Larger Company, Weaker Creativity

When a company is still small, we often find its owner has extraordinary amounts of creativity. Not all of it can be realized due to limited resources and the tendency to have low productivity. However, as a company grows, management is often preoccupied with many operational matters and focuses on intricate and complicated productivity calculations.

If we neglect to hone creativity, it will be increasingly weakened, become very limited, and eventually lost.¹ Companies that are already big are often trapped in a commodification attitude that mainly refers to a commercial or trade orientation. Companies with a commoditization approach usually do not require intense creativity. Commoditization is a catalyst that can lead a company to become a price taker—a company with no market power to influence price and faces so many competitors who sell identical or similar products so that customers are indifferent—which is forced to sell its product at a price according to the market equilibrium, willing to accept a low price, and subsequently get caught in a price war with a thin profit margin. Only creative companies can create differentiation, become price makers, and finally get a significant margin.

Unclear Purpose of Creativity

It is common for a company to be very creative, but the purpose of that creativity is often not clear, resulting in a costly waste of resources. It is not productive if a company follows a creative process that is not in alignment with its vision and mission. Even though, from the start, the company has involved qualified people in being part of the value‐creation process, management must be sure beforehand that the character of these people is in line with the company's values and is suitable for carrying out the company's mission.

Creativity without a clear purpose will not produce anything valuable, both commercially and socially. Creativity like this will only be a discourse that wastes the company's capital, which will undoubtedly be contrary to the company's economic goals. We have entered an era in which many businesses are run based on a purpose‐driven approach, in line with the increasing global, social, and environmental challenges. Given this, companies need a powerful creative capability to work with stakeholders and overcome problems. Therefore, a strong alignment between creativity and the company's business goals is essential.² Unfortunately, not all companies can accomplish this alignment effectively.

Intense Creativity, Zero Execution

No matter how strong creative ideas are, if they are not feasible to execute, it is a waste of existing capital or assets, both tangible and intangible. Sometimes many creative ideas can disrupt the long‐running routine in a company. This is why management often sees creative ideas as a new burden―even a problem. In other words, management may be resistant to concepts that force them to abandon long‐standing habits or routines. They could reject a new challenge because they are already busy managing other problems.³ No wonder so many great creative ideas usually remain on the drawing board.

Idealism and Reality

Management sometimes develops creative ideas using assumptions based on ideal internal and external environmental conditions. This can be hazardous if the actual conditions are different. Sometimes, a company's management holds onto unrealistic creative ideas.

Both pragmatic and idealistic traits are essential in building a solid team in a company. Therefore, by mixing both ways of thinking and working, a team will be well balanced and ultimately capable of creating the best outputs. An idealistic vision can make people excited and even persuade them to engage. However, we must also acknowledge the reality of the challenges. We should see idealism as a vision that drives and motivates the company and its employees to know that they are working toward something consequential and noble. But with all the difficulties to achieve it, it's still not enough―employees also need to know that their companies' leaders are in touch with reality and are willing to directly step in and engage themselves by working hard on executions. In other words, sticking to one goal is excellent, but it will limit one's creativity in doing business. Therefore, pragmatism will help overcome limitations of creative potential.⁴

Underappreciation of Creativity

Creativity is sometimes considered a given. In other words, some have the thought that we can obtain creativity for free. This thinking makes a company reluctant to invest in creativity‐related projects, especially if the results are often unreal and difficult to monetize.

Companies are often trapped in spending their money on tangible things such as physical assets―including production equipment and supplies―which are easier to calculate for productivity in terms of input‐output and the rate of return on investment. If someone requests that funds be allocated for physical facilities related to creativity, it may raise a few eyebrows among executives.⁵

In Industry 1.0, the top corporation activities were focused on mining, textiles, glass, and agriculture, which rely on tangible assets such as land, factory, and natural resources. However, in Industry 4.0, company performance depends on brand valuation, intellectual property, and knowledge assets for problem‐solving. These are intangible assets but will still affect the corporation's profit.⁶

Unclear Orientation of Creativity

Customer problems are an excellent starting point for providing a clear orientation to a creative process. Sometimes, though, it is not easy to define customer problems. Meetings often include discussions of ideas without focusing on the actual issue that consumers are trying to remedy.

