Leveraging the Value Chain

A value chain is the chain of activities that a company needs to coordinate in order to execute its product or service. Leveraging the value chain refers to maximizing benefits from the value chain in order to execute its function.

Start-ups can leverage the value chain by:

• Outsourcing in the initials stage, when it lacks the resources and capabilities.
• Design products with as many off-the-shelf parts as possible to minimize design and tooling charges.
• Taking on value chain activities if there are no reliable or ready sources or when those activities provide a competitive advantage.
• Enable lean operations to reduce costs by having suppliers do most of the activities.
• Maintain good relations with value chain partners.
• Balance the activities undertaken in-house and outsourced taking into consideration quality and responsiveness of the value chain partners to market fluctuations.

Peter & Waterman’s 7S framework

The 7s framework identifies seven factors of an organization that need to be aligned in order for an organization to perform well. The model groups the factors into hard and soft ‘S’s. The hard ‘S’ are more tangible, easily to define and easy to influence than the soft ‘S’.

Hard “S”:

Strategy: the plan devised to maintain and build competitive advantage over the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the job done.

Soft “S”:

Shared Values: called "superordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.  

Porter’s 5 forces

Porter's 5 Forces model analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.

1. Industry competitors: This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because of the high cost of competition.
2. Potential entrants: Ease of new entrants entering the market and competing with your business
3. Suppliers bargaining power: How much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power.
4. Buyers bargaining power: This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then the customer holds substantial power.
5. Threat of substitute products: Businesses that offer alternative products/solutions.

Government legislation can act as the sixth force as it can influence all the other forces.

Entrepreneur vs. Manager vs. Leader

Entrepreneur	Manager	Entrepreneurial Leader
Locates new ideas	Maintains current operations	Leverages core business; explores new opportunities
Starts a business	Implements business	Starts businesses within an ongoing organization
Opportunity driven	Resource driven	Capability and opportunity driven
Creates / implements vision	Plans, organizes, staffs, controls	Creates vision, empowers others to carry it out
Builds organization around opportunity	Enhances efficiency of organization	Maintains entrepreneurial ability as company grows
Leads and inspires others	Supervises and monitors others	Develops/guides entrepreneurial individuals
Orchestrates change in the competitive environment	Maintains consistency	Orchestrates change in organizational and competitive environments

Delegation vs. Decentralisation

Basis	Delegation	Decentralization
Meaning	Manager delegate some of their functions and authority to their subordinates	Right to take decisions is shared by top management and other levels of management
Scope	Limited scope as superior delegate on an individual basis	Wide scope as the decision making is shared by subordinates
Responsibility	Responsibility cannot be delegated and remains with the manager.	Responsibility is also delegated to subordinates
Freedom of work	Freedom is not given to subordinates as they have to work as per instructions of their superiors	Freedom to work can be maintained by subordinates as they are free to take decisions and implement them
Nature	It is a routine function	It is an important decision of an enterprise

Task Force vs. Team

Task forces are work groups typically comprising experts in specified areas of knowledge or practice. Task forces are small groups of people and resources brought together to accomplish a specific objective, with the expectation that the group will disband when the objective has been completed.

A team is a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they are mutually accountable.

Skunkworks vs Cross-functional teams

Skunkworks is a group of people who, in order to achieve unusual results; work on a project in a way that is outside the usual rules.

Cross-functional teams are group of people of various backgrounds and expertise who work together in order to achieve a common goal.

Driving Forces of growth

The driving forces of growth are leadership, the opportunity domain, resources and capabilities, and execution. The model has execution as its core. An organization must achieve overall balance of these forces and establish some sort of control system in order to sustain and grow over the long-term.  

Official vs Operative Goals

Official goals are the general aims of an organization as expressed in the corporate charter, annual reports, public statements and mission statements. Their purpose is to give the organization a favourable public image, provide legitimacy, and justify its activities.

Operative goals reflect the actual intention of an organization. They describe the concrete steps to be taken to achieve the organization's purpose. Operative goals include things like overall performance, productivity, employee development, innovation and change etc.

Organization vs Strategy

Strategy is the pattern that integrates an organization’s major goals, policies, and action sequences into a cohesive whole. Organizing is the deployment of organizational resources to achieve strategic goals. Strategy dictates “what you do”. Organization dictates “how you do it”.

