Chapter 5: Creativity and Motivation

LEARNING OBJECTIVES

 Describe creativity and innovation

 Recognize creativity and innovation techniques
 Identify the creativity process

Creativity is the tendency to produce or recognize ideas, possibilities, or

alternatives that may be useful in communicating with others, solving problems, and
entertaining ourselves and others. Technique, on the other hand, is a way of carrying
out a task, especially the execution or performance of an artistic work or a scientific
procedure.

Creativity techniques are ways that help us think more creatively whether in the
arts or sciences. It focuses on various aspects of creativity, specifically, the techniques
for divergent thinking and idea generation, changes in the effective environment,
methods of re-framing problems, and so on. They are helpful for artistic expression,
problem-solving, or therapy.

Innovation is always rooted in creative thought, and that thought comes from a
person who doesn’t make room for pressure to come in. And for that individual to
innovate, he must allow himself to find motivation from the things around him.
Motivation is a vital key for something to click in, and most of the time, it is a basis for
whether one should continue pursuing something. Creativity techniques are the vast
and multifunctional body that applies to different subjects. It may include games, written
exercises, brainstorming, TRIZ, and algorithms in approaching certain problems. There
are also key factors such as aleatory techniques where it incorporates chances from
random elements and improvisation, which means to do something without preparation.
Sometimes, creative episodes will spark someone who engages and frees himself from
barriers that might hinder progress. Creativity techniques, when applied properly,
strengthens one’s ability to solve problems, as it awakens an individual’s potential to
perform things and provide more support in problem execution.

As technology continues to evolve, we must think of something that will be still a

trend and useful in the long-term aspect as our ideas won’t go to waste. A lot of ideas
are becoming obsolete due to the other ideas that have overwhelmed the ones before
them. With a result of multiple waste from both the materials and money that can be
used for something else.

Define Innovation and its Types

Definition

Innovation walks hand-in-hand with creativity as it facilitates entrepreneurship

and empowers people to take charge of their lives and economic prosperity. It is
essentially about seeing, perceiving, and solving problems in creative ways. It caters to
the ever-changing environment and makes the most of globalization connectivity.
Innovation is a way of saying that companies support and understand the customer's
rapidly shifting lifestyle preferences.

Innovation can be; incremental, disruptive, architectural, or radical. These types

have two dimensions; market and technology. Business doesn't always require major
changes. Solely knowing the problem is already a step forward in identifying what to
change and improve. With that comes innovation that can greatly benefit companies.

Informative Information

Innovation is essential for organizations to progress. Also, innovating is not

always something new or original. It can come from pre-existing ideas that significantly
affect the market. To fully understand innovation, there are four types. The first is
incremental innovation, which corresponds to the enhancement or refinement of current
products. The second type is disruptive innovation. As the name suggests, it disrupts
the current market. According to Kylliäinen (2019), a concept either creates a new
market or joins a surviving one. Subsequently, the third type is architectural innovation.
It is an innovation that applies a proven idea to a different form of market. As stated by
Lopez (2015) with this type, the risk is low since the concept was proven and tested
from another market. The fourth and final type is radical innovation. Radical innovation
or Breakthrough innovation is the most popular notion of innovation. It is the most
popular conception of innovation because it is original, new, and most impactful. The
breakthrough of new outputs usually generates a fresh industry or substantially
transforms a market.

Explanation

Life is made out of concepts. Many, in fact, most people believe that the
concepts they see every day are all the ones there are. Some companies build their
entire businesses in these known concepts, which can also be recognized as “status
quo”. Ideas can be made beyond these commonly agreed concepts; those that others
have missed, those that are ignored, or those that are long since forgotten about, and
these are perceived as discoveries. Liking how things currently are, some protest
against these discoveries and claim that these are invalid or do not even exist, yet it still
holds many opportunities for change. The source of these discoveries mostly come from
notions, unexpected connection, ideas, possibilities, and imagination. Many of today's
common knowledge were, one time, uncommon and newly-introduced discoveries. So,
what is innovation? – it is those other concepts, the ones that others have missed, and
having the certainty to know that the concepts you see are not only valid but necessary
if the world is to move forward.

Factors that give impact to Creativity and Innovation

As reported by Amabile et al. (1996), “All innovation begins with creative

ideas”. We define creativity as the production of novel and useful ideas, and
innovation as the successful implementation of creative ideas within an
organization. In this view, creativity by individuals and teams is a starting point for
innovation. As life becomes more complex, creativity and innovation allow us to
adapt to the changes around us.
 Creativity and innovation are essential factors for any society to grow and be
prosperous. It is even more essential for a business to succeed. Creativity and
innovation exist in every entrepreneur to create something or change something for the
better of society. In more modern times, we have Steve Jobs, the inventor of Apple; and
Bill Gates, the inventor of Microsoft. These two men have innovated the computer
industry and changed the world as we know it. There are many environmental factors
and hindrances to creativity and innovation. What makes someone successful in
business is the ability to overcome these issues or to use them to your advantage.

