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2.3: Creativity and Innovation in Entrepreneurship

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    Creativity and Innovation in Entrepreneurship

    Task Summary:

    Learning Outcomes:

    • Define creativity and innovation in an entrepreneurial context
    • Reflect on various perspectives on creativity and innovation in an entrepreneurial context
    • Assess the potential of design thinking
    • Identify the characteristics that resonate with you as being critical to entrepreneurial success

    Creativity and innovation are what make the world go around and continue to improve and evolve! There have been lots of great ideas and thoughts around the creative and innovative process for entrepreneurs, as this is a key part of the problem identification process. Have a look at what some resident experts have said about creativity and innovation from an entrepreneurial lens.

    Lesson 2.3.1: Entrepreneurial Creativity and Innovation

    DruckerInnovation mind map

    Systematic innovation involves “monitoring seven sources for an innovative opportunity” (Drucker, 1985). The first four are internally focused within the business or industry, in that they may be visible to those involved in that organization or sector. The last three involve changes outside the business or industry.

    • Internally Focused
      • The unexpected (unexpected success, failure, or outside events)
      • The incongruity between reality as it actually is and reality as it is assumed to be or as it ought to be
      • Innovation based on process need
      • Changes in industry structure or market structure that catch everyone unawares
    • Externally Focused
      • Demographics (population changes)
      • Changes in perception, mood, and meaning
      • New knowledge, both scientific and nonscientific


    One of the components of Mitchell’s (2000) New Venture Template asks whether the venture being examined represents a new combination. To determine this, he suggests considering two categories of entrepreneurial discovery: scientific discovery and circumstance.

    • Scientific Discovery
      • Physical/technological insight
      • A new and valuable way
    • Circumstantial Discovery
      • Specific knowledge of time, place, or circumstance
      • When and what you know

    The second set of variables to consider are the market imperfections that can create profit opportunities: excess demand and excess supply. This gives rise to the following four types of entrepreneurial discovery.

    • Invention I
      • Uses science to exploit excess demand (a market imperfection)
      • Becomes an opportunity to discover and apply the laws of nature to satisfy excess demand
      • Inventions in one industry have ripple effects in others
      • Example: the invention of the airplane
    • Observation
      • Circumstances reveal an opportunity to exploit excess demand (a market imperfection)
      • Not necessarily science-oriented
      • Example: airline industry = need for food service for passengers
    • Invention II
      • Uses science to exploit excess supply (a market imperfection)
      • Example: Second most abundant element on earth after oxygen = silicon microchips
    • Coordination
      • Circumstances reveal an opportunity to exploit excess supply (a market imperfection)
      • Example: Producer’s capacities to lower prices = Wal-Mart


    Schumpeter’s (1934) five kinds of new combinations can occur within each of the four kinds of entrepreneurial discovery (Mitchell, 2000):

    • New or improved good/service
      • The distinction between true advances and promotional differences
    • A new method of production
      • Example: assembly line method to automobile production, robotics, agricultural processing
    • Opening of a new market
      • Global context: Culture, laws, local buyer preferences, business practices, customs, communication, transportation all set up new distribution channels
      • Example: Honda created a new market for smaller modestly powered motorbikes
    • Conquest of a new source of supply of raw materials
      • Enhance availability of products by providing at lower cost
      • Enhance availability by making more available without compromising quality
    • Reorganization of an industry


    Murphy (2011) claimed that there was a single-dimensional logic that oversimplified the approach taken to understand entrepreneurial discovery. He was bothered by the notion that entrepreneurs either deliberately searched for entrepreneurial opportunities or they serendipitously discovered them. Murphy’s (2011) multidimensional model of entrepreneurial discovery suggests that opportunities may be identified (a) through a purposeful search; (b) because others provide the opportunity to the entrepreneur; (c) through prior knowledge, entrepreneurial alertness, and means other than a purposeful search; and, (d) through a combination of lucky happenstance and deliberate searching for opportunities.


    According to experimentation research, entrepreneurial creativity is not correlated with IQ (people with high IQs can be unsuccessful in business and those with lower IQs can be successful as an entrepreneur). Research has also shown that those who practice idea generation techniques can become more creative. The best ideas sometimes come later in the idea-generation process—often in the days and weeks following the application of the idea-generating processes (Vesper, 1996).

