovation adoption and the factors that influence an
individual’s choices about an innovation. Rogers’ theory is broad in scope which lends itself
to being flexible across many contexts but also difficult to use as a process model when
planning for organizational change due to adoption of an innovation (Straub, 2009).

There are four main components in Rogers’ diffusion theory:

1. the innovation
2. communication channels used to broadcast information about the innovation
3. the social system existing around the adopters/non-adopters of the innovation
4. the time it takes for individuals to move through the adoption process.

The interaction of these components helps one understand why an individual chooses to
adopt an innovation or not (Straub, 2009). A sub-process of diffusion in Rogers’ theory is the
innovation decision or process which leads to adoption or rejection of the innovation.

Rogers presents five stages potential adopters move through in this process.

The first is seeking knowledge about the innovation and its function.
The second is persuasion when the potential adopter formulates an opinion about the
innovation.

The third stage is when a decision is made to adopt or reject the innovation.

The fourth stage occurs when the adopter implements the innovation.

Finally, the adopter reaches the confirmation stage where they seek reinforcement of their
decision to adopt the innovation. Here they may continue implementing the innovation as
they experience its benefits or they may change their decision and reject the innovation
(Rogers, 2003).

Diffusion occurs through a five–step decision-making process. It occurs through a series of

communication channels over a period of time among the members of a similar social system.
Rogers' five stages (steps): awareness, interest, evaluation, trial, and adoption are integral to this
theory. An individual might reject an innovation at any time during or after the adoption process.
Rogers changes his terminology of the five stages to: knowledge, persuasion, decision,
implementation, and confirmation. However, the descriptions of the categories have remained
similar throughout the editions.
Stage 1: Knowledge

The individual is first exposed to an innovation, but lacks information about the innovation. During
this stage the individual has not yet been inspired to find out more information about the
innovation.

Stage 2: Persuasion

The individual is interested in the innovation and actively seeks related information/details.

Stage 3: Decision

The individual takes the concept of the change and weighs the advantages/disadvantages of using
the innovation and decides whether to adopt or reject the innovation. Due to the individualistic
nature of this stage, Rogers notes that it is the most difficult stage on which to acquire empirical
evidence.

Stage 4: Implementation

The individual employs the innovation to a varying degree depending on the situation. During this
stage the individual also determines the usefulness of the innovation and may search for further
information about it.

Stage 5: Confirmation

The individual finalizes his/her decision to continue using the innovation. This stage is both
intrapersonal (may cause cognitive dissonance) and interpersonal, confirmation that the group has
made the right decision.
Rogers extends beyond the adoption process by identifying five attributes that affect whether
an innovation is adopted or not: relative advantage, compatibility, complexity, trialability,
and observability.

Relative advantage refers to how much greater or lesser the benefits of the innovation are
compared with the alternatives.

How well the innovation fits with a potential adopter’s existing process or workflow is its
compatibility.

The more difficult to learn and implement an innovation is perceived to be, the less likely it is
to be adopted. This is because its complexity is perceived to be too high.

Potential adopters are more likely to accept innovations they have an opportunity to
experiment with and test out before making a decision whether to adopt or not; this refers to
their trialability.

Observability occurs once an innovation has been adopted and diffused across enough people
within a culture system than those who previously had not thought about adopting it, change
their minds or at least begin considering adopting the innovation (Rogers, 2003).

Many personal technologies such as the smart phone and FitBit type devices have
experienced widespread diffusion due in part to their high observability. Some universities
have waited until there was high visibility of others implementing online courses before they
began doing the same. This allowed them to see the success or failure of the strategy along
with learning from the challenges of the early adopters. This example also demonstrates the
impact of time on diffusion which Rogers (1962/2003) discusses in more depth in his
book Diffusion of Innovations.

Categories of Adopters
According to C, Romjin (2004), the innovation process is linear and begins with research and
followed by development. Development then leads to production followed by marketing of a
technology, innovation theory explains why, how and the rate at which innovation or new
ideas spread through cultures. The classification scheme of adaptation of new technology can
be put in five categories.
 a) Innovators or technology enthusiasts – usually venture oriented, educated and are multiple
information sources. These will easily adapt to new innovations. Innovators are willing to take risks,
have the highest social status, have financial liquidity, are social and have closest contact to scientific
sources and interaction with other innovators. Their risk tolerance allows them to adopt
technologies that may ultimately fail. Financial resources help absorb these failures.

b) Early adopters or visionaries characteristically are social leaders, popular in the society and
educated. These individuals have the highest degree of opinion leadership among the adopter
categories. Early adopters have a higher social status, financial liquidity, advanced education and are
more socially forward than late adopters. They are more discreet in adoption choices than
innovators. They use judicious choice of adoption to help them maintain a central communication
position.

c) Early majority or pragmatists. This type of people has many social contacts and does things
deliberately. They will receive a new innovation because they have well researched about it. They
adopt an innovation after a varying degree of time that is significantly longer than the innovators
and early adopters. Early Majority have above average social status, contact with early adopters and
seldom hold positions of opinion leadership in a system.

d) Late majority or conservatives – usually are skeptical, traditional and lower social economic
status. Takes time to accept new ideas. They adopt an innovation after the average participant.
These individuals approach an innovation with a high degree of skepticism and after the majority of
society has adopted the innovation. Late Majority are typically skeptical about an innovation, have
below average social status, have little financial liquidity, in contact with others in late majority and
early majority and little opinion leadership.

e) Laggards – these fear new ideas and are great critics. They will be the last to accept new ideas.
They are the last to adopt an innovation. Unlike some of the previous categories, individuals in this
category show little to no opinion leadership. These individuals typically have an aversion to change-
agents. Laggards typically tend to be focused on "traditions", lowest social status, lowest financial
liquidity, oldest among adopters, and in contact with only family and close friends.