There are many environmental factors that contribute to creativity and innovation
in business. One of the main ones is education and learning. Education has a lot to do
with one's ability to be creative and innovative. It is the learning process that enables us
to think outside the box and to think of different methods for doing things. In general, it
is a person's ability to learn and adapt to new ideas and methods of doing something
that enables them to be creative and innovative.

Money, or access to money, is an important environmental factor as well. Having

money to start with or access to money is another important aspect of creativity and
innovation. Most figures in history, who were innovators, did not have money to start
with, but they had access to it and used it to become successful. The last environmental
factor that we will discuss is society as a whole. If a society as a whole wants to change
or innovate new things, then that society will produce people who create change and
innovation.

According to Amabile et al. (1996), these are the factors that affect creativity and
innovation:

 Motivation - Organizational motivation to innovate is the basic orientation

towards innovation and supports for creativity and innovation.
 Resources - Everything that an organization has to aid work in domain targeted
for innovation including training. Appropriate time and money.
 Personality – high valuation of aesthetic qualities in experiences, interests,
attraction to complexity, independence of judgment, autonomy, intuition, self-
 confidence, ability to resolve conflicting traits in self and belief that self is
creative.
 Dispositions – high level of intrinsic motivation, follow intrinsic interests, free
from evaluations and constraints.
 Time – Creative ideas require time for incubation.
 Creativity is the tendency to produce or recognize ideas, possibilities, or
alternatives that may be useful in communicating with others, solving problems,
and entertaining ourselves and others. Technique, on the other hand, is a way of
carrying out a task, especially the execution or performance of an artistic work or
a scientific procedure.
 Creativity techniques are ways that help us think more creatively whether in the
arts or sciences. It focuses on various aspects of creativity, specifically, the
techniques for divergent thinking and idea generation, changes in the effective
environment, methods of re-framing problems, and so on. They are helpful for
artistic expression, problem-solving, or therapy.
 Innovation is always rooted in creative thought, and that thought comes from a
person who doesn’t make room for pressure to come in. And for that individual to
innovate, he must allow himself to find motivation from the things around him.
Motivation is a vital key for something to click in, and most of the time, it is a
basis for whether one should continue pursuing something. Creativity techniques
are the vast and multifunctional body that applies to different subjects. It may
include games, written exercises, brainstorming, TRIZ, and algorithms in
approaching certain problems. There are also key factors such as aleatory
techniques where it incorporates chances from random elements and
improvisation, which means to do something without preparation. Sometimes,
creative episodes will spark someone who engages and frees himself from
barriers that might hinder progress. Creativity techniques, when applied properly,
strengthens one’s ability to solve problems, as it awakens an individual’s
potential to perform thing sore support in problem execution.
  As technology continues to evolve, we must think of something that will be still a
trend and useful in the long-term aspect as our ideas won’t go to waste. A lot of
ideas are becoming obsolete due to the other ideas that have overwhelmed the
ones before them. With a result of multiple waste from both the materials and
money that can be used for something else.

The Importance of Creativity and Innovation

Creativity and Innovation

According to Shawn Hunter, author of Out Think: How Innovative Leaders

Drive Exceptional Outcomes (Wiley, 2013), creativity is the capability or act of
convincing something original or unusual. It is also defined as the nature of
producing new ideas, concepts or methods. While innovation uses the creativity to
improve the performance of a certain thing or as Hunter defined, as the
implementation or creation of something that has realized value to others.

Creativity and innovation have a binary and interdependent relationship.

These two concepts cease to exist with the help primarily with each other.
Creativity in a nutshell is just a theory. It acts as an imaginary thought that
something might be possible to do. On the other hand, Innovation is the practice or
act to perform the creativity. However, creativity does not necessarily mean
innovation. Although innovation and creativity have the same meaning to convey, it
has still something in between that separates the two. When doing such things for
instance, the invention of mobile devices, especially smartphones. Creativity is the
thought that brought to the innovation of making it.

In simple terms, creativity exists due to the action done by the innovation.
Innovation comes due to creative imagination. Ideas produced by innovation are
the results of creativity. They both make improvement and growth possible.

Why are creativity and innovation important?

 The value of creativity and innovation are seen often in the corporate world.
Big companies use creativity and innovation as a strong foundation to come up
with a unique application, product, or service that they provide to others as to
themselves. New technologies continue to cultivate, companies need to keep up to
date and in order for them to do it, having creativity will allow them to find new
innovations that will allow their business to grow.