Project Leader vs Project Manger

A project leader is required for the innovation process. Project leadership focuses on doing "the right things" while managers focus on doing "the things right".

Project leader’s focus is to provide leadership and motivation. Ensures effective project execution, team coordination and balance of project goals with organizational needs. They enable and support the project and the project matter. They assume a democratic approach.

Project manager’s focus is more administrative in nature. Their goal is to ensure that the project is completed on time and on budget. Organisational needs get priority. They assume an autocratic approach.

Key individual roles

Technical Innovator: Experts in one or two fields. Generates new ideas and finds new and different ways of doing things.

Technical/commercial scanner: Acquires vast amounts of external knowledge (e.g. technical or market information) through networking.

Gatekeeper: Stays informed of related developments that occur outside the organisation through journals, conferences, colleagues and other companies. Conveys the information to others in the organization and thus serves as an information resource. They may also serve as bridge to link one technical group to another within the same organization

Product Champion: Product champion advocates and pushes for change and innovation. They sell new ideas to others in the organisation, acquire resources and takes risk. They take ideas (whether their own or others) and attempt to get them supported and implemented. They are aggressive in championing their cause.

Project Leader: Provides the team with leadership and motivation. Ensures effective project execution, team coordination and balance of project goals with organizational needs.

Sponsor: Intermediary between organisation and project team. Provides the team with what they need from the organisation and shields them from unnecessary organisational constraints. Provides legitimacy and organisational confidence to projects.

Software Protection

To protect Intellectual property of software the following can be done:

• All manner of software can be protected by patents.
• Software specific to the operation of the computer itself is patentable.
• All forms of computer programs can be protected by copyright.
• Software can also be protected using the trade secret approach.

N.I.H Syndrome

Not Invented Here (NIH) is a term used to describe persistent social, corporate or institutional culture that avoids using or buying already existing products, researched knowledge because of their external origins.

Patent vs. Trade Secret

Patent is the exclusive right granted by a government to an inventor to manufacture, use, or sell an invention for a limited period of time in exchange for detailed public disclosure of the invention. Most patents start off as trade secrets. Patents allow legal action against unauthorized use but are expensive and have a short life span. E.g. 3d printing was patented but now is publically available.

Trade secret is a process, method, plan, formula or other information unique to a manufacturer, which gives it an advantage over competitors. Trade secret law does not prohibit others from developing the secret information independently or learning it through reverse engineering. Maintaining trade secrets is free and can have a very long life span if properly kept, e.g. Coca Cola 120 years.

Serial vs. Accidental Entrepreneur

• Serial Entrepreneur: is a person who continuously finds new ideas and starts new businesses. Once the idea is developed, he/she gives responsibility to someone else and move on to a new idea or a new venture.
• Accidental Entrepreneur: is a person who never expected to be self-employed, never thought of being an entrepreneur but who started his or her businesses out of pure necessity or the creative idea came by accident.   

Timmons’s Model

The model identifies 3 ingredients for a successful business: the opportunity, the entrepreneur and resources. At the center of the model is the business plan. The opportunity is an idea that addresses the right customer needs at the right time in the right market. The entrepreneur converts this opportunity into a successful venture using the appropriate resources. The integration of the three results in the strategic plan for the business. All three must be balanced and work well to start the company and make it grow. Any misbalance in these forces will hamper the successful implementation of the business.

Opportunity domain early & late growth

Early Growth: 

• Following the initial success the firm must establish a focused strategy to guide the company through the maze of opportunities that materialize.
• The firm’s core focus must be defined. Capabilities must be developed; and resource & time must be spent around this core.

Late Growth:

• Competitive uniqueness of the company can now be leveraged and at the same time future strategy must be developed.
• Upgrade products to extend its current advantage
• Combine incremental extensions with expansion into the periphery
• Create next-gen. product with improvements and new features for existing customers, while exploring new products and new markets.

Information Overload

Information overload is used to describe the exposure to or provision of too much information /data, or the resultant state of stress.

Narrow vs. Broad approach

There are two distinct views of Entrepreneurship.

• Broad approach which views entrepreneurship as a basic approach to life. In this approach we chase our benefits in life and takes opportunities that can make us more successful.
• Narrow approach links entrepreneurship solely to business development. In this approach we identify opportunities in the business world, define strategy to pursue them, assemble necessary resources and finally take an action to implement the strategy and develop the opportunity.