    Vesper (1996) identified several ways in which entrepreneurs found ideas:

    • Prior job
    • Recreation
    • Chance event
    • Answering discovery questions

    Although would-be entrepreneurs usually don’t discover ideas by a deliberate searching strategy (except when pursuing acquisitions of ongoing firms), it is nevertheless possible to impute to their discoveries some implicit searching patterns. (Vesper, 1996)

    Vesper (1996) categorized discovery questions as follows:

    • Search questions, which might prompt venture ideas by placing one’s mind into a mode where the subconscious will work to push ideas into the conscious mind
      • What is bothering me and what might relieve that bother?
      • How could this be made or done differently than it is now?
      • What else might I like to have?
      • How can I fall the family tradition?
    • Questions based on encounters with a potential customer request, someone else’s idea, or another event
      • Can I play some role in providing this product or service to a broader market?
      • Could there be a way to do this better for the customer?
    • Questions based on evaluative reactions to ideas
      • Could I do this job on my own instead of as an employee?
      • If people elsewhere went for this idea, might they want it here too?

    Vesper (1996) also highlighted several mental blocks to departure. He suggested that generating innovative ideas involved two tasks: to depart from what is usual or customary and to apply an effective way to direct this departure. The mental blocks in the way of departure include the following:

    • Perceptual blocks
      • difficulty viewing things from different perspectives
      • seeing only what you expect to see or think what others expect you to see
    • Emotional blocks
      • intolerance of ambiguity
      • preference for judging rather than seeking ideas
      • tunnel vision
      • insufficient patience
    • Cultural blocks
      • a belief that reason and logic are superior to feeling, intuition, and other such approaches
      • thinking that tradition is preferable to change
      • disdain for fantasy, reflection, idea playfulness, humor
    • Imagination blocks
      • fear of subconscious thinking
      • inhibition about some areas of imagination
    • Environmental blocks
      • distrust of others who might be able to help
      • distractions
      • discouraging responses from other people
    • Intellectual blocks
      • lack of information
      • incorrect information
      • weak technical skills in areas such as financial analysis
    • Expressive blocks
      • poor writing skills
      • inability to construct prototypes

    Understanding these mental blocks to departure is a first step in figuring out how to cope with them. Some tactics for departure include the following (Vesper, 1996):

    • Trying different ways of looking at and thinking about venture opportunities
    • Trying to continually generate ideas about opportunities and how to exploit them
    • Seeking clues from business and personal contacts, trade shows, technology licensing offices, and other sources
    • Not being discouraged by others’ negative views because many successful innovations were first thought to be impossible to make
    • Generating possible solutions to obstacles before stating negative views about them
    • Using idea-generating tricks like
      • Brainstorming
      • Considering multiple consequences of possible future events or changes
      • Rearranging, reversing, expanding, shrinking, combining, or altering ideas
      • Developing scenarios

    Lesson 2.3.2: Design Thinking

    An interactive H5P element has been excluded from this version of the text. You can view it online here:


    The Hasso Plattner Institute of Design at Stanford University called the (, is an acknowledged leader at promoting design thinking. You can download the Bootcamp Bootleg manual from the website at The following description of design thinking is from the IDEO website:

    Design thinking is a deeply human process that taps into abilities we all have but get overlooked by more conventional problem-solving practices. It relies on our ability to be intuitive, to recognize patterns, to construct ideas that are emotionally meaningful as well as functional, and to express ourselves through means beyond words or symbols. Nobody wants to run an organization on feeling, intuition, and inspiration, but an over-reliance on the rational and the analytical can be just as risky. Design thinking provides an integrated third way.

    The design thinking process is best thought of as a system of overlapping spaces rather than a sequence of orderly steps. There are three spaces to keep in mind: inspirationideation, and implementation. Inspiration is the problem or opportunity that motivates the search for solutions. Ideation is the process of generating, developing, and testing ideas. Implementation is the path that leads from the project stage into people’s lives (IDEO, 2015).