Creativity that starts from a well‐defined problem―written in a clear problem statement―will significantly assist management's judgment to support the effort with solid reasons, especially if it is in line with company policies reflected in the vision, mission, and strategy. Productive creativity depends on the process of defining a problem (see Figure 7.2).⁷

We also need to pay attention to how pressure will affect creative abilities. Some argue that we cannot force creativity. We often find that in conditions where pressure is too high, creativity cannot emerge. However, if the motivation of a group of thinkers is unusually powerful, no matter how heavy the pressure is, they will not crack under it. They can even come up with various creative ideas that lead to innovation.

Status Quo on Productivity

Productivity is often associated with routine activities, leading management to stagnancy in a business‐as‐usual cadence. This status quo condition is typically oxygen‐depleting for creativity. Anything viewed as “rocking the boat,” which creativity usually does, doesn't fit in. The culture prefers stability, consistency, and rigid standardization.

Herein lies the challenge, because the status quo mindset as the basis for calculating productivity does not leave much room for creativity. We must not forget that creativity―converted into innovation―may directly or indirectly affect productivity.⁸ Management sometimes prefers to avoid problems because of ideas that are not viewed as mainstream. When these ideas are ignored because they are considered “not‐invented‐here,” it will, unfortunately, cause the company to be unable to innovate and will eventually bring the company into a crisis. If companies can't even get out of that crisis, how can they think about customer problems?

Productivity Is Everything

A company's pursuit of productivity can lead to an excessive burden on employees, in which workers feel unappreciated, inadequately rewarded, and burned out.⁹ Too much emphasis on time management―meant to make an employee less stressed―sometimes has the opposite result.¹⁰ There has to be room for other activities too, including rest and employee well‐being.¹¹

Inflexibility in Productivity

It is not easy to calculate productivity if there is no consistency. Companies usually build this consistency through standard operating procedures. The processes are sometimes so complicated that they cause headaches for the people who carry them out. Yet their essence aims to achieve high efficiency and a certain level of productivity.

Deloitte, in one of its publications, said that efficiency undermines creativity. Productivity is built with savings in mind, and reducing waste, so that there is less room to experiment with new things, including creative ideas and different approaches.¹² We often hear the expression that it will be difficult to manage appropriately without measurement. Unfortunately, an applied measurement sometimes focuses more on tangibles such as machinery, equipment, other physical assets, and working capital. The management often overlooks the intangibles because they are difficult to calculate with the “machine” approach.

Input‐Output Perspective

The calculation of productivity in some companies solely relies on production factors as inputs, which then undergo processes and eventually become the company's output. Unfortunately, this approach often cannot include multiple intangible and indirect factors. The setup refers to the output but not the outcome. It is not surprising that a company is reluctant to spend money and invest in creative ideas because the comparisons refer to items that are quantifiable and not abstract.

Quantifying ideas that come from creative thoughts often can be challenging. Moreover, no one knows whether they will work until we implement them and then evaluate them. Indeed, we still have to use the input‐output approach, but that does not mean it is sufficient. In the end, we are not merely looking at the output, but also the outcome and impact (see Figure 7.3).

Output is the immediate result of a production process that we often call products (both goods and services). We can measure output immediately after the completion of a given production process. In simple terms, an outcome is the positive effect of the output from a given production process offered and enjoyed by several stakeholders, such as people in the company, customers, the community, and the company itself. We can see an outcome in the short and medium term, whereas the impact is a result that we can see in the long term.¹⁴

Impatient Customers

Customers are the lifeblood of a company. Their expectations can affect how creativity and productivity are handled. Here are some main challenges in dealing with customers in today's environment.