Triggering Events

Examples of triggering events that give birth to new organizations are:

1. School dropout
2. The person has been passed over for a promotion or even laid off or fired
3. Entrepreneurship is a deliberate career choice
4. Accidental entrepreneur

An example would be Tim Waterstone who founded Waterstone’s book stores after he was fired by W. H. Smith.

Source of Ideas

A study of the inc.500 (America’s 500 fastest growing companies) found that 75% of the founders got it in the industry they worked in and additional 23% got it in a related industry.

Post Start-up Options

The post start-up options for an entrepreneurial business are as follows (the sub-points are the founder’s options):

Sell: 

1. Sell ownership but stay and work for company,
2. Start another venture,
3. Seek employment from another company

Maintain: 

1. Become a manager at the company
2. Exit day-to-day management

Grow: 

1. Become an entrepreneurial leader within the company
2. Take alternate position within the company
3. Exit day-to-day management

Late Growth sources of Financing

Late growth financing requires high-risk and long-term investments. Banks will not loan substantial funds, unsecured, for riskier expansion efforts. Companies will have to rely on equity sources for financing. They can look for strategic partners who may provide more favorable financing terms. They can also expand through franchising.

Early Growth sources of Financing

Sources of financing for early growth include:

• Investment from key management
• Founder loans
• Family and friends
• Angel investors
• Venture capital
• Loans on assets, such as receivables, inventory, and equipment
• Equipment leases
• Credit cards

Debt vs Equity / Forms Of Start-Up Capital

There are two main types of start-up capital: Debt and Equity.

Debt is the amount of money owed to a person or organization for funds borrowed. It involves high risk for the entrepreneur and requires careful planning of the cash flow because the money needs to be paid back.

Equity represents the ownership interest of investors in a business. It involves bringing in investors to provide capital in exchange for an ownership stake. This form of financing involves high risk for investors and thus they expect returns from the business however the money does not need to be repaid.

Debt and equity financing provide means for companies to carry out plans that require large amount of money such as developing new product lines, acquiring another company or starting a new business. Most companies will never take on outside investors, and many will never use debt financing for growth.

Angel Investors vs Venture Capitalist

Angel Investor

• An individual investor investing their own money
• May be willing to invest in early-stage or start-up businesses, as well as established companies
• Have experience and contacts to contribute
• May be willing to be "hands-off" or "hands-on" adding important skills.

Venture Capital

• A company or business investing institutional money
• Seldom interested in early-stage.
• Large investment amounts.
• Have contacts
• Require seat on board

Bootstrapping

Bootstrapping in start-up is the building of a business out of little or virtually nothing. Entrepreneurs undertaking bootstrapping rely on personal income & savings, sweat equity, operating revenues, lowest possible operating cost, fast inventory turnaround, and a cash-only approach to selling. Companies such as Dell and Apple were bootstrapped. Bootstrapping allows the entrepreneur to maintain control over all decisions of the company.

Crowdfunding

A method of raising finance for funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Sweat Equity

Contribution to a project or enterprise in the form of effort and toil. Sweat equity is the ownership interest, or increase in value, that is created as a direct result of hard work by the owner(s).Sweat equity is a party's contribution to a project in the form of effort, as opposed to financial equity, which is a contribution in the form of capital.

Traits of a good leader

• Enthusiasm
• Championing change
• Communicating
• Leading by example
• Tolerating risk, and
• Being open(approachable, willing to listen)

9 F’s for a Successful Company

1. Founders – Every start-up must have a first-class entrepreneur
2. Focused – They must focus on niche markets. They specialize.
3. Fast – Make decisions quickly and implement them swiftly
4. Flexible – They keep an open mind. They respond to change.
5. Forever innovating – They are tireless innovators
6. Flat – They must have as few layers of management as possible.
7. Frugal – By keeping overheads low & productivity high they keep costs down.
8. Friendly – They are friendly to their customers, suppliers and employees.
9. Fun – It is fun to be associated with an entrepreneurial company.

