Innovation and creativity in industry

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.


Innovation is a new way of doing something or "new stuff that is made useful". It may refer to increase or to have revolutionary changes in thinking, products, processes, or organizations. Many people to the scholarly literature on innovation typically distinguish innovation as ideas applied successfully in practice. Something new must be substantially different to be innovative, not an insignificant change, e.g., in the arts, economics, business and government policy. In economics the change must increase value, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy.

Innovation in organisation context

In the organizational context, innovation is defined as performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share, etc. All organizations can innovate, including for example hospitals, universities, and local governments.

Relevance of innovation to industry:

  • The introduction of a new good — that is one with which consumers are not yet familiar — or of a new quality of a good.
  • The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.
  • The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
  • The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.
  • The carrying out of the new organization of any industry, like the creation of a monopoly position or the breaking up of a monopoly position.

Value of Innovation in Industry

Goals of innovation in Industry

  1. Improved quality
  2. Extension of the product range
  3. Reduced labour costs
  4. Creation of new markets
  5. Reduced materials
  6. Improved production processes
  7. Replacement of products/services
  8. Reduced environmental damage
  9. Conformance to regulations
  10. Reduced energy consumption

Failure of innovation in industry

  1. Poor Leadership
  2. Poor Communication
  3. Poor Empowerment
  4. Poor Organization
  5. Poor Knowledge Management

Measures of innovation in industry

There are two different types of measures for innovation:

  1. The organizational level
  2. The political level.
  3. The organizational Level:

Organizational level means to individuals, team-level assessments, private companies from the smallest to the largest. Measure of innovation for every organizations can be conducted by surveys, workshops, consultants or internal supervision, checking. There is no established general way to measure organizational innovation.

Measuring innovation have traditionally been by looking at expenditure, for example, investment in R&D (Research and Development).

2) The political level: A common industry view is that comparative cost-effectiveness research (CER) is a form of price control which, by reducing returns to industry, limits R&D expenditure, ultimately reduces our cost and leads to innovation in decreasing cost. By it the orgazation gets ready for future innovation and compromises new products access to markets.

Induced innovation- reason for motivation:

Induced innovation was first proposed by Dr. J. R. Hicks in his work. He proposed that "a change in the relative prices of the factors of production is itself a spur to invention, and to invention of a particular kind—directed to economizing the use of a factor which has become relatively expensive."

This works as motivation in the sense that if wages are increased definitely the employees will work hard and more motivation will be there.

Costs (whether direct or indirect )has always been a motivation for a more rapid improvement in energy efficiency of goods than would normally occur.

Innovation system in Organizations

The concept of the innovation system stresses that the flow of technology and information among people, enterprises and institutions is key to an innovative process. Every organisation should have a good and effective management information system in order to be highly innovative. It creates interaction between the employees who are needed in order to turn an idea into a process, product or service on the market and thus earn money.

Open innovation

Open innovation is that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology by Bazaar model. The barriers between a firm and its environment have become less now a days, so innovations can now be easily transferred inward and outward.

So, this is all about innovation in industry.


Creativity is a mental and social process involving the discovery of new ideas or concepts, or new associations of the creative mind between existing ideas or concepts. Creativity is pumped by the process of either conscious or unconscious insight. An alternative conception of creativeness is that it is simply the act of making something new or presenting something old in a new manner.

Difference between creativity and innovation

It is often seen as problem that people are not aware of exact meanings of these two. So it is better to understand them in their right context.

  1. Creativity is typically used to refer to the act of producing new ideas, approaches or actions, while innovation is the process of both generating and applying such creative ideas in some specific context.
  2. In the context of an organization, the term innovation is often used to tell the entire process by which an organization generates creative, new ideas and converts them into real life products or services that are useful and viable in business practices, while the term creativity is reserved to apply specifically to the generation of new ideas by individuals or by groups, as a necessary step within the innovation process.

Creativity and its affect on work

Three patterns generally exist between that affect creativity at work:

  • Positive (or negative) mood, or change in mood, predictably precedes creativity;
  • Creativity predictably precedes mood
  • Whether affect and creativity occur simultaneously.

It was found that these not only affect process of creativity, but creative outcomes are also affected by it as well. The experience of creativity is itself a work event, and like other events in the organizational context, it could evoke emotion. Qualitative research and anecdotal accounts of creative achievement in the arts and sciences suggest that creative insight is often followed by feelings of elation. For example, Albert Einstein called his 1907 general theory of relativity “the happiest thought of my life.” Empirical evidence on this matter is still very tentative.

Measuring creativity

1) Creativity quotient

Several attempts have been made to develop a creativity quotient of an individual similar to the Intelligence quotient (IQ), however these have been of great value.[ Most measures of creativity are dependent on the personal judgment of the examiner, so a standardized measure it is difficult to develop.

2) Social-personality approach

Some researchers have taken a social-personality approach for measuring creativity. In these studies, personality traits such as independence of judgment, self-confidence, attraction to complexity, aesthetic orientation and risk-taking are used as measures of the creativity of individuals Other researchers have related creativity to the trait, openness to experience.

3) Creativity Profiles

Creativity comes in different forms. There is kind to produce growth, innovation, speed, etc. There are four “Creativity Profiles” that can help achieve such goals.

  1. Incubate (Long-term Development)
  2. Imagine (Breakthrough Ideas)
  3. Improve (Incremental Adjustments)
  4. Invest (Short-term Goals

Creativity in diverse cultures

Now a days it is very difficult to manage in diversed work culture. So, creativity is needed at most of the levels now a days in order to solve this problem.

Creativity in organizations

Expertise (technical, procedural & intellectual knowledge),

Creative thinking skills (how flexibly and imaginatively people approach problems),

and Motivation (especially intrinsic motivation).

Economic views of creativity

In the early 20th century, Joseph Schumpeter introduced the economic theory of creative destruction, to describe the way in which old ways of doing things have been replaced by the new.

Creativity is also seen by economists as an important element in the recombination of different elements to produce new technologies and products and services and, thus leads to economic growth. Creativity leads to capital (tangible or intangible assets), and creative products are protected by intellectual property laws.

The creative class is seen to be an important driver of modern countries.

3 T's of economic development that are related with organization's creativity:

Technology, Talent and Tolerance" also have high concentrations of creative professionals and tend to have a higher level of economic development.

Creative problem solving in industry:

Creative problem solving is the mental process of solving a problem. It is a special form of problem solving in which the solution is independently created rather than solved by looking at previous results of same problem.

Creative problem solving system always involves creativity. However, creativity often does not involve creative problem solving, especially in fields such as music, poetry, and art. Creativity requires newness, updated knowledge, as a characteristic of what is created, but creativity does not necessarily have value (that it will be beneficial for society) or is appreciated by other people.

So, this is all about creativity and Innovation in Industry.

Result and Interpretation:

From this report i have learned the value of innovation and creativity from industry perspective that how it affects every business whether big or small. By studying this & realizing its value in customer satisfaction i will try to implement it in my business also.


Creativity & innovation are of great value in every industry today. They are the driving forces of every business now days and also acts as competitive advantage. Being the business administration students we should understand their value and try to be creative and innovative.