Innovation and Competitive Advantage

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Creativity can be defined as problem identification and idea generation while innovation can be defined as idea selection, development and commercialization.

There are other useful definitions in this field, for example, creativity can be defined as constituting of a number of ideas, a number of diverse ideas and a number of novel ideas.

There are distinct processes that enhance problem identification and idea generation and, similarly, distinct processes that enhance idea selection, development and commercialization. Whilst there is no sure fire route to commercial success, these processes improve the probability that good ideas will be generated and selected and that investment in developing and commercializing those ideas will not be wasted.

Innovation and Competitive Advantage

Creativity and Innovation are intricately linked to competitive advantage:

a) There is a positive correlation between new products and market share. This is best explained by examining what would happen if firms did not introduce new products – Microsoft would almost certainly have lost its dominance if it had not improved on Windows 95.

b) Firms have to introduce new products as life cycles decrease – the average life span of a mobile phone is less than a year.

c) Competitors force the introduction of new products – if Nokia did not introduce new mobile phones every year then Motorola or Siemens would.

d) Macro changes push innovation – China's entry into the WTO mean that Western firms would face competitions of scale and scope.

These and other topics are covered in depth in the MBA dissertation on Managing Creativity & Innovation, which can be purchased (along with an Innovation Bible, Creativity and Innovation DIY Audit, Good Idea Generator Software and Power Point Presentation) from http: // www .aging-creativity.com /

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Kal Bishop, MBA

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