2. Hall’s Concerns-Based Adoption Model

Stemming from the need for a model particular to educational environments due to their
traditional top-down approach to change, Hall (1979) developed the Concerns-Based
Adoption Model (CBAM). CBAM approaches innovation adoption from the perspective of
those impacted by the adoption of the innovation and also charged with implementing the
subsequent change – namely teachers in an educational context. The idea is that by
addressing the concerns of the teachers during the adoption process, the challenges
experienced during the change process will be lessened. There are six assumptions in CBAM:

1. Change is a process, not an event.

2. Change is accomplished by individuals.
3. Change is a highly personal experience.
4. Change involves developmental growth.
5. Change is best understood in operational terms.
6. The focus of facilitation should be on individuals, innovations, and context.

Three components of the CBAM, formed from the six assumptions, that inform a leader
planning for change are the
 stages of concern (SoC),
  levels of use (LoU), and
 innovation configuration (IC).

The SoC refers to individual characteristics relative to teachers concerns for themselves and
for their students during the adoption process and is the main premise on which the CBAM
was created (Straub, 2009).

The SoC scale breaks down teachers’ concerns into seven stages during the adoption process.

Stage 0 – awareness concerns – indicates that the innovation is of no concern to users, or

adopters, because they do not know it exists.

Stage 1 – information concerns – is when potential adopter are concerned about gathering
more knowledge about the innovation.

Stage 2 – personal concerns – is when the users perceive the innovation to pose a personal
threat. They may have doubts or lack self-confidence about their ability to use the innovation.

Stage 3 – management concerns – typically manifest after the first 24 hours of using an
innovation when potential adopters struggle with the logistics, coordination, and the time it
takes out of their schedules to learn and use the innovation.

Stage 4 – consequences concerns – happens when potential adopters reflect on the potential
effect the innovation will have on others such as students in many educational contexts.

Stage 5 – collaboration concerns – usually is shared by the change agents which are typically
administrators or team leaders. In this stage, there is a concern around bringing user groups
together in forming best practices in using the innovation effectively.

Stage 6 – refocusing concerns – is when users consider whether the proposed innovation is
actually the best approach to use in achieving their goals or perhaps another innovation would
be more suitable and had a greater impact (Hall, 1979). The LoU and IC refer to innovation
characteristics.

The LoU scale breaks down the stages of behavior as teachers pass from a lower level of use
to higher levels of use (Straub, 2009).

The innovation configuration (IC) refers to the process for implementing the innovation.

Although the teachers are seen as adoptees instead of adopters in the CBAM model, they also
have the role of change agent in order for successful adoption to occur in the classroom. One
might then see the students as receivers of the change, yet the CBAM model only focuses on
the concerns of the teachers because of their role as change agents. Another note about this
model is its apparent focus on negative opinions from teachers regarding innovation. As was
mentioned in the overview of Rogers’ theory, opinions formed about an innovation – whether
positive or negative – can each have an impact on the adoption of the innovation (Straub,
2009).
 3. Technology Acceptance Model
Continuing along the theme of opinions and attitudes impacting innovation adoption, Davis’
(1985) Technology Acceptance Model (TAM) asserts that it is in fact a potential adopter’s
attitude and expectations of the innovation that affects the chances for its adoption (Davis,
1985).

Two focus concepts in TAM are;

i) how the innovation is perceived by the potential adopter related to its ease of use –
how easy the innovation will be to learn and implement
ii) its potential usefulness – the degree to which the innovation will improve the user’s
personal or job-related performance.

Of the two elements, Davis believed that ease of use has a direct impact on perceived
usefulness as, the easier an adopter perceives an innovation to be able to use, the greater
chance they will use it and experience higher productivity thus proving to be useful to the
adopter (Davis, 1985). In a later study, Davis concluded that there was a higher correlation
between perceived usefulness and technology adoption than between perceived usefulness
and adoption. From his test results, he surmised that it would not matter how easy a
technology is to learn; people would not adopt it if they did not perceive it to be useful in
increasing their productivity (Davis, 1989).
4. The Chocolate Model

The Chocolate Model focuses on innovation adoption and change related to an organization.
It is structured around four elements: change, adopters, the change agent(s), and the
organization – CACAO when made into an acronym for ease of recollection and use for
planning.

Unlike Rogers’ Innovation Diffusion Theory, the Chocolate Model can be applied when
planning for organizational change and innovation adoption. The process flows as follows:

 First, analyze the change whether it is a new system or innovation (Dormant, 2011).
This is similar to the first step of seeking knowledge that is in Rogers’ (2003)
adoption process.
 The second step is to analyze the adopters of the change.
 Third, identify the change agents. At this point, a plan is developed.
 The next step is to examine the organization where the change process is expected to
occur as well as analyzing the larger context of the organizational change – how it
impacts other aspects of the whole organization. Before implementing, the plan may
be revised based on the outcomes of the organizational analysis (Dormant, 2011).

