Innovation and creativity 04 the ecosystem of creativity, innovation and change

Chapter 04: The Ecosystem of
creativity, innovation and
change
BY KAMAL M. AL MASRI
Israa University Gaza
Faculty of Managerial and Financial Sciences
Departmentof Management Course code: ::::.BEAD4312..::::

Innovation and Creativity By Kamal AL MASRI
Introduction
 Some countries like Switzerland and Sweden are at
the top of the GII index (and others rankings),
 Other countries are at the bottom, although big
countries.
 Saudi Arabia: 68
 Argentina: 73.
 Egypt: 92
 Algeria: 113…
The question is why?

GII 2019: What places theses countries
at the top?

Factors / drivers of innovation…
 The procedures and structures of an organization as well as
the norms, values and collective beliefs of employees
(whether on the shop floor, within middle-level
management or among senior executives), all serve to shape
and influence processes of creativity, innovation and
change.
 The driving forces of innovation include internal and
external drivers/factors.

Ecosystem
An ecosystem is a
community of
living organisms in
conjunction with
the nonliving
components of
their environment,
interacting as a
system. (WP)
"It takes a village to raise a child,
and it takes an ecosystem to
scale an innovation."

The innovation ecosystem
The innovation ecosystem consists of
business participants, start-ups, academia,
technical and support services, and the
individuals that drive results.
An ecosystemic approach to innovation is a
structured approach to analyzing
the innovation system.

Why a systems approach?
 Due to the complexity of creativity and innovation, it is cautioned
not to make any overstatement of the influence of any single
attribute on creativity and innovation.
 To better understand creativity and innovation, we should take a
systems approach,
 which includes multiple factors from different perspectives and across
levels,
 to analyze the interaction of the multiple factors and their influence on
personal creativity and organizational innovation.

Implications of the ecosystems
approach to innovation:
 Adopting an ecosystems approach to innovation recognizes that:
 An innovation ecosystem is made up of different actors, relationships and
resources who all play a role.
 The effectiveness of each part within the innovation ecosystem is
moderated by other parts of the system (e.g. entrepreneurs depend on
being able to access financing).
 A change to one part of the innovation ecosystem leads to changes in other
parts of the innovation ecosystem (e.g. an increase in internet connectivity will
accelerate the design and testing of new technologies).

The innovation ecosystem

List of actors (not exhaustive):
• FRIENDS & FAMILY
• DEVELOPMENT AGENCIES
• PROFESSIONALS (Human
Capital)
• STARTUPS & ENTERPRISES
• MARKET FACILITATORS &
INTERMEDIARIES
• PRIVATE COMPANIES
• …

Why studying the innovation
ecosystem?
It’s important to in order to:
1. Explain the difference between countries.
2. Measure the inputs of innovation and creativity.
3. Manage the whole process of innovation by
manipulating and acting on theses factors.
4. …

Different ecosystems …
 Some innovation ecosystems are already well-functioning
and will require little support.
 Others are problematic due to fragility, inequity, conflict,
corruption, weak institutions or political stagnation.
 Because ecosystems are dynamic, traditionally strong
ecosystems can also decline in response to external
factors.

So, at which level?
 Innovation ecosystems can operate at multiple levels
(e.g. city, regional, national, etc.).
 The definition of the innovation ecosystem depends
on the given level…
 In this chapter, we will focus on the main
drivers/factors at the national level.

External factors/drivers of creativity, innovation
and change.
 P Political drivers
 E Economic triggers
 S Sociocultural factors
 T Technology
 L Legal requirements and regulations
 E Environmental factors
Of course, these
factors cant interact
together…

P- Political factors
 Major political and social events:
 for example, the changing relationships and tensions between America and the Middle East, and
Australia and their East Asian neighbors.
 Lobbying,
 Government,
 Political system,
 …
 These factors have an impact on other factors that in turn
affect innovation.