10 "D's" of successful entrepreneurs

1. Dream: Entrepreneurs have a vision of the future and the ability to pursue their dreams
2. Decisiveness: They don't procrastinate. They make decisions swiftly.
3. Doers: Once they decide a course of action, they implement it as quickly as possible.
4. Determination: They implement with total commitment. They don't give up despite the obstacles.
5. Dedication: They are totally dedicated to their business.
6. Devotion: Entrepreneurs love what they do.
7. Details: Entrepreneurs must be on top of critical details.
8. Destiny: They want to be in charge of their own destiny.
9. Dollars: Money is not the reward. Money is viewed as the measure of success.
10. Distribute: Entrepreneurs distribute the ownership of their business.

Traits of Entrepreneur

An entrepreneur has the following characteristics:

• Likely possesses the need for achievement
• Independence-oriented
• Desire personal control (is challenged, not discouraged by setbacks)
• Opportunity driven
• Innovative
• Self-confident
• Assume calculated risk (attracted to challenges not risks)

Product vs Service Innovation

Product innovation is the development of new products, changes in design of established products, or use of new materials or components in the manufacture of established products.

Service innovation is the development of a new or improved service concepts, client interaction channels, service delivery systems or technological concepts that lead to new or improved service functions.

Creative Organization Characteristics

• Open channels of communications are maintained.
• Contacts with outside sources are encouraged.
• Nonspecialists are assigned to problems.
• Ideas are evaluated on their merits rather than on the status of their originator.
• Management encourages experiments with new ideas rather than making “rational” prejudgments.
• Decentralization is practiced.
• Much autonomy is allowed professional employees.
• Management is tolerant of risk-taking.
• The organization is not run tightly or rigidly.
• Participative decision making is encouraged.
• Employees have fun.

Pelz and Munson’ (1982)

The Innovation process is the process of generation of an idea or invention, and then conversion of that invention into a business or other useful application.

1. Idea stage (idea generation and crystallization): A problem is recognized, search for a solution is undertaken; alternatives are diagnosed; a prototype does not yet exist. This is the creative phase.
2. Design stage: An innovative solution or prototype is developed, adapted, or adopted, and detailed guidelines for action are established. Outcome of this stage is a working prototype and a sound conceptual business plan.
3. Implementation stage: The innovation is put into action; scale up operations begins. The innovation may be evaluated to decide whether to expand, modify, or discontinue it. A final detailed plan is required. (This is the entrepreneurial stage.)
4. Incorporation, or diffusion, routinization, or institutionalization stage:  The innovation becomes accepted as part of standard operating procedures and is no longer viewed as “an innovation.”  Incorporation, or diffusion, routinization, or institutionalization stage

Idea vs. Opportunity

A business idea is a concept that can be used to make money. Usually it centers on a product or service that can be offered for money. A business opportunity is a business idea that has been researched upon, refined and packaged into a promising venture that is ready to launch. While multiple business ideas may strike on a daily basis, only few of them convert into opportunities. Example, Colonel Saunders tried for years to sell his chicken recipe but no one listened to him until he repackaged it with a detailed plan and KFC was born.

Vision vs. Strategy

The vision of a company is its long-term goal whereas strategy is how the company is going to achieve (or maintain) its vision. The strategy is a plan, the tactics are how the plan will be executed and the vision is the end-result.

Corporate Governance

A set of systems, principles and processes by which a company is governed can be defined as corporate governance. This provides the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term.

Corporate Culture in Innovation

Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. A culture that sustains and supports innovation is one that encourages reasonable risk and uncertainty in the goal of larger, more profitable products and services. Consequently, an organization that fosters a corporate culture supportive of innovation will likely be an innovative organization. E.g. 3M 15% Rule which allows employees to use a portion of their paid time to pursue their own ideas.

Corporate Social Responsibility

CSR is a management concept where companies integrate social and environment concerns in their business operations and thereby achieve a balance of economic, environmental and social imperatives, while at the same time address the requirements and expectations of shareholders and stakeholders.

CSR initiatives can lead to innovation through use of social, environmental or sustainability drivers to create new ways of working, new products, services, processes and new market space (Little 2006), which has led many companies to redefining their business models e.g. Nokia’s Recycle My Cell program.  