• More demanding. Consumers, empowered by social media and digital gadgets, increasingly control when, where, and how they interact with brands. They are now more demanding than ever for more personalized service. Because of this, the customer experiences at all points of the omni‐channel must be seamless. Products and services need to be offered at affordable prices with fast and hassle‐free delivery. This condition also forces companies to collaborate and co‐create with customers―both B2C and B2B―to ensure a stronger level of engagement.
• More challenging to satisfy. Connectivity of one person to another on various platforms makes it easier to exchange information and educate more customers. Customers are increasingly demanding higher standards and becoming more stringent in their choices by constantly comparing the options available. They study ratings that other customers have given.
• More difficult to gain loyalty. Even if we can satisfy the customer, it is not a guarantee that the customer will remain with us. A study of more than 34,000 consumers worldwide by Verint^® Systems Inc. shows customer loyalty and retention are dropping. More specifically, two‐thirds of consumers surveyed indicated that they are inclined to move to a competitor that offers superior customer service or an exceptional experience.¹⁵
• Craving for new products. Changes in functional and emotional needs, tastes, and contemporary trends occur quickly, causing consumers to feel deprived and influencing them to look for new, better products that are available ASAP. Shoppers are constantly looking for new and higher value from products. They may be willing to pay an advance even before a new item is available in the market so they can gain the title of becoming one of the first owners or users.

Highly Cautious Investors

Investors are often a vital source of funding for a company. However, it is not easy to convince them to contribute to a company because it is full of creative people, and therefore, has a very high creative capability. Investors will be interested in a company's potential to provide a rate of return on the money invested. If it is difficult to give a convincing calculation, then they will also be hesitant to make a commitment.

Here are some reasons why investors may be skeptical about creativity:

• A huge investment. Generating creativity requires enormous effort and resources. Yet it does not usually produce the desired results right away. Sometimes we see a scarcity of creativity in a company because of the reluctance of parties to contribute the heavy funding needed to support the initiatives.¹⁶
• Difficult to assess the value. Investor hesitancy usually increases when an investment offer is too complicated to understand. Creativity is often abstract. We cannot see the results immediately. We need to find a way for investors to see and understand that creativity has a high value and deserves to be considered when investing.¹⁷
• High rate of failure. According to Harvard Business School professor Clayton Christensen, there are about 30,000 new products introduced to the market every year. Of those, 95% fail. Meanwhile, according to University of Toronto Professor Inez Blackburn, the failure rate of new products in grocery stores ranges from 70–80%.¹⁸
• Play‐it‐safe attitude. The management team's view of creativity often shows high distrust. Instead of making “rational” investment efforts, management usually sets aside a small budget for creativity. If it does not provide any results, it will be considered or calculated as an insignificant loss. Investors also play it safe in the same way, because they cannot see the results of creativity in financial terms.¹⁹
• Unsolved hidden problems. In addition to considering the investment amount, investors tend to spot hidden issues that increase risk. If a company's culture is not in line with the spirit of creativity, if it does not involve people who have a calling for creativity, or if the management team is not committed to supporting creativity (in the form of time and resources), it will raise doubts for investors.²⁰
• Overpromised creative proposal. Investors will be reluctant to invest when they hear a pitch that seems too good to be valid or too complex to be understood. They may be familiar with creative ideas that look good on paper but do not materialize as expected and even end up failing. It's only natural that investors are then more interested in other investment portfolios that make more sense in their view.

  The founder of Segway―a two‐wheeled personal transporter―predicted the device would be a game‐changer to the transportation industry. The founders also envisioned that sales would explode to 10,000 units per week, and that the company would reach US$1 billion in sales faster than any company in history. Unfortunately, this did not happen. In fact, Segway only sold 24,000 units in four years. This issue was rooted in the fact that Segway made the products for general purposes. The outcome was that Segway could not compete with other forms of transportation such as motorcycles, bicycles, and cars. Some people even prefer to walk (which is free!) rather than use a Segway.²¹

By understanding these obstacles and finding solutions to overcome them, we can increase the likelihood of attracting investors. Having their support often leads to the development of creativity in a company. Bottom line, their investments matter.