The Chocolate Model aligns well with TAM in that change characteristics are similar. As in
TAM, adopters look at the relative advantage of the innovation or change (Dormant, 2011) –
referred to as the “perceived usefulness” in TAM (Straub, 2009). Adopters also look at the
simplicity and compatibility the innovation represents – the “perceived ease of use” in TAM
(Dormant, 2011; Straub, 2009). Two elements not discussed in TAM but called out in the
Chocolate Model are the adaptability of the innovation to the specific needs of the adopters
and the social impact of the change – what the change will mean for the social structure and
climate of the organization (Dormant, 2011).
3M’s Rule for Innovation Culture

A Culture of Innovation: Lessons from 3M

On June 6, 2018 3M Corporation opened up their Innovation Center in St. Paul, MN to

members of the Association of Equipment Manufacturers (AEM). DISTek Integration sent
representatives from our engineering group to attend 3M’s presentation entitled, “Building a
Culture of Innovation.” 3M leaders presented how the company went from a small and
unprofitable Minnesota Mining and Manufacturing (where the three “M”s come from)
company in the early 1900s, to one of the most successful product companies in the world
today. They explained how the company was able to slowly, but relentlessly, develop their 46
technology platforms of which every 3M product is based on.

Innovation is the tool of entrepreneurs to create opportunities! In this day of ever accelerating
change, organizations that value and promote innovation succeed and thrive. Organizations
that are complacent, or pay lip service to innovation, stagnate and fail. 3M has managed to
expand and thrive for over 100 years because of its culture of innovation. 3M explained the
keys to innovation success:

1. Feel your customer’s pain. 3M considers closeness to customers a main competitive

advantage with 75 customer innovation centers around the world. 3M engineers
understand customer product needs by getting out to the customer in their natural
environment and spending time with them. They look for and listen to their customer’s
“pain points.” 3M insists that customers must inspire your innovation and when you
listen to them, customers will actually help you solve their problems.
2. Empower employees. Allow employees to work on what they are passionate about. Give
your employees license to experiment and work on projects that they love. Promote
innovative ideas and empower employees to look at their daily tasks through an
innovation lens. Employees should be acknowledged and rewarded for innovative ideas.
3. Dedicate time to innovation. In 1948, 3M launched its 15 percent program, where 15
percent of employees’ time was dedicated to innovation. The Post-It note was invented
during 15 percent time. Organizations such as Hewlett-Packard and Google have both
replicated this approach. Gmail and Google Earth were conceived during Google’s 20
percent time. While people are encouraged to work on their ideas, they must complete
 their billable work first. When innovative ideas make it through the ideation phase,
employees are given technology grants to pursue these ideas.
4. Collaborative Platforms. Use newer social media technologies to promote collaboration
across the enterprise. Crowd source good ideas within the organization and capitalize on
those innovations. Establish committees to grant monies to individuals and groups for
their new ideas
5. Attract good talent. Showcase and highlight the innovation programs that your
organization has implemented. Present videos, papers, or demonstrations of the
technologies you offer and pursue.
The process of innovation
Innovation occurs in phases.
1. An idea is generated, packaged and developed into a business plan. The plan is then
evaluated.
2. R & D. Research and development involves information gathering to enable further
development of the idea. This is through market research and competitor analysis. This
enables proper definition of the product.
3. Development of prototype. Once prototypes are developed, they are pilot-tested and
customers’ reactions evaluated. A review is then done.
4. Production. Once confirmed, the product is produced in mass for the market.
5. Phase five will involve distribution, pricing and market development through promotion.
An entrepreneur develops strategies to deal with competitors.
6. New innovations – to identify new opportunities.

DESIGN
This is a structured process that transforms creative ideas into concrete products, services and
systems and as such links creativity to innovation. As part of innovation process, design has
the potential to substantially contribute to improving the brand image, sales and profitability
of a company. It has also emerged as a key differentiator for businesses.
As a result of the growing access to technology, firms increasingly have to compete at equal
prices and functionality. Design increasingly assumes a new role, one of competitive
advantage and differentiator, creating new markets by linking technology with commercial
and user considerations whether linked to functionality, aesthetics brand or other intangibles.
The concept of design has been defined in different ways either focusing on design as an
economic activity or more general as the translation of the ideas generated by creativity into
new products and processes. It links creativity and innovation. Design definitions are based
on design professions with the following ensembles; fashion design, graphic design, interior
design, product design etc.
Creativity on the other hand is defined as the generation of new ideas but the number of ideas
is an unobserved statistical phenomenon. Creativity is multidimensional and three different
‘type’ can be distinguished; technology creativity (invention), economic creativity
(entrepreneurship) and artistic/cultural creativity.
Creativity is the generation of new ideas, design is the shaping (or transformation) of ideas
into new products and processes and innovation is the exploitation of ideas i.e. the successful
marketing of these new products and processes.
NB: Creativity, design and innovation are not limited to certain sectors or professions, but
apply across the economy.

CONCEPT OF DESIGN THINKING

Design thinking is a cognitive process from which ideas of a product emerge. It is related to
problem solving, decision making, creativity, sketching and developing a prototype. Design
thinking is the method of developing designs as a mechanism to provide solutions to existing
problems. It is a human centered creative approach that focuses on the needs of the end user.
It involves empathy, imagination, intuition to explore possibilities that benefit the end user.
Hence, design thinking is not just how a product looks and feels, but also how a product
works. The goal of design thinking is to ensure that the entrepreneur provides a product that
solves the end users problems and satisfies their needs.