Brainstorming

Brainstorming is a technique for solving problems, Generating ideas, and stimulating creative thinking by unrestrained spontaneous participation in discussion. It combines a relaxed, informal approach to problem solving with lateral thinking. Brainstorming is a very simple, but effective, technique for overcoming a number of mental barriers

• Do not permit criticisms
• Welcome freewheeling: The wilder the idea, the better it is.
• Keep the ranks of participating individuals fairly equal
• Record all ideas
• Select the timing of the session with care.
• Combine and Improve Ideas
• Think of some possible solutions to the problem under consideration ahead of time.
• Appropriate group size: Best results are obtained with 8-12 people
• A leader whose role is to record and write down all the ideas that are expressed by the group members

Sources of Individual Difference in Creativity

• Cognitive Factors (Divergent Production, and Cognitive Style), and other Cognitive Factors. [how individual approaches the problem :Cognitive style]
• Non-Cognitive Factors (Personality Factors, Interests, Attitudes) Psychoanalytic, Humanistic & Behavioristic (Woodman)
• Contextual and Social Influence (Physical environment, culture, group or organizational climate, time task constraints, expectations, reward punishments, and role models)

Wallas 4-Stage Model Of The Creative Process

Stage 1: Preparation

• Includes “the whole process of intellectual education
• Acquiring the requisite knowledge and skills of the field.
• Cognitive Psychology, a cognitive theory called schema theory (information is thought to be stored in the mind in the form of abstract knowledge structures called schemata)
• 3 types of Learning:
• Accretion, or the encoding of new information in terms of existing schemata;
• Tuning, or the modification and refinement of a schema due to its use in different situations; and
• Restructuring, or the process of creating new schemata through patterned generation (patterning by analogy on existing schemata) or schema induction(inducing from experience)

Stage 2: Incubation

• It is a “gestatory period”
• The problem is not consciously pursued;
• Free working of the unconscious or partially conscious processes of the mind

Stage 3: Illumination

• Is “the final ‘flash’ or ‘click’ i.e. the culmination of the incubation stage.
• Illumination is inspiration, revelation, insight ;
• It is the “Eureka!” or “Aha! “experience.
• At illumination, what has previously been unconscious suddenly becomes conscious.
• Illumination is a sudden, often joyful experience.
• The illumination of a fully formed work is not the usual case.

Stage 4: Verification

• In typical case, the incomplete product of illumination is subjected to a final stage, “Verification”
• Verification includes Revision, Elaboration, and Implementation.
• Verification checks the validity of the creative solution

Wallas’s model shortcomings

• Wallas’s model implies that the process of creativity is linear
• Creativity is most likely to be interactive and iterative.

Innovative People: Nurturing Corporate People

• Innovation is about change, and change will happen only if some people are ready to take risks and make an impact on their environment
• Entrepreneur / Intrapreneur (in-house entrepreneur)
• Innovation=Invention +Entrepreneurship

Technological Innovation

• The process by which industry generates new and improved products and production processes.
• It includes activities ranging from generation of idea, research, development and commercialization to the diffusion throughout the economy of new and improved products, processes and services.”
• Innovation=Invention + commercial exploitation

Technological innovation occurs as a result of either:

• Technology-push (Science-push): happens when innovators seek commercially viable uses for new or existing
• Market-pull (Demand-pull, or Need-pull): results from recognition of an existing problem or need by the technology. Innovator, aka the application of technical and capital resources to develop alternative technological solutions.

Characteristics of Noncreative Persons

• Cynical;
• Fear of ridicule;
• Resistant to change;
• Conformity;
• Fear of failures;
• No interest in experimenting;
• Inclination towards systematic routines;
• Seeking of security;
• Jealous of competitiveness;
• Nonbelief in nonconventional ideas.

Characteristics of Creative People

• Devotion to work, creative people work very hard.
• Independence, creative people are more disposed to setting their own agenda and to taking independent actions than are others.
• The Drive for Originality, creative people strive for originality.
• Flexibility, creative people show flexibility more than others.

Enabling Technology

At the end of the fluid phase a dominant design for assembled products emerges after a long period of experimentation in manufacture and use of the product. An equivalent to the dominant design for continuous production and non-assembled products is the enabling technology. Unlike assembled products, the focus is on the technological effort and experimentation in the production process during the fluid phase. The resultant technology is known as enabling technology. Enabling technologies are characterized by rapid development of subsequent derivative technologies, often in diverse fields.

Dominant Design

A dominant design is the de facto standard of design that emerges after the fluid phase and before the transitional phase of the Abernathy-Utterback model. The dominant design wins the allegiance of the marketplace, and becomes one that competitors and innovators must adhere to if they hope to command significant market following.

