<B>Eureka! The old new form of competition</B>

David Allen and Raúl Eguía. Professors. Instituto de Empresa

31 January 2006

Innovation and creativity are vital for promoting competition in a changing world. Yet do we really understand the difference between the two concepts and the relationship between them?

Question: What gives us a strong competitive edge and enables us to adapt quickly to a changing world?

The answer is creativity; its embodiment is innovation. Creativity is present in virtual communities, such as IT companies competing in the biotech sector, a film industry increasingly involved with the videogame business--and vice versa--and absolutely everything else. Creativity is the driving force behind change and Schumpeter’s creative destruction; it provides a competitive advantage.

The existence of creativity is obvious, but its scope (Eureka!) is less well known. As Steve Jobs says: "When personnel in the creativity department are asked how they made a certain thing, they generally feel a little guilty because they didn't really make anything; they simply saw something."

In other words, do we really know what creativity is? In historical terms, creativity has been considered to be a blind variation (Campbell), divergent thinking (Torrance), intrinsic motivation (Amabile), social factor (Csikszentmihalyi) and a stock market (Sternberg and Lubart). Today, a generally accepted definition might be "the skill of producing ideas or products that are new and appropriate".

However, how does creativity emerge? One of the recent theories that combine cognitive and social variables is that of Sternberg and Lubart’s investment theory. This theory describes creativity as a stock market where ideas are shares and creative individuals buy them when their price is low and sell them when their price is high. This means the richer a broker’s resources, the greater the profit he reaps. It’s not money in question, but rather resources such as intelligence, know-how, legislative-style of thinking (ability to create their own rules), tolerance to ambiguity, the will to win, perseverance, rational risk-taking, self-confidence, intrinsic motivation and favourable environment (creative support, freedom, etc.).

Is creativity a synonym of innovation? Innovation can be understood as a process that comes after creativity. Innovation occurs only if the latter has previously existed. Whereas creativity focuses on the creative process (production, development, selection and retention of ideas), innovation is the implementation of this process. In the corporate environment, both are necessary: the first as a driving force and the second as a process of capitalising on the creative ideas.

How to encourage organisational innovation and creativity. To encourage innovation and creativity, the organisational environment and culture need to be free. Institutional support is lent in the form of tangible (financial assistance) and intangible (fluent communication, tolerance to errors, etc.) resources and time. The aim is to promote freedom, confidence and motivation so that both innovation and creativity can begin to flow.

Creativity and innovation act as competitive driving forces and require both commitment and challenge. However, as in the film The Man in the White Suit (MacKendrick, 1951), they are also a threat for companies that are neither creative nor innovative because they break away from paradigms and encourage change. So again we ask ourselves, how can we adapt to this changing world? Are we able to gain a competitive edge? These are the questions. You, no doubt, have the answers.

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