Design Thinking Process

The design thinking concept involves a series of steps that entrepreneurs engage in when
developing products and services that address the needs, pains, fears of the customer. The
design thinking process involves five steps: Empathize, Define, Ideate, Prototype, and Test.
The design thinking process involves a series of steps that utilize the aspects of imagination,
intuition, logic, creativity, and systematic reasoning to bring out products or services that
provide the benefits that satisfy the end user.

THE DESIGN PROCESS

1. Identify the problem -

This step is important because it informs the rest of the design process and defines how
success will be measured.

2. Do research
After a problem has been identified, the next step is to conduct a research. This research may
include finding articles in books, magazines, or on the Internet to help formulate ideas and
recognize constraints for their designs. During this stage, one is required to examine existing
designs, which can provide a starting place and help to formulate questions.
Research is also the step in which one discovers and explores the important elements of a
design. Guided questions encourage critical thinking about aspects of the problem that must
be addressed in order to develop a successful design.
In each activity, the research step includes the question, What are your design constraints?
This question helps one recognize the limits of his/her solutions and to eliminate solutions
that would be inefficient, costly, or physically impossible.

3. Develop possible solutions

Next, employees brainstorm possible design solutions that address the problem they have
identified. Possible solutions may include variations on one design using the same or
different materials. They also may include completely different designs. This step allows
employees to recognize the pros and cons of each design.

4. Choose one solution

In this step, employees choose one of their proposed designs and describe it in detail. They
may be asked to draw or diagram their design and to explain why they chose it. Having as
much information as possible about each possible solution and keeping the problem or task in
mind is helpful for choosing a successful design. The chosen design should represent the
solution that employees think best meets the need or solves the problem that was identified at
the beginning of the design process.

5. Design and Construct a Prototype

At this point in the design process, employees gather materials, build a prototype, and record
the particular details of a design that are required for replication. These requirements—such
as dimensions, measurements, materials, processes, and so on—are described in a detailed
description or assessment. Anything that someone studying or replicating the prototype
would need to know should be included in this section.
At the end of this step, employees have a prototype that is ready for testing. By definition, a
prototype is the original or base model.
6. Test the Prototype

After building their prototypes, employees will test it. Some of the activities produce
prototypes that can be tested within a short period of time; others involve several days of
testing. Testing the prototype usually involves asking questions that are based on
observations, and assessing the prototype in terms of how well it solves the problem or task.
7. Communicate Results

Sharing results is an important step in any developing design. Employees are encouraged to
use a variety of approaches to communicate their results. Examples include sketches,
photographs, detailed diagrams, word descriptions, portfolios, computer simulations,
computer slide shows, and video presentations. Employees may also present evidence that
was collected when the prototype was tested. This evidence may include mathematical
representations, such as graphs and data tables, that support the design choice.
Communicating the results of an experiment or test has practical and ethical importance for
scientists and engineers. Practically, communicating results opens a conversation in which
other scientists or engineers can make suggestions and help improve a design. The design
also might help the other engineers solve problems they are having with their own designs or
inspire them with a new design. Ethically, communicating results opens an experiment or
 design to accurate, unbiased evaluation. It also helps protect the intellectual rights of the
scientists or engineers sharing the design.
8. Evaluate and Redesign
The last step allows employees to evaluate what worked and what did not work about their
designs and why. They may be asked to rate their prototype designs with a rubric of design
constraints. They are also encouraged to explain their ratings and, if needed, brainstorm
design improvements. Some activities allow the employees to redesign their prototype.

The elements and principles of design

The elements and principles of design are the building blocks.
The elements of design are the things that make up a design.
The Principles of design are what we do to those elements. How we apply the principles of
design determines how successful the design is.
The elements of design
 LINE – The linear marks made with a pen or brush or the edge created when two shapes
meet.
 SHAPE – A shape is a self-contained defined area of geometric (squares and circles), or
organic (free formed shapes or natural shapes). A positive shape automatically creates a
negative shape.
 DIRECTION – All lines have direction – Horizontal, Vertical or Oblique. Horizontal
suggests calmness, stability and tranquillity. Vertical gives a feeling of balance, formality and
alertness. Oblique suggests movement and action
 SIZE – Size is simply the relationship of the area occupied by one shape to that of another.
 TEXTURE – Texture is the surface quality of a shape – rough, smooth, soft hard glossy etc.
 COLOUR – Colour is light reflected off objects. Color has three main characteristics: hue or
its name (red, green, blue, etc.), value (how light or dark it is), and intensity (how bright or
dull it is).

The Principles of Design

1. BALANCE –. Balance provides stability and structure to a design. It’s the weight distributed
in the design by the placement of your elements.
2. PROXIMITY – Proximity creates relationship between elements. It provides a focal point.
Proximity doesn’t mean that elements have to be placed together, it means they should be
visually connected in some way.
3. ALIGNMENT – Allows us to create order and organisation. Aligning elements allows them
to create a visual connection with each other.
4. REPETITION – Repetition strengthens a design by tying together individual elements. It
helps to create association and consistency. Repetition can create rhythm (a feeling of
organized movement).
5. CONTRAST – Contrast is the juxtaposition of opposing elements (opposite colours on the
colour wheel, or value light / dark, or direction – horizontal / vertical). Contrast allows us to
emphasize or highlight key elements in your design.
6. SPACE – Space in art refers to the distance or area between, around, above, below, or within
elements. Both positive and negative space are important factors to be considered in every
design.