Enforcement of standards-so that production and other complementary economies can be sought and perfected. Effective competition then shifts from innovative approaches to product design and features, to competition based on cost and scale as well as on product performance.

2. Change in the pace and direction of innovation product innovation slows down after the emergence of the dominant design, firms turn their energies to innovations that will lead them to cost and quality advantages (on what has become a fairly standardized product).

The Abernathy-Utterback model

The Abernathy-Utterback model of product and process innovation, hypothesizes that the rate of major innovation for both products and processes follow a general pattern over time, and that product and process innovation share an important relationship.

The fluid phase:

Product Innovation > Process innovation

Transitional phase:

Rate of major product innovation slow down and the rate of major process innovations speeds up.

At this point, product variety begins to give way to standard designs known as dominant design.

Specific phase

The rate of major innovation dwindles for both product and process. These industries become extremely focused on cost, volume, and capacity

Janussian Thinking

Janus, the Roman God, whose two faces permitted him to look in opposite direction at once.

Janusian thinking consists of actively conceiving two or more opposite or antithetical concepts, ideas, or images simultaneously, both as existing side by side and equally operative or equally true.

The obvious benefit of such a dual perspective – and the underlying power of Janusian thinking – is that it provides the ability to consider multiple perspectives simultaneously. Failure to do this results in decision-making paralysis, depression or in wasted effort, pursuing false goals.

The idea of a body being in motion and at rest at the same time are the antithetical concepts which Einstein used in the development of relativity.

Facilitating & Motivational conditions

Facilitating conditions are conditions that an organization must provide so that people can innovate. Motivating conditions are conditions that encourage people to try to innovate.

Domain-relevant / Creativity-relevant skills

Domain-relevant skills are attributes such as factual knowledge and skills. These attributes affect an individual’s performance in a given field of knowledge. Creativity- relevant skills include a person’s cognitive style that facilitates coping with complexity and breaking one’s mental set.

Amabile’s Model of Creativity

Amabile’s model of creativity contains two “can” factors (domain skills and creativity skills) and one “try” factor (internal motivation) that affect the performance in an organizational setting.

Amabile identified 5 environmental components that affect creativity in the workplace:

• Encouragement of creativity (which encompasses open information flow and support for new ideas at all levels of the organization, from top management, thru immediate supervisors, to work groups)
• Autonomy or freedom (autonomy in the day-to-day conduct of work, a sense of individual ownership of and control over work)
• Resources (the materials, information and general resources available for work)
• Pressures (including both positive challenge and negative workload pressures)
• Organizational impediments to creativity (including conservatism and internal strife)

Bureaucracies are not Innovative

Bureaucracy is a formal organizational structure that enforces a hierarchy of authority and a system of rules & regulations that control activity within an organization e.g. the government or the military.

Due to the nature of a bureaucracy, the scope and possibility to innovate within a bureaucracy is very limited if not non-existent. All activities are closely monitored and must follow predefined practices, rules, standards etc. Hence, any innovative ideas are killed before they can flourish for the sake of rules and policies. Creativity focuses on resourcefulness, imagination and flexibility, bureaucracy on order, systems, certainty and predictability. Hence, bureaucracies are not creative.

Sources of Innovation

Peter Drucker identified 7 sources of Innovation:

• The Unexpected: innovations from unexpected sources by accident.
• Incongruities: incongruities or conflicts between opposing functions, requirements or values may be the start of an innovation.
• Process Needs: an old proverb says that “necessity is the mother of invention”.
• Industry and Market Structure: industry markets and market structure may offer opportunities for new types of services.
• Demographics: demographics have long been a major source of innovation creating opportunities
• Changes in Perception: changes in perception can be a source of innovation
• New Knowledge: Last but not least new knowledge has produced many opportunities for new products.

Schumpeter/Drucker on Innovation

Creative destruction (innovation waves):

"Creative destruction” is used it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways. Creative destruction describes the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."

Systematic innovation

Drucker writes that systematic innovation means monitoring seven sources for innovative opportunity. The first four lie within the enterprise; they are essentially symptoms. The second set of sources for innovative opportunity involve changes outside the enterprise or industry

Serendipity

Serendipity refers to making a fortunate discovery by accident. “Serendipity” was coined by Horace Wolpole in 1754 to denote the gift of finding something valuable and agreeable which was not being sought.

