Developing Management Capability

1. Definition of Creativity and Innovation

        Creativity is defined as ‘the act of turning new and imaginative ideas into reality’ (Naiman, 2014). In other words, creativity is the tendency to produce or perceive ideas, alternatives, or possibilities that may be valuable in solving problems, communicating with others, and entertaining ourselves and others. Innovation is defined by Linda Naiman (2014) as ‘the implementation of a new or significantly improved product, service or process that creates value for business, government or society’. In layman’s terms, innovation is creating and capturing value in a new way.

2.1 The Importance of Creativity for Employment

Creativity is important for employment because it allows employees to solve problems within the workplace easily. According to CEOs interviewed by Shannon McGovern (2012), creativity is one of the most valuable skills for employees or graduates as it allows them to figure out problems using their intelligence, and come up with new solutions. Furthermore, employees must be creative to deal with difficult problems, such as a change of management structure or culture, which they can recommend some good solutions for the top management. Besides that, it is important for employees to be creative as it helps them to resolve conflicts. For instance, employees are able to sort out creative solutions to resolve conflicts among their customers or colleagues in the organization

The next reason is that it can generate new ideas or methods for the organization. Many successful organizations have creative employees that facilitated in terms of producing new products, improving the quality of existing products, and improving the efficiency of its existing processes. These creative solutions mentioned had definitely improved productivity as it was proven by the success of Apple Inc., which emphasizes on the creativity of their employees to produce innovative products and services.

Generally, creative employees have the ability to think differently, which simplifies the creation of new ideas for products. They are willing to discover new things, explore new places, and perform in depth research to support their new ideas. Moreover, creative employees tend to work smarter and faster, while improving the quality of their work at the same time (Kim, 2014). However, it is important to note that creative ideas from employees is only realizable if the working environment or organizational culture supplements it. With that in mind, a study conducted by Forrester Consulting revealed that “58% of survey respondents that said their firms foster creativity had 2013 revenues exceeding their 2012 revenues by 10% or more. In contrast, only 20% of less creative companies performed similarly” (Forrester Consulting, 2014). Based on the findings above, it shows that organizations that nurture creativity combined with the existence of creative employees are able to increase the profitability of the overall organization (refer to Appendix B).  

2.2 The Importance of Innovation for Employment

Innovation is important for employment because it allows employees to find what opportunities exist now, or are prone to rise in the future (Boundless, 2015). This is because a successful firm will not just respond to their current customers' demand, but also anticipate future trends. With such preparation of the future, successful firms will develop ideas, products and services as well as improve existing business process and practices, in order to meet this future demand quicker and successfully than its rivals. Furthermore, encouraging innovation is a vital stride in venturing into new markets and overcoming obstacles (Omega Management Group Corp., n.d.). By this way, it can develop a unique selling point to add value to the company’ products and services. At the same time innovation also helps the company to gain commercial advantages. For example, the innovative Apple Inc. had successfully gained commercial advantages because of their innovative discoveries of information technology and systems. No matter how expensive is the iPhone 6s relative to its substitutes, consumers will be willing to pay more for this innovative product. In short, innovation enables firms to gain competitive advantage.

Normally innovation is associated with higher costs, but that’s exactly the wrong way to be looking at it. There are a lot of innovative ideas that cut costs, such as the internet, technological devices, and paperless systems. For example, firms that make payroll paperless are able to save administrative costs. Moreover, before the innovation of the Automated Teller Machine (ATM) and online banking service, consumers have to visit the bank directly to withdraw or deposit money. Therefore, with financial innovation in the ATM and online banking service, it brings a lot of convenience and benefits to both the bank and consumers (Gordon 2015). Another example will be Nestlé, who offered multiple innovative beverage-making systems for consumers that improved customer satisfaction and company profits (Nestlé, 2011).