CREATIVITY
Creativity is a way to produce something new and different which has some value or to do
the same mundane thing or a new thing in a new way using a new technique which is unique
in itself to get better / positive results or simply to get more business.

CREATIVE THINKING
This is 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.
Main Components of Creativity
1) Originality

The method or idea must be new and unique. It should not be the extension of something,
which already exists. However, one can take inspiration from the already existent methods
and ideas to fabricate something new and unique.

2) Functionality

Another important component of creativity is its functionality. A creative idea must work and
produce results, otherwise, the whole effort will be in vain.

Most of the time, people wonder how creativity happens. It has been seen that creativity
become another nature of some people whereas others have to spend hours on road or on a
mountain to think of a tiny idea. In the following paragraph, you will learn about when does
creativity happen and what kind of people called creative?

 People who are thought-provoking, curious and have a variety of uncommon thoughts
are known to be creative people. Sometimes these people don’t even know what they
are doing and how much importance does that innovation holds. Therefore, they
usually fabricate new ideas, which leave people flabbergasted.
 People who had important self- discoveries, who view the world with a fresh
perspective and have insightful ideas. These people make unique discoveries which
they don’t share with the outer world.
 People who make great achievements which are known to the world. Inventors and
artists fall under this category.
Creative people have numerous traits that influence their creative thinking. Followings are
the few personality traits of creative people.

Qualities of creative people

1. Creative people are energetic, but focused

Creative people have a great deal of energy, both physical and mental. They can spend hours
working on a single thing that holds their attention, yet seem to remain enthusiastic all the
while.

This doesn't mean that creative people are hyperactive or manic. They are imaginative and
curious and spend a great deal of time at rest, quietly thinking and reflecting on the things
that hold their interest.

2. Creative people are smart, but also naive

Creative people tend to be smart, but research in 2013 has shown that having a very high IQ
is not necessarily correlated with higher levels of creative achievement - personality traits are
important too.

Creative people are smart, but they are able to maintain their sense of wonder, curiosity, and
ability to look at the world with fresh eyes.

3. Creative people are playful, yet disciplined

When working on a project, creative people tend to exhibit determination and doggedness.
They will work for hours on something, often staying up late into the night until they are
satisfied with their work. Consider what you would think when you meet someone who is an
artist.

On the surface, it sounds both exciting, romantic, and glamorous. And for many, being an
artist certainly does involve a great deal of excitement. But being a successful artist is also a
lot of work, which is what many people fail to see. A creative person, however, realizes that
real creativity involves combining both the fun and the hard work.

4. Creative people are realistic dreamers

Creative people like to daydream and imagine the possibilities and wonders of the world.
They can immerse themselves in imagination and fantasy, yet remain grounded in reality.
They are often described as dreamers, but that doesn’t mean that they live with their heads in
the clouds.

Creative types, ranging from scientists to artists to musicians, can come up with imaginative
solutions to real-world issues.

5. Creative people are extroverted and introverted

Creative people tend to exhibit characteristics of both introversion and extraversion. They are
both gregarious and reticent, sociable and quiet. Interacting with others can generate ideas
and inspiration, and retreating to a quiet place allows creative individuals to fully explore
these sources of creativity.

6. Creative people are proud, yet modest

Highly creative people tend to be proud of their achievements and accomplishments, yet they
are also aware of their place. They have tremendous respect for others who work in their field
and the influence that those previous innovations have had on their work. They can see that
their work is often remarkable in comparison to that of others, but it is not something they
focus on.

7. Creative people are conservative, yet rebellious

Creative people are "out-of-the-box" thinkers by definition, and we often think of them as
non-conformist and even a little bit rebellious. It is also about being able to appreciate and
even embrace the past, while still seeking new and improved ways of doing things. Creative
people can be conservative in many ways, yet they know that innovation sometimes means
taking risks.

8. Creative people are passionate, but objective about their work

Creative people don't just enjoy their work — they dearly and passionately love what they do.
But just being passionate about something does not necessarily lead to great work. Creative
people love their work, but they are also objective about it and willing to be critical (and take
criticism) of it. They are able to separate themselves from their work and see areas that need
work and improvement.

9. Creative people are sensitive and open to experience, but happy and joyful

Creative people tend to be more open and sensitive, characteristics that can bring both
rewards and pains. The act of creating something, of coming up with new ideas and taking
risks, often opens people up to criticism and even scorn. It can be painful, even devastating,
to devote years to something only to have it rejected, ignored, or ridiculed.

But being open to the creative experience is also a source of great joy. It can bring
tremendous happiness, and many creative people believe that such feelings are well worth the
trade-off for any possible pain.

Types of creativity
Dietrich has classified creativity in four domains using four discrete processing modes such
as emotional, cognitive, deliberate and spontaneous. He created a quadrant of creative types
using these four characteristics.