E- Economic factors
 Monetary policy, Exchange rates, Interest, taxes, and fund availability, (read here)
 Competitive pressures (faire and active competition),
 State of markets (dynamic?),
 Income levels, and purchasing power,
 Globalization of markets and the internationalization of business,
 Mergers and acquisitions,
 Privatization,
 Fluctuations in business cycles,
 …

Example:
Relationship
between
Innovation and
GDP levels

S- Sociocultural factors
 Culture and Societal values (will be detailed),
 Expectations.
 Societal expectations for businesses to operate
ethically and responsibly,
 Demographic changes and shifts in customer
requirements,
 …

T- Technological
 Advances in technology,
 IT developments and Internet,
 Tools for prototyping and simulation,
 Availability of spare parts and specific components,
 R&D,
 …

Prototypes
A prototype is a real, workable, and quasi-
usable system built economically and
quickly with the intention of being
modified.

L- Legal requirements and regulations
 Government laws and regulations:
for example, legislation on pollution or on animal
testing, …
 Property rights (will be detailed),
 …

E- Environmental factors
Environmental factors: e.g., pollution, ethical
consideration,
The weather ???

Internal drivers of creativity, innovation
and change (next chapter).
 The generation of new ideas and their translation into new
products, services or ways of doing business depends on the task
environment.
 Many factors can affect this environment:
 1- technology,
 2- primary task (core or main business),
 3- people,
 4- administrative structures,
 …
Will be studied in details next
chapters when talking about
innovative people, and
innovative organizations.

Culture and Innovation
“Don't Innovate. Create a Culture of
Innovation” (Forbes.com)
 Innovations needs a culture (company or country) that
encourages innovative behaviors, e.g.: questioning, observing,
challenging, ....
 Learned behavior in any organizational grouping or community
is an outcome of the values, ideas, techniques, habits, routines
which are passed on by one generation to another (…).

What is culture?
Values, traditions, customs, ways of doing
things… shared by a particular group of people
(nation, country, organization, society, …)
It acts like a “Collective Mental Programming”.
It impacts the way people make decisions
(behaviors) …

Innovative
culture?
According to
Goran Ekvall
are employees involved in, motivated by, and committed to the long-
goals and success of the organization?
Challenge and
involvement
can employees independently define their work, exercise discretion, and
take initiative in their day to day activities?
Freedom
are employees supportive and respectful to each other?Trust and openness
do individuals have time to elaborate on new ideas before takingIdea time
is the workplace spontaneous and fun?Playfulness/humor
do individuals make decisions and resolve issues based on the good of
organization versus personal interest?
Conflict resolution
do managers tolerate uncertainty and ambiguity and are employees
rewarded for taking risks?
Risk- taking
are employees allowed to express opinions and put forth ideas for
consideration and review?
Debates

Innovation and
cultural factors
according to
Goran Ekval …
These elements
(factors) can be
measured and
evaluated …

Go far: For each innovation type, a
specific culture is needed …
See “Archetypes of incremental and
radical innovation culture” (article here).
This applies to country level and
organization level (will be studied later).

Intellectual property
 Intellectual property (IP): a category of property
that includes intangible creations of the human
intellect.
 Intellectual property rights: the legal rights that
entities have on a thing or creature they own.
They usually give the creator an exclusive right over the
use of his/her creation for a certain period of time.
 See (WTO)
The level of protection must be defined (country, international, …)

Types of IP:
 There are many types of intellectual property, and some
countries recognize more than others.
 Intellectual property rights include: patents, copyright,
industrial design rights, trademarks, plant variety rights, trade
dress, geographical indications, and in some jurisdictions trade
secrets…
 WTO classifies IP into two main areas:
 (i) Copyright and rights related to copyright.
 (ii) Industrial property.
Any way, the most well-
known types are
copyrights, patents,
trademarks, and trade
secrets.

Types of IP (cont.)
 Copyrights:
 May apply to a wide range of creative, intellectual, or artistic
forms, or "works“ including software.
 Copyright does not cover ideas and information themselves, only
the form or manner in which they are expressed.
 Trademarks:
 A recognizable sign, design or expression which distinguishes
products or services of a particular trader from similar products or
services of other traders.

Types of IP (cont.)
 Patent: a form of right granted by the government to an
inventor or their successor-in-title, giving the owner the right to
exclude others from making, using, selling, offering to sell, and
importing an invention for a limited period of time.
 Trade secrets: A formula, practice, process, design,
instrument, pattern, or compilation of information which is not
generally known or reasonably ascertainable, by which a
business can obtain an economic advantage over competitors
and customers.
N.B. There is no formal government protection granted; each business must take measures to guard its
own trade secrets (e.g., Formula of its soft drinks is a trade secret for Coca-Cola.)