Serendipity plays an important role in creative thinking, many historic innovations such as Alexander Fleming's accidental discovery of penicillin was a result of serendipity.

Serendipity can happen when:

An inventor is actively engaged in problem solving but is stuck at a certain point, and an accident or chance observation provides the solution or answer he is hunting for.

The inventor encounters something new that is not applicable to an area of work in which he or she is actively engaged.

Serendipity results from observation during hands-on experimentation. Hence an inventor who pursues experimentation is more apt to encounter and benefit from accidental inventions.

Applied & Basic Research

Basic Research: Concerned with research, discovery and invention (What is possible?)

Applied Research: Concerned with business and social needs (What is needed?)

Idea Growers

Idea growers are individuals or statements that encourage creativity by providing open-ended opportunities for input.

• Are there any questions?
• What have we missed?
• Who else has a suggestion?
• What would happen if...?
• How could we improve...?
• What ideas have you come up with?
• Where else can we get additional information on that?
• Before we make a final decision, let’s review all the options.

Group Dynamics

Group dynamics is a term used to describe the interactions that influence the attitudes and behaviors of people when they work in a group and its effects on group members and on the group as a whole.

There are two types: Intragroup dynamics (within a group) & intergroup dynamics (between groups)

A group with a positive dynamic has trusting members and they work towards a collective decision and they hold one another accountable for making things happen

In a group with poor group dynamics, people's behavior disrupts work and as a result they may not come to any decision, or it may make a wrong decision, because group members could not explore options effectively.

Idea Killers

Idea killers are individuals or statements that discourage creativity and stop ideas before they can be developed. Common killer phrases are:

• We tried that already
• Won’t work.
• Too expensive.
• Are you sure?
• I don’t understand you.
• Where do we find people to
• I am tired of hearing this.
• You think managers will like this?
• Why would you want to do it that way
• We don’t have enough time to do it.

Technical & Administrative Innovation

Technical innovations:

Innovations that pertain to products, services, and production process technology. They are related to the primary work activity of the organization. Technical innovations can be an idea for a new product or a new service or the introduction of a new element in an organization’s production process or service operation. Technical innovations can be either product or process innovations.

Administrative innovations:

Innovations that involve organizational structure and administrative processes. Examples can be the adoption of new ways to recruit personnel, allocate resources, structure tasks or units and give rewards etc. Administrative innovations are more related to the management process and indirectly related to the primary work activity of the organization. They are largely process innovations.

Active Listening

Active listening is a way of listening in which the listener make a conscious effort to hear and understand what people are saying. The listener must pay attention to the speaker and may be required to give feedback by restating or paraphrasing what they have heard, to confirm what they have heard and moreover, to confirm the understanding of both parties

Advantages Of Six Hats Method

• Improves thinking by focusing thought from different perspectives.
• Improves decision making
• Improves communication
• Allows people to express their thoughts without any risk.
• Generates understanding that there are multiple perspectives on an issue

Individual vs Group Brainstorming

Individual brainstorming is when an individual applies the technique on their own. Whereas in group brainstorming, a group of individuals apply the technique.

With group brainstorming, you can take advantage of the full experience and creativity of all team members. When one member gets stuck with an idea, another member's creativity and experience can take the idea to the next stage. You can develop ideas in greater depth with group brainstorming than you can with individual brainstorming.

Group brainstorming can be risky for individuals. Unusual suggestions may appear to lack value at first sight – this is where you need to chair sessions tightly, so that the group doesn't crush these ideas and stifle creativity.

In individual brainstorming, several studies have shown that individual brainstorming produces more – and often better – ideas than group brainstorming. Also there is no risk of criticism or ridicule for the individual.

Individual vs Organizational Creativity

Individual creativity is the creativity of the individual. Organizational creativity is the creative capability of an entire organization. For an organization to be creative it is not sufficient to have creative employees, but must provide a creative climate for its employees by providing motivating as well as facilitating conditions.

Barriers To Creative Thinking

• Perceptual barriers. Minds tendency to short circuit.
• Environmental barriers. Concerns the development of an individual (due to parent-child, boss-subordinate, teacher student relationships)
• Emotional barriers. Greed, fear, hate, poor self-confidence, desire for security, unwillingness to accept help from others, resistance to change, and self-satisfaction.
• Cultural barriers. The ones imposed by the society on an individual, such as conformity, competitiveness, and cooperation.