    Activity 2.3.1: Read/Watch/Listen – Reflect

    Today is all about taking some time to sit the value of creativity and innovation in entrepreneurship. Similar to previous activities, this is all done with the intent to develop your own understanding of the characteristics needed for success in entrepreneurship. Pay close attention to characteristics and leanings that resonate with you, and are particularly appealing. Remember, at the end of this module you will be developing either a 250-word document, infographic, or a three-minute presentation on the characteristics that make an entrepreneurial thinker and leader successful.

    The key steps are:

    1. Choose five (5) videos from this Innovation Playlist to watch
    2. Building on what you have learned throughout this unit, identify the characteristics that resonate with you as being critical to success and appealing to you personally
    3. Reflect on why these characteristics are critical and appealing
    4. Reflect on how these characteristics, or lack thereof, could impact your own success as an entrepreneur
    5. Reflect on how you can strengthen these characteristics to support your own entrepreneurial success over the next 18 months

    Activity 2.3.2: Journal Entry

    As a reminder, journaling can be a really powerful way to learn because it gets us to pause and reflect not only on what we have learned but also on what it means to us. Journaling makes meaning of material in a way that is personal and powerful. Similar to your unit end reflection in Unit 1, we are going to take a slightly different approach for this journal, which focuses on developing an action plan given your previous two journal reflections. Here, you will develop a plan of action for immediate learning challenges, such as the unit assignments featured in this course. Recall in the past two journals you reflected on key learning (not content) aspects you found challenging. You will reconsider your strengths, weaknesses, and key learnings and determine specific steps to prepare and complete the oncoming learning challenge of designing the entrepreneurial process for yourself. Your reflection entries should be either 300 to 500 written words or a video that is approximately 5 minutes.

    Using your past two journal reflections and your learning experience in Unit 2, Module 3, reflect on the following:

    1. Concepts that were easy to understand and why
      • If there was not a particular concept that was easy to understand, reflect on why this was the case
    2. Concepts that were difficult to understand and why
      • If there was not a particular concept that was difficult to understand, reflect on why this was the case
    3. Develop a meaningful plan with clear and specific actions you need to take, how you will take them, and when you will take them, to address any challenges or weaknesses before you complete your Unit 2 Assignment: The Makings of a Successful Entrepreneur.
    UNIT 2 Assignment: The Makings of a Successful Entrepreneur
    The purpose of this assignment is to connect all of the dots that you have been learning about and engaging with over the past unit when it comes to what really makes for a successful entrepreneur. You are going to develop your own set of characteristics, skills, abilities, traits, etc., which collectively make for a successful entrepreneur, and explore how you see these characteristics in yourself. Remember, this is not about finding the right answer, or providing a set of characteristics that was developed by someone else, but rather this is about developing your own set of characteristics with supporting rationale. Your submission should be about 250 words, which is one page double spaced, or it could be done as an infographic, or a two-three minute presentation. If you are doing this as part of a formal course and have a different approach that you would like to take for developing this assignment, please check with your instructor.

    Media Attributions

    Text Attributions


    Drucker, P. F. (1985). Innovation and entrepreneurship: Practice and principles . p. 35. New York, NY: Harper & Row.

    IDEO. (2015). About IDEO. para. 7-8. Retrieved from

    Mitchell, R. K. (2000). Introduction to the Venture Analysis Standards 2000: New Venture Template Workbook. Victoria, B.C., Canada: International Centre for Venture Expertise

    Murphy, P. J. (2011). A 2 x 2 conceptual foundation for entrepreneurial discovery theory. Entrepreneurship Theory and Practice, 35(2), 359-374. doi:10.1111/j.1540-6520.2010.00368.x

    Schumpeter, J. A. (1934). The theory of economic development : An inquiry into profits, capital, credit, interest, and the business cycle (R. Opie, Trans.). Cambridge, MA: Harvard University Press.

    Vesper, K. H. (1996). New venture experience (revised ed.). p. 60. Seattle, WA: Vector Books

    2.3: Creativity and Innovation in Entrepreneurship is shared under a CC BY-NC-SA license and was authored, remixed, and/or curated by LibreTexts.

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