1) Deliberate and Cognitive creativity

People who possess deliberate and cognitive characteristics are purposeful. They have a great
amount of knowledge about a particular subject and combine their skills and capabilities to
prepare a course of action to achieve something. This type of creativity built when people
work for a very long time in a particular area.

People who fall under this type of category of creativity are usually proficient at research,
problem- solving, investigation and experimentation. This type of creativity is located in the
brain’s prefrontal cortex, which is at the front part of the brain. These types of creative people
spend a great deal of time every single day testing to develop new solutions.

Thomas Alva Edison is one prominent example of this type of creative people. He ran
experiment after experiment before inventing electricity, the light bulb, and
telecommunication. Hence, deliberate and cognitive creativity requires a great deal of time,
dedication and abundance of knowledge about a particular subject.

2) Deliberate and Emotional Creativity

People who are categorized as deliberate and emotional let their work influenced by their
state of emotions. These types of creative people are very emotional and sensitive in nature.
These individuals prefer relatively quiet and personal time to reflect and they usually have a
habit of diary writing. However, they are equally logical and rational in decision making.
Their creativity is always a balanced product of deliberate emotional thinking and logical
actions. This type of creativity is found in the amygdala and cingulate cortex parts of the
human brain. Amygdala is responsible for human emotions whereas cingulate cortex helps in
learning and information processing. This type of creativity happens to people at random
moments. Those moments are usually referred to as “a-ha!” moments when someone
suddenly thinks of a solution to some problem or think of some innovative idea.

For example, there are situations when you feel low and emotional which distracts you from
your work. In those kinds of situations, you should take 5 minutes and point out the things
which are making you sad and keep them aside and focus on the work in hand. It will help
you to get improvised results and you will get work done easily. One should seek “quiet
time” for deliberate and emotional creativity to happen to them.

3) Spontaneous and Cognitive creativity

There are times when you spend a long time to crack a problem but can’t think of any
solution. For example, when you want to make a schedule for a month to get a job done, but
you can’t seem to think of any possible way and when you are watching television and
having your relaxed time and suddenly you think of a solution and everything falls in place.
The same case happened with the great scientist Isaac Newton. He got the idea about the law
of gravity when an apple hit his head while he was sitting under a tree and relaxing.

This is the “Eureka!” moments for Newton and an excellent example of a spontaneous and
cognitive person. This type of creativity happens when one has the knowledge to get a
particular job done, but he requires inspiration and a hint to walk towards the right path. This
type of creativity usually happens at the most inconvenient time, such as, when you are
having a shower. Spontaneous and cognitive creativity takes place when the conscious mind
stops working and go to relax and unconscious mind gets a chance to work.

Mostly, this type of creative person stops conscious thinking when they need to do “out of the
box” thinking. By indulging in different and unrelated activities, the unconscious mind gets a
chance to connect information in new ways which provide solutions to the problems.
Therefore, to let this type of creativity happen one should take a break from the problem and
get away to let conscious mind overtake.

4) Spontaneous and Emotional Creativity

Spontaneous and emotional creativity takes place in the “amygdala” part of the human brain.
Amygdala is responsible for all emotional type of thinking in the human brain. Spontaneous
ideas and emotional creativity happen when conscious and Prefrontal brain is resting. This
type of creativity is mostly found in a great artist such as musicians, painters, and writers etc.
This type of creativity is also related to “epiphanies”.

Epiphany is a sudden realization of something. Spontaneous and emotional creativity is

responsible for a scientific breakthrough, religious and also philosophical discoveries. This
allows the enlightened person to look at a problem or situation with a different and deeper
viewpoint.
Those moments are defined as rare moments when great discoveries take place. There is no
need to have specific knowledge for “spontaneous and emotional” creativity to happen but
there should be a skill such as writing, musical or artistic. This type of creativity can’t be
obtained by working on it.

Creative Process
Generation of ideas occurs within a social context and is linked to domains of knowledge and
understanding that are also in a constant state of change.
Individuals require a certain level of intelligence, be willing to think in non-traditional ways
and to be persistent over time.
It is argued that it is not simply the creation of new ideas that is important but the translation
of these ideas into realizable products and services.
Wallas (1926) identified four stages in the creative process namely;
1. Preparation – refers to the period when an individual may refine their goals in
response to a particular issue or question that they face.
This is also the period where relevant material from a wide range of secondary and
primary sources is collected. The aim of this stage is for the individual to conduct
research in order to broaden their view of the area under investigation.
2. Incubation stage - here individuals suspend their conscious concentration on the
problem and engage in a process of subconscious data processing.
3. Illumination stage – this is the period when someone suddenly becomes aware of a
core answer to the problem. It is characterized by an unplanned result that derives
from a unique combination of ideas or patterns of knowledge that occurs during the
incubation stage. It is during this period that creative individuals must use their logical
thought processes to turn sudden insight into a novel and valuable solution.
4. Verification stage - this is the transition of new ideas into a realizable solution. It is
when the individual needs to formally evaluate the resultant outcome against the
criteria set at the outset.

