Price competition is as old as business itself. But, current economic conditions and the compliance…
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Is determining the value of a business a science or an art? Certainly the research aspects of business valuation would indicate it’s a science. However, there is art in how you interpret hard data or assign value to intangibles in a company. For example, how would you determine the value of the creativity inherent in an organization?
In a book called “Creativity, Inc.”, authors Jeff Mauzy and Richard Harriman argue that sustained creativity and innovation are essential for the long-term prosperity of any business. In other words, a business must be constantly reinventing itself in order to stay competitive.
For the purposes of this discussion let’s assume that creativity in business is the ability to generate ideas for new and useful products and processes. Innovation in business is then the ability to efficiently incorporate new and better products and processes into normal business operations. In simpler terms, creativity is idea generation and innovation is putting those ideas to work.
The authors suggest that a business can develop a culture of innovation. There are three aspects of a business that affect sustained creativity and innovation: Individual and group creative thinking, a supportive corporate culture, and an effective new product/process development method. Let’s examine them one at a time.
If a creative workforce is a priority than a business should hire people with a creative background and/or provide creativity training for all employees. In addition, if you want creative individuals to be creative together you need to have a shared brainstorming format that encourages full participation. It is also important to have a diverse workforce. A variety of styles and experiences improve the quality of ideas in a group. The authors also suggest seeking out unusually creative people when hiring. Often these people may appear to be mavericks and a risky hire, yet they can provide the unconventional ideas that lead to innovation. The highly creative individual can be a valuable part of a diverse workforce.
A supportive corporate culture for creativity has many aspects. The physical space encourages personal decorative touches and group interaction. Employees are expected to honor and value diversity. The leadership of the company supports and rewards individual and group creativity. The company frequently solicits new ideas from all levels of the company. And most importantly risk taking is acceptable. This can be a difficult adjustment for a company because risk-taking involves occasional failure. To accomplish this, some companies have a policy of celebrating their failures as well as their successes.
Finally, a company must have a method for choosing the best creative ideas and a process for new idea development. The authors suggest that many companies have such a process in place but it is often designed to eliminate all ideas without an absolute certainty of success. In practice, this can mean discarding many ideas with potential. Ideally this process should strike a balance between nurturing and critically evaluating a new idea.
“Creativity, Inc.” presents a compelling argument for the importance of creativity and innovation in a company. It makes sense that an organization that encourages and develops the creative ideas of all employees is going to have an advantage over their competition. However the authors do not suggest any metrics for placing a value on this business advantage. So when you are valuing a business, do you simply ignore their creativity/innovation efforts? Perhaps you have an unusually creative individual in your organization who can answer this question.