3

Are you creative?

Take a minute and score yourself on the basis of the statements in Table 3.1. Give yourself a mark from 1 to 10 according to how well you think you match every statement, where 10 means that you always act 100% according to the statement. Add up your points at the bottom. If you scored 73 or more, you are in all probability a highly successful business innovator. If your score was around 45, you should still not be worried as you are average. And when you have finished reading this book, you will hopefully have approached the magic limit of 73 points.

Why just 45 and 73? The numbers are taken from a wide-ranging study, where 73 points was the limit for the upper third that were regarded as really successful and 45 was the average. Researchers studied business executives in 578 American companies, which together covered widely differing products such as cars, hotdogs, mobile phones and syrup. It was found that the really successful leaders in trade and industry differ from the rest insofar as they display the qualities on which you have just assessed yourself to a much higher degree than other people.

Table 3.1 Self-test for creativity

In a second stage of the same study, 240 ordinary consumers were asked to answer questions and assess the creativity of the products and marketing programmes that the executives had developed. The results showed unambiguously that the products and marketing programmes of the successful executives were judged to be considerably more creative. In the study, researchers also found a direct link between creative business innovation and professional success, but they chose not to measure professional success and the personal qualities that make it possible.

So far we have learned that nine specific qualities – those measured in Table 3.1 – determine whether the result of your work is creative (we will have reason to return to this later in the book); and that if you are creative, this means that you will be more successful professionally. But let us now leave promotion, salary increases, benefits and other features of a successful career aside, and widen our perspective.

How does it look at company level? In Figure 3.1 you can see the result of a wide-ranging study that can help companies to see how they can be more creative and judge the effects of their progress not only on the company's market-related and financial results but also on the company's customers. American researchers examined in total 312 companies involved in everything from abstract service products to toothbrushes, but all of which were to some degree engaged in product development.

Figure 3.1

Creativity was scored by the companies and by the customers in the market. They gave marks, firstly, according to how creative the specific product was and, secondly, to how creative the marketing (positioning and brand strategy) was around the specific product. The results were measured in the form of sales and market share (market result), profit and return on investment (financial result) and how satisfied the company's customers were compared to customers who bought competing products (customer satisfaction).

The results in the figure show that there are very strong links between the company's creativity and its results. If we add together ‘Product creativity’ and ‘Marketing creativity’, we can see that these components explain no less than 77% of the changes in the company's market result. If we compare companies who have increased their sales and market share with those who have maintained or lost sales and market share, the successful companies have been more creative, which explains 77% of the positive result. The majority of the changes in the financial result – precisely 52% – can also be accounted for by the creativity of the company. Finally we may note that creativity also has a 61% effect on the satisfaction of the company's customers. A successful business executive – and this, as we have just confirmed, is the same as a creative business innovator – promotes the company through increased sales and market share, generates value for the company's owners and partners, and contributes to the company's customers experiencing higher value in the company's offers and their relations with the company (which is usually the most fundamental factor in customer satisfaction).

The study also shows that there are two sides to the creative coin. Professional business creativity is about both the concrete development of products and marketing creativity. With the possible exception of very high-tech companies, there is evidence that marketing creativity – that is to say, the conceptual and strategic development of product marketing – is of greater importance than concrete product creativity. Among the average values in Figure, we can see that ‘marketing creativity’ is of greater significance for ‘market result’ (59 versus 18%), financial result (29 against 23%) and customer satisfaction (45 versus 16%).

A quick return to the study of ground-breaking pharmaceuticals in Chapter 3 clearly illustrates the importance of marketing creativity: if the company concentrates on marketing in the promotion of the new product, the estimated worth increases from USD 405 million to USD 929 million. Without marketing, it sinks instead to USD 122 million.

The finding that conceptual marketing creativity is on average more important than concrete product creativity might come as something of a surprise. Most of us probably associate creativity with brilliant discoveries and revolutionary products such as the telephone, television, the computer, the aeroplane or the motor car. But the fact is that most businesses are based on considerably more modest innovation, just as almost all patents registered throughout history have concerned small changes to existing products.

The dominant significance of marketing creativity can be understood from several points of view. Almost all companies are active in mature markets, i.e. markets with many different competing businesses offering similar products. For example, in order to be successful, it is not enough to develop a mobile phone that takes pictures, because competitors will soon be promoting similar telephones that take pictures that are just as good or even better. In other words, it is difficult to make money from pure product innovation. In addition, product innovation in mature markets is fairly insignificant – adding a picture-taking function is far from being as revolutionary as the introduction of the mobile phone, which created an entirely new market.

Because most markets offer a wide choice of competing products with similar attributes, the concrete functions of the product are not necessarily the deciding factor in people's choice. For a mobile phone to be chosen, it is not enough that it can take pictures. It must stand out and offer something more in the way of a concept or meaning. History is full of inferior products that have become superior through marketing, such as the classical examples of the Duorak keyboard and the VHS video (we shall have reason to return to this kind of dynamic market development later in the book).

Let us return for a moment to Figure 3.1, concerning product and market creativity. At the far left of the figure you can see how the company's general knowledge of the world and its organization affects its capacity for product creativity and market creativity. In the light of the previous discussion, it comes as no surprise that competitor focus and knowledge of competitors' activities has negligible significance for the company's creativity. We have already pointed out that the actual differences between most products are modest. Studying one's competitors therefore gives very little guidance on how your business can be developed (more about this later in the book). On the other hand, studying customers and applying a customer focus has significance for marketing creativity, because the products acquire their meaning first in the presence of customers. (Perhaps you can now see a connection between the first three qualities in the test you did earlier?)

Finally, the figure shows that the way the company is organized has great significance for its capacity for both product creativity and marketing creativity. The greater the company's flexibility, the easier it is to adapt to new insights and ideas, and the easier it becomes to develop new products and ideas. And in order to guarantee flexibility in a company, you need executives who are motivated to think in new and different ways (questions 4 to 6 in your test of qualities) and who have the courage to renew themselves (questions 7 to 9).

With the help of technology, you can quickly learn about your customers and use what has been learned in a flexible way. An example of this is provided by the Swedish sports apparel retailer that not only set up a web shop but gave about 60 selected users the tools to start their own web shops on the site. In this way, the company was able to acquire many different ideas on the basis of how these 60 customers arranged their layout, services and range, and could also see in real time how the different shops attracted other customers. The next stage was continuously to select new and interesting ideas from the web shops and test them in the physical outlets. This was a win–win situation, where the 60 customers could get noticed and impact the big sportswear chain's website (free of charge, which encouraged their playfulness and genuine involvement). The company's other customers received offers that had been formulated from a ‘pro-customer’ point of view by people in the same situation as themselves; and the company acquired a perfect workshop for learning and being flexible, which could then be passed on to their large number of retail outlets.