Basadur’s et al., (1982) three stage model of process of creative problem solving
1. Problem finding
They argue that in order for creative process to begin there needs to be a problem that
requires a solution. This stage is important because the way one approaches a problem
will affect the quantity and quality of ideas generated in the stages that follow.
2. Problem solving
Focuses on generating as many ideas as possible, it is assumed that the number of
ideas increases the probability of someone coming up with an idea worth pursuing.
3. Solution implementation
This focuses on implementation of one of the solutions that were generated from the
previous stage.
NB: During each of the three stages a two-step process of ideation-evaluation occurs.
Ideation refers to the uncritical development of ideas. Evaluation refers to the selection of the
best of the generated ideas.
Amabile (1983) five stage- componential model
This model identifies key components of creativity at certain stages of the creative process.
1. Problem or task presentation
The task to be undertaken or the problem to be solved is presented to the creative
person. It can arise from external stimuli (the supervisor may have assigned the task)
or from internal stimuli (one may particularly be interested in solving a specific
problem).
2. Preparation
At this stage the creative employee develops or reactivates a store of data relevant to
the problem or the opportunity identified.
3. Response generation
Here the individual comes up with a diverse range of possible ideas appropriate to the
issue in question. It is at this stage that an individual’s creative thinking will
determine both the quality and quantity of ideas generated.
4. Response validation
This refers to the process through which new ideas are checked for their
appropriateness and validated.
5. Outcome assessment based on tests performed in the previous stage.
If the response is found to be wholly appropriate then the outcome will be accepted
and the process ends. If, however, the response is unacceptable or only partially
acceptable but shows potential then the process returns to the initial stage of problem
or task presentation.

Harvard business school Prof. Theresa Amabile identified five environmental components
that affect creativity. These are;
1. Encouragement of creativity (which encompasses open information flow and support
for new ideas at all levels of the organisation, top management through immediate
supervisors to work group).
2. Autonomy or freedom (autonomy in the day-to-day conduct of work; a sense of
individual ownership of and control of work).
3. Resources (the materials, information and general resources available for work).
4. Pressures (including both positive challenge and negative workload pressures).
5. Organisational impediments to creativity (including conservatism and internal strife)

FACTORS IMPACTING ON THE MANAGEMENT OF TECHNOLOGY AND

INNOVATION
Technology
Technology is often discussed as an output of innovation and it can also be looked at from its
role as an influencing factor. Technology is concerned with the utilisation of technology to
facilitate innovation and innovative behaviour within and between organisations.

Innovation process relates to the generation, development and implementation of

innovations.

Corporate Strategy
Strategy refers to aspects of the corporate and innovation strategies of the organisation and
how they impact on the management of innovation. It also refers to the dissemination of the
strategic vision throughout the organisation.

Organisational structure relates to the way the various parts of an organisation are
configured and how this impacts on an organisations ability to manage innovation.

Organisational culture
‘Culture’ relates to the values and beliefs of the organisation and how these impact the
management of innovation within the organisation. It takes into consideration the
organisation’s approach to collaboration, communication and risk. Organisational culture is
often intrinsic to the way an organisation functions and the values it engenders within its
operation. It is also the most commonly discussed factor relating to an organisations ability to
manage innovation. Organization culture is also seen as the ‘primary determinant’ of
innovation.

Employees refer to the non-management employees of the organization and the role they play
in affecting innovation management. This factor takes into account the various personal
characteristics associated with employees and the motivation of employees to become
innovative.

Resources relate to all the resources that the organisation has, human, financial and physical,
and how resources are managed to impact on an organisations ability to manage innovation.
Knowledge management refers to the management and utilisation of knowledge for
innovation management. This covers all aspects of knowledge, both internal and external to
the organisation. This factor will also take organisational learning into consideration as it
plays a key role in knowledge management.

Management style and leadership refers to the employees that have responsibility for the
management of the organisation. This factor is concerned with a number of aspects to the
way management influences the management of innovation. For example it takes into
account the management style within the organisation and how management can motivate
employees to become more innovative.
.
Factors and sub-factors influencing an organizations ability to manage innovation
Factor Sub-factors
Technology Utilisation of technology
Technical skills and education
Technology strategy
Innovation process Idea generation
Selection and evaluation Techniques
Implementation mechanism
Corporate strategy Organisational strategy
Innovation strategy
Vision and goals of the organisation
Strategic decision making
Organisational structure Organisational differentiation
Centralisation
Formality
Organisational culture Communication
Collaboration
Attitude to risk
Attitude to innovation
Employees Motivation to innovate
Employee skills and education
Employee personalities
 Training
Resources Utilisation of slack resources
Planning and management of resources
Knowledge resources
Technology resources
Financial resources
Knowledge management Organisational learning
Knowledge of external environment
Utilisation of knowledge repositories
Management style and leadership Management personalities
Management style
Motivation of employees

The paradox of creativity

Definition of paradox: contradictory statement or proposition which when investigated may
prove to be well founded or true.
Creativity seems to yield survival and reproductive benefits. Creative behaviors allow
individuals to solve problems in new and appropriate ways, and thus to promote their
survival. They also facilitate bonding and constitute a signal of one's fitness, favoring
attraction of mates. However, to be creative, individuals often have to violate social norms in
order to promote change. So far, this deviance induced by creative behaviors had not been
seen as an adaptive disadvantage. This deviance entails negative consequences as social
exclusion or ostracism, which are detrimental for both survival (e.g., reduced access to
resources within the group) and reproduction (reduced reproductive fitness). Thus, the
adaptive benefits yielded by creativity have to be nuanced by these potential disadvantages.
The paradox of creativity proposes a finer-grained vision of the adaptive reasons why
creativity has been maintained within the human species, has evolved, and is collectively
regulated. Research perspectives are also proposed.

