Over the last few years, creativity and innovation have emerged as critical success factors for business. In 2001, former US Federal Reserve chairman Alan Greenspan declared that “We are entering the era of Ideanomics”. The late management strategist Peter Drucker once said: “An established company, which in an age demanding innovation, is not capable of innovation, is doomed to decline and extinction.”

“Increasingly, the new core competence is creativity — the right-brain stuff that smart companies are now harnessing to generate top-line growth. The game is changing. It’s about creativity, imagination, and, above all, innovation”, noted Business Week in a special edition in 2005 titled “Get Creative!”

With our articles, Thinkergy aims to give readers deeper insights into the world of business creativity and innovation. Let’s get started by first taking a look at the key concepts under consideration. What does it mean — Business Creativity and Innovation? Based on a working definition of 3M, one of the world’s most innovative companies, I prefer to express the relationship between the two concepts in a simple equation:

creativity + action = innovation

Let’s take a close-up look on the different components of the equation to find out how to become innovative.

I have noted to my big surprise that in their efforts to create more value, most companies start with ‘hard-wiring’ their organizations for innovation. They hire an innovation manager, set up an innovation management system, define key performance indicators to measure innovation, and so on. After some time, senior management wonders why the innovative results of their investments are rather meager. The reason is that they wrongly started at the right side of the equation.

Innovation always starts with creativity, which can be defined as coming up with a novel, relevant and meaningful idea. All ideas come out of the brain of an individual. Hence, a company that wants to see more innovation needs to encourage and support its employees to come up with ideas.

But having an idea alone is not good enough for arriving at the right side of our equation. There are many dreamers in the world who have come up with tons of great ideas in their lives but have never brought a single one to life. In a corporate setting, there is an additional hurdle for an employee with a great idea to overcome: corporate inertia.

Lee Iacooca, the former chief executive officer of Chrysler, says it well: “It is very difficult for ideas to survive in the modern corporation. They have to survive politics, lack of understanding, envy, theft, lack of funding and other resources, as well as just plain corporate inertia. The more we can make our companies a fertile breeding ground for new ideas the better.”

This means that in many firms, a creative employee with a great idea needs to have a lot of courage and be willing to take the risk to suggest an idea for implementation. As such, a creative culture needs to encourage employees to come up with innovative ideas and take the necessary action steps to win support for implementation.

Now it becomes clear that the software (innovative ideas and a creative culture) is more important than the hardware (the innovation management system) that a company needs to focus on the left side of the equation first in order to arrive at the right side.

I am sure that many companies could have saved a lot of money if they had understood the dynamics between the concepts of creativity and innovation. So how can you avoid the same mistake and set your company on the right innovation track?

My simple advice here is: Use our equation and buy “the software” first before investing into “the hardware”. A great first step is to invest in a prime creativity training to motivate your employees to generate ideas using creativity techniques (creativity). Next, add the implementation- and action-component by gaining deeper insights into the innovation-friendliness or hostility of your corporate culture via an innovation readiness audit. Only after the results of your initial investments promise to bear fruits, invest in the different components of a innovation management system on the right side of the equation (innovation) and harvest your results.