After reading this article you will learn about:- 1. Meaning of Creativity 2. Components of Creativity 3. Process 4. Climate.

Meaning of Creativity:

Creativity means creating something new. In the context of business, it means creation of new ideas, new method or new product/service.

Creativity is the “cognitive process of developing an idea, concept, commodity, or discovery that is viewed as novel by its creator or a target audience.” — Max H. Bazerman

“Creativity is not a quality of a person; it is a quality of ideas, of behaviours or products.” — Teresa M. Amabile


Creativity improves the quality of decisions. It increases the scope of alternatives to be considered for problem-solving. It is essential to deal with problems which are no-repetitive and novel as such problems cannot be solved by pre-defined solutions. They require imaginative thinking for their solution. As no problem has a single solution, creativity helps in generating new ideas that help in taking the final decision.

The creative approach to problem solving assumes the following:

1. There is always a better way of doing things. Past precedents, habits and conventional ways of doing things cannot always guide the future courses of action.

2. Problems have diverse perspectives. Each perspective should be probed, questions should be raised and answers should be found.


3. Things should not be taken for granted. Problems should be redefined and obvious facts should be challenged.

4. There is always scope for improvement. Managers should move from traditional ways to modern, computer-aided ways of managing organisations.

5. Managers should not be afraid of failures. Initial failures will lead to ultimate success.

Creativity in decision-making results in organisational innovations, new technology or new products.


In the era of globalisation, competition is so intense that creativity is essential for organisations to take decisions that help in their survival and growth.

The creativity process requires:

1. Convergent thinking,

2. Divergent thinking.


In convergent thinking, the problem is solved according to pre-defined method or course of action. It pre-supposes solution to the problem and rationally moves towards that solution. Divergent thinking does not solve the problem in a pre-defined way. It analyses different aspects of the problem, views it in different ways and searches for alternative courses of action to solve that problem.

Components of Creativity:

Teresa M. Amabile enumerates three components of creativity.

1. Domain skills:

A manager can be creative in decision-making if he is theoretically and conceptually aware of the problem and its relevance to the environmental factors. In other words, he must have knowledge of the problem area and also the talent and ability to solve that problem. This is known as domain skill.


2. Creativity skills:

The skills to do creative things; to think of new ways of doing the work, to think of new avenues of marketing are the creative skills that help to carry out the decision-making process.

3. Task motivation:

Managers do not perform organisational tasks for earning only financial rewards. Money or financial considerations are not the only motives for taking up a novel task. Ego satisfaction and morale boost up are also the considerations that lead to creativity in decision-making.

Process of Creativity:


The process of creativity consists of the following steps:

1. Problem finding or sensing:

The entrepreneur faces a problem and selects to work on it. He feels curious to solve that problem. He thoroughly familiarizes himself with the problem, analyses its importance for the business and its relationship with other segments of the business.

This helps in identification of the problem as close as possible to reality so that alternatives can be generated which analyse the problem and provide solutions in the right direction. Curiosity leads to development of ideas.


2. Preparation:

Once the problem is identified, the decision-maker concentrates on the problem and starts working on it. He collects information, analyses how others are using it and formulates hypotheses to work on. Information may be collected on the basis of past experience, through experience of others and also through study of new researches and innovations done in that field. If he wants to introduce a new product in the market, he studies the consumer buying behaviour before converting that idea into reality.

3. Gestation or Incubation:

If, in the preparation stage, the decision-maker is not able to arrive at creative solution to the problem, he moves away from conscious deliberation to sub-conscious development of ideas. He moves away from the problem and engages in other routine activities while still thinking of the problem in his sub-conscious mind.

He thinks over collected information and makes decisions in his sub-conscious mind. He appears to be idle but actually he is trying to correlate what runs in his sub-conscious mind with the happenings around. As lot of information and ideas are already stored in his mind, sub-consciously they are combined and related to each other and help in generation of new ideas important for solving the problem.

4. Insight or Illumination:


He thinks of all possible solutions at all times. He thinks of ideas while eating, walking or going to sleep. These ideas are put in writing so that he does not forget them in his conscious mind. In this process, there is flash of ideas in his mind.

These ideas come and go at the speed of light, some of which are spontaneously rejected while others are accepted for further analysis. Sometimes, it results in ideas which the decision ­maker may not have even thought of in his conscious mind.

Social gatherings and meetings may also result in new ideas. Compaq computer company was found as a result of social encounters. Rough sketch of portable computer was drawn on a paper napkin by three friends over lunch which turned into setting up of Compaq computer company.

5. Verification and application:

The entrepreneur proves by logic or experiment that the idea can solve the problem and, therefore, can be implemented. He tests the ideas empirically through mathematical models and experimentation. If it is feasible, he applies it to solve the problem. Verification is an essential step in the creativity process because an idea that cannot be implemented is of no use howsoever good it may be.

Climate for Creativity:

Managers create a climate that encourages creativity in the following ways:


1. Recognise the need for change:

Though people are generally resistant to change, accepting the need for change is necessary to promote creativity. People must feel that they will be benefitted by change.

2. Encourage new ideas:

The manager should welcome new ideas. Listening to new ideas and implementing the profitable ones encourages a creative climate in the organisation.

3. Interaction:

Interaction with people within and outside the enterprise encourages exchange of useful information and generation of new ideas.


4. Tolerate failure:

New ideas may prove to be failures. People should not get disheartened. They should consider time, money and energy in ideas that have failed as investment for bright future prospects.

5. Clear objectives:

Managers must have purpose for creativity. They should know what ideas to be tried, when and for what. Clear objectives will optimize the use of time, energy and money.