Examples:
To create, a person must
 Have knowledge but forget the knowledge;
 See unexpected connections in things but not have a mental disorder;
 Work hard but spend time doing nothing;
 Create many ideas yet most of them are useless;
 Look at the same thing as everyone else, yet see something different;
 Desire success but learn how to fail;
  Be persistent but not stubborn; and,
 Listen to experts but know how to disregard them.
others include;

 Be aware of thinking patterns shaped by the past to be creative in the present

 Being mindful in business is profitable. Yes, for many this is paradoxical.
 You can’t solve a problem with the same mind that created it (Einstein quote)
 In order to live a life of abundance, be free from desire for abundance
 To be more productive, practice doing nothing regularly.

Business capabilities include the knowledge, competencies and resources that a firm accumulates
over time and draws upon in the pursuit of its objectives. Collecting data on business capabilities is
of critical importance for the analysis of the drivers and impacts of innovation (why some firms
innovate and others do not), the types of innovation activities performed by firms, and their impacts.
Business capabilities of relevance to innovation include management capabilities, workforce skills,
and technological capabilities. The discussion of technological capabilities covers technical expertise,
design capabilities and digital competences.

1. the resources controlled by a firm

The resources available to a firm have a strong influence on its ability to pursue its
objectives by engaging in different types of activities, including innovation-related
activities.

Relevant resources for the firm include;

 its own workforce,
 physical and intangible assets (comprising knowledge-based capital),
 accumulated experience in conducting business activities and available financial
resources.
 Access to the resources of affiliated enterprises for firms that are part of an
enterprise group and those of partners and collaborators can be equally
relevant.

2. the general management capabilities of a firm, including capabilities related to managing

innovation activities
Management capabilities can influence a firm’s ability to undertake innovation activities,
introduce innovations and generate innovation outcomes. While the management
literature has identified a large variety of management practices and capabilities that
can potentially affect innovation performance, this section focuses on two key areas:
 a firm’s competitive strategy and
 the organisational and managerial capabilities used to implement this strategy.
3. the skills of the workforce and how a firm manages its human capital

People are the most important resource for innovation as they are the source of creativity
and new ideas. The design, development and implementation of innovations require a
variety of skills and the co-operation of different individuals. Data on the skill levels of a
firm’s workforce and on how a firm organises its human resources (including how it attracts
and retains talent) are therefore critical for understanding innovation activities and
innovation outcomes. Data on workforce skills and human resource management are also
important for analysing the role of labour markets, education, and human resources for
innovation

4. the ability to develop and use technological tools and data resources, with the latter providing an
increasingly important source of information for innovation (Technological capabilities)

The novelty or improved characteristics of an innovation are often due to the use of new or
modified technology. At the same time, the accumulated innovation activities of one or more
actors can advance knowledge within specific technological domains, creating new markets and
opportunities for innovation. The ability of a firm to take advantage of these opportunities will
depend on its technological capabilities within relevant domains.

Three types of technological capabilities are of particular interest to potential users of

innovation data:
 technical expertise, consists of a firm’s knowledge of and ability to use technology.
 design capabilities,
 and capabilities for the use of digital technologies and data analytics.

MYTHS OF CREATIVITY

Mention the word creativity, and people begin to squirm in their chairs. The very thought can
prompt anxiety, fear, and doubt – even in the most accomplished professionals. Let’s explore
some common myths, and uncover the truth behind this “fuzzy” topic:

MYTH 1: Creativity is only needed at the top

TRUTH : In today’s business environment, creativity applies to everyone. The organizations

that win in these challenging times have creativity as a core priority at all levels of the
organizational chart. We must embrace the concept of Everyday Creativity: fresh ideas and
creative problem solving in every business setting. Every meeting. Every customer
interaction.

MYTH 2: People are creative (or not) based on what they do

TRUTH: Your role has nothing to do with your creativity. There are professional musicians
in major symphonies that are great technicians but don’t use an ounce of creativity. There are
also statisticians that are brilliantly creative. Don’t let labels dictate or limit your creativity.

MYTH 3: Creativity can’t be developed

TRUTH: As human beings, we all have tremendous creative capacity; we just need to
develop it. Your level of creativity isn't fixed at birth. Instead, think of creativity as an
expandable muscle. You don’t become a champion bodybuilder without hitting the gym.
Similarly, to build creative capacity requires some practice and focus. There is an
overwhelming amount of scientific research confirming that you can grow your creativity at
any age.

MYTH 4: Creativity isn’t my job

TRUTH: Today, creativity is everyone’s job. For your organization to enjoy success,
creativity must be harnessed at all levels. It is no longer just something those “art people” do.
There isn’t a job function that can’t benefit from creative problem solving, fresh ideas for the
future, or simply finding a better way.

MYTH 5: My technical skills and experience are enough

TRUTH: Maybe in the past, but definitely not in the future. Unorthodox approaches, original
thought and imagination have become the currency for success in the new world of
business…and life. The difference between getting a promotion, making the sale, raising
capital, or reaching your full potential lies in your ability to embrace and nurture your
creative potential.
In our fist-fighting business climate, we're faced with unprecedented challenges. The stakes
are higher than ever, but so is the opportunity. Dispelling the myths, and then harnessing your
own creativity can be the difference-maker for you and your company.