Creativity also helps the companies to manage tasks, improve staff

performance and create quality products, it helps in developing the core
competencies, supplementing knowledge and skill base for the employees. As a
result of this, they can harness creativity and innovation capabilities to achieve
long-term success, and when a company fails to innovate and change as needed,
its customers, employees and the community at large can all suffer.
Strategies to Encourage Creativity and Innovation

1. Keep things fun.

With a relaxed and playful workplace, people tend to be more efficient and more
creative, Happy people are less likely to be stressed. After all, when people are
stressed, their body releases stress hormones that may affect their overall performance,
affecting the working environment and possibly, other workers as well. worker's health
may not seem like your problem, but their mental status surely is. Work does require
concentration and effort, but you can still find ways to keep things fun and supportive.

2. Build trust

Trust is the foundation of all relationships and nowhere is this more evident than in the
workplace. Without it, employee engagement, morale and productivity go down the
drain. Letting your employees know that they can trust you to support them in their
efforts to understand your expectations goes a long way in establishing trust. So, treat
them fairly and acknowledge their perspectives and preferences, they'll be more
engaging on what they do. Trust is necessary in order to establish not only your
reputation, but also a strong network of people who will help the organization.

3. Keep toxic people out.

One of the biggest problems in a working environment is toxic people it is the type of
coworker that keeps on giving negative thoughts on things and always dragging you
down. According to studies it can really affect the productivity of an individual if
somebody can feel uncomfortable or timid, they are more likely to be unproductive and
one relevant phenomenon is psychological safety. When people feel psychologically
safe, or able to work without fear or unjust treatment or reproach, they are much more
likely to have good ideas and to voice them.

4. Encourage collaboration.

Encouraging Collaboration is one of the most effective way to boost creativity and
innovation on workplace, by constantly interacting and sharing information, it’s likely that
your employees create something new and valuable, we can also conclude that the
positive effect of collaboration is that people with different skills and knowledge can
figure out creative ways to combine their assets to solve problems.

5. Minimize bureaucracy.

Bureaucracy is like an administration in an organization. According to Dr. Nisha Cooch

on one of her articles, this can be a significant barrier to innovation. This is because it
prohibits innovation when people are forced to worked with a lot of rules that hinders
their freedom to think freely and creatively. Setting up rules is not bad, but set up one
with valid reasons, with a purpose to just keep the discipline inside the office and the
one that does not enclose your people to work inside the box.

6. Focus on psychological safety.

For people to think freely and express ideas fully, one should have good self-esteem
and confidence. As said in the previous strategies, people should not be stressed, not
locked in a bureaucratic rule, and have not any problems with any toxic individuals
because this may inhibit innovation. Healthy people be it mentally and physically are
good to work with because they are not easily swayed by insecurities and such. If this is
not avoidable, make sure to help your employees to improve their performance by
building their self-esteem. Recognizing your employee’s good works can also be the
way to do this. According to Bonusly’s 2020 Engagement and Modern Workplace
Report, highly engaged and recognized employees were more productive than the ones
who are not.

Sources: Cooch, D. (2020, December 24). 7 Ways to Encourage Creativity & Innovation
on Your Team. Retrieved January 13, 2021, from https://blog.bonus.ly/creating-
innovative-teams.

Principles of innovation
- Foundational statements that are intended to guide innovation decisions.

● Opportunities – The work of innovation starts with unexpected opportunities that

we encounter. These are new trends and knowledge that continuously change as
 time passes. Be mindful of the environment, learn to adapt and recognize
opportunities that come by.

● Go out and seek – to act on an innovation, one should be perceptive and an

analytical thinker. One must seek information on what the innovation should be
for it to be satisfying. Knowing what the people want is a big must in trying to
innovate for something.

● Simple and focused – an innovation should be simple and focused. This means

that it should only serve one purpose and does not have unnecessary
characteristics for it to be known. We do not need to solve every problem in just
one innovation.

● Little steps – It is said that great things start small. Innovation does not work

fast. It takes a series of steps for it to be done. It is not a process that we can
work on for hours but for days or months. Starting small helps us see every flaw
that we can improve on overtime.

● Leadership – It is said that innovation should aim towards leadership, for it to be

at top amongst the others. Learn how to be different from other competitors, be
uniquely better and win over others. Otherwise, it will not be “innovative” enough.

● Simple not smart – Innovation does not always have to be smart. Simple

innovations always work for a large number of people. Smart innovations are
cool, but simple innovations are essential.

● One at a time – When working on innovations it should not be rushed.

Innovating is not a process of doing things all at once. Be focused on trying to

work one thing at a time. It is organized, concentrated, and has progress.

● Live for the present – Do not think ahead of the innovation. A correct mindset is

to think of the current need for innovation. Understanding what people can use
for the present will attract them, people want what they need for today. Not for
tomorrow.
References:

Ramadani, Veland & Gerguri, Shqipe. (2010). Innovation: Principles and

Strategies. University Library of Munich, Germany, MPRA Paper.