Examples of patent

A patent must be explained …
 Text explanation.
 Graph, illustration,
 Technical chart,
 …
Wen filing a patent
application it is
extremely important
to make sure that
the invention is as
fully described as
possible. Patent
attorneys say this
all the time!

Where to register a patent?
 This varies according to the country and the
sought level of protection:
Palestine: Ministry of National Economy
USA: U.S. Patent and Trademark Office.
Egypt: Egyptian Patent Office.
Saudi Arabia: …
 See WIPO PCT: http://www.wipo.int/sme/ar/faq/pat_faqs.htm

Innovation and property rights (WIPO)
 As there are many players involved in facilitating the market
success of an innovation, the effective use of the tools of IP will
play an important role in reducing risk for the players involved
(returns for their participation in the process).
 IP plays an important role in facilitating the process of taking
innovative technology to the market place.
 At the same time, IP can restrict diffusion of innovations
(knowledge).
 A BIG DEBATE !!!

READ ONLY- Innovation and property
rights
 Intellectual property rights can be used effectively to facilitate successful innovation. Innovative technologies
stand a better chance of successfully reaching the marketplace if IP is used strategically.
 Gauging the importance of IP in innovation by merely focusing on patents as input and/or output of innovation,
does not do justice to the significant role that can be played by the other tools of IP.
 A broader approach to the contribution of IP in innovation is therefore needed.
 IP also plays an important role in safely navigating the "valley of death." It provides access to financing and technical
facilities.
 In addition, IP provides a strong negotiation position when it comes to entering into and maintaining business
partnerships.
 Several examples have been given of businesses that have profited by exploiting the role of IP in innovation.
 More examples on the role of IP, not only on innovation but also in business in general and in particular by SMEs, are
found under case studies at https://www.wipo.int/sme.
READ ONLY

Expected relationship: innovation and
property rights (see link)
Innovationactivitieslevel
Patent application level
Not linear …

Innovation ecosystem factors as inputs
It’s important to understand, and try to
control these factors because:
They can be the inputs for the innovation
process.

The story of LEGO (see link)

The crisis
 But despite world domination, LEGO’s sales
declined sharply in 2003, dropping 35 percent in
the US and 29 percent worldwide, culminating a
year later in the biggest loss in the toymaker’s
history: £217 million.
 With debts almost equivalent to its annual sales,
LEGO seemed destined for acquisition, or worse.

The resurrection?
 In the last ten years, however, LEGO has grown from the very brink of
bankruptcy into the “Apple of toys:” an innovative, design-driven and
highly profitable toy brand that produces a staggering 22 billion plastic
bricks a year – roughly 500 a second.
 Fuelled in part by The LEGO Movie’s Pixar-sized triumph, the privately
held company surged ahead of main rival Mattel in 2014 to become
the biggest toy manufacturer in the world.
 Against all odds, LEGO achieved one of the biggest turnarounds in
history.

How did LEGO do it?
 Setting a new direction
 Innovation at the core
 With The Future Lab, LEGO developed a range of low-risk, low-cost innovation practices to test
ideas and cultivate expertise.
 1. Smart Licensing
 2. Rapid prototyping
 3. Open Innovation
 4. Designing Products for Girls
 5. Low-Risk Experimentation
Read the article
here.

What can we learn from the ups and
downs of innovation at LEGO?
 Innovation without direction is risky.
 Innovate close-to-the-core first.
 To experiment and test ideas in a safe way, without damaging your brand
reputation, start with small projects and small budgets, then test, learn and
prove.
 Disrupt yourself – build the next big thing before a competitor does.
 Foster open innovation and listen to the wisdom of your customers.
 Build an innovation culture that gives people freedom to be creative, as well as
the direction and focus needed to deliver profitable innovation.

References
 Essentials of the Management of Creativity and Innovation in Education, Business, and
Engineering, Christian H. Werner and Min Tang, 2017. in Handbook of the management of
creativity and innovation: Theory and practice, World Scientific Press, 2017.
 HANDBOOK OF THE MANAGEMENT OF CREATIVITY, AND INNOVATION, Theory and Practice
 https://www.cairn.info/revue-journal-of-innovation-economics-2017-2-page-33.htm
 Wipo: https://www.wipo.int/sme
 https://core.ac.uk/download/pdf/137345.pdf

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