Activity No. 5 Thinking Analysis

Explore 1 product in your mind and give your suggested ideas to implement creative
ideas into that product and prepare the business plan..

Chapter 6: Costing and Pricing

LEARNING OBJECTIVES

 Know the objectives of costing and pricing

 Identify the correct pricing strategies
 Determine the costing system.

Costing and Pricing of your product or service are determined by the supply and
demand of the market.

The Price will determine the quantities that customers are willing to purchase. Setting
the price will dictate the inflow of revenue into your business. If the revenues are not
covering all the costs of the business then the business cannot survive, which means
your business will FAIL.

Setting the price of your product or service takes into account three factors:
 Cost of producing and marketing.
 What the buyer is willing to pay for your product or service (maximum price).
 And the price of other competing products or services.
How to set the correct price?
 Add all the costs then divide the total by the number of products, (or days of
service) that you expect to sell.
 Another method is to research the market and determine the maximum price that
you could charge, based on that, set the actual price between the two measures
(that is, the maximum price and the per unit price).
Should your price be lower than the competitors?
 Only if you can differentiate your product or service to secure a competitive edge.
o For example, better service, quicker delivery, or better quality.
6 Ways of Determining Competitive Prices
1. Cost-based pricing: total costs are calculated and a simple mark-up is added to
give you a profit. Mark-up is usually a percentage of cost.
Eg. PRICE=Cost of Production + Margin of Profit
2. Creaming/Skimming: initially charge a relatively high price to recover investment
costs quickly if product is new and unique. When competition enters the market,
you should lower the price.
3. Negotiated prices: customers help to set the price based on quantities they want
to purchase.
4. Expected price or price discrimination: depends on the attitude of the customer
toward the product or service.
5. Differential pricing: charging different segment of the market different prices for
the same service or product.
6. Lifetime pricing: convincing your customer that what they are buying is the best
over a long-term period.

4 Types of Costing Systems

1. Job Order Costing where cost can be determined for each job and is useful for
accounting and billing purposes. Three main factors of use are: material, labor
and overhead expenses.
E.g.: Cost of Cement + Cost of Labor +Transportation
 2. Process Costing is used to calculate the unit cost of manufacturing one product
over a period of time.
E.g. Unit Cost = Total Cost of Production
3. Target Costing is used where the target selling price is already known before
manufacturing. It shows what consumer is willing to spend.
E.g.: Anticipated Selling Price – Desired Profit = Target Cost
4. Cost Plus Pricing is used to calculate the price that covers all fixed, variable and
markup costs to arrive at a target selling price.
E.g.: Rent + Material Used + 10% (Profit)
Weighted Average: Is a process that treats partially completed units in the beginning
work in process inventory as if they were started and completed during that period.

FIFO: Distinguish between work completed in the period and work completed currently.

Absorption: Calculate the markup % based on the cost and desired profit.

Contribution: Selling Price - Variable Cost = Contribution

Creativity is defined as the utilization of the imagination for the purpose of

creating something distinct and unique. It can also be the ability to recognize or
synthesize different ideas to create something that may be beneficial in solving real life
problems such as technology and infrastructure. However, it can also be for leisure
such as artworks and games that may be entertaining not only for ourselves, but to
other as well. For example, Take the invention of the 1st iPhone, this is something that
works because they used their own creativity. The 1st iPhone was an evolutional thing
that influenced the world of phones. It combined the best of all technology and put it into
a small thing that can fit inside your pocket. You can browse the web, listen to music
and even call your loved ones all of then you can do with just a tiny thing. Without the
creative minds behind apple who knows what will happen in the landscape of phones.

Furthermore, Creative ideas did not just pop out randomly as we commonly
perceive. Steve Jobs did not immediately build the iPhone as soon as he thought about
it nor did Bill Gates create windows immediately. But instead, creative ideas become
reality because it undergoes a process called the Creative process. The Creative
Process can be shortly defined as a series of ideas and actions that leads to the
intended production (Lubart, 2001), and can be categorized into levels: the macrolevel,
which includes the stages of the creative process, and the microlevel, which describes
how the creative process function. (Botella et al., 2016). The stages of the creative
process are as follows (Haseeb, 2016):

1. Preparation – The starting point. This is where you observe the world
around you and take notes of things that fascinate you and may help in
synthesizing ideas. This is where ideas are born.
2. Incubation – Problems arising from the synthesized ideas are seen here.
Brainstorming for solutions.
3. Illumination – This is where the eureka moment happens and the solution
for the problem has been made.
4. Evaluation – The feasibility of the idea is analyzed and examined to
ensure if it can birth results.
5. Implementation – This where the ideas become a reality. The product of
creativity is seen here.
Activity No. 5 Test your Knowledge

Enumeration

1. 6 Ways of Determining Competitive Prices

2. 4 Types of Costing Systems

3. Absorption and Contribution formula