Innovation vs. Creativity (or Tactics vs. Strategy)

Nokia

Nokia. My first cellular phone was Nokia. Those days Nokia created best cellular phones. Nokia, once a dominant force in the mobile phone industry, has experienced a dramatic decline. From a market capitalization of $550 billion in 2000, it plummeted to just $18 billion. This decline prompts a critical question: Why did Nokia fail while companies like Apple soared to unprecedented heights?

While Nokia excelled at producing high-quality cellular phones, it missed the boat on the smartphone revolution. Smart phones slowly gain more and more customers, and, of course, who bought smart phone did not buy cellular phone. Nokia did not lost it's domain of cellular phones. Nokia just missed this moment when new market of smartphones was created. Those two markets could not coexist. Such situation defined by "Struggle of Informations" model as "antagonistic informations" where only one information will survive and other will totally disappear.

The critical question is why Nokia, despite its resources and market dominance, missed the pivotal transition to the smartphone market. It had the potential to lead this new sector but failed to create something new beyond refining its existing products. Nokia is not only company that fail because it's market became irrelevant. Why big companies, despite a lot of resources they have, do miss big changes?

Innovation and Creativity

It's well known that most profitable market is so called emerging market, and company that gain most from such market is company that created this market. Company that created first new kind of product take it's biggest share. There are so many companies want to be first in market that not yet exists. So many companies invest a lot of resources in innovation and creativity to be first with new product in new market.

Biggest problem with those investments is that most of managers do not really understand that innovation and creativity are very different processes. Innovation and Creativity happen differently, very differently. They so different that it's almost impossible to be both innovative and creative.

First I need to clarify what I mean by innovation and by creativity.

Innovation is continues process improving existing product.

Creativity is process that create new product that does not exist yet.

Very important understand that both innovation and creativity create new Information, but with different context. For innovation context is well defined, it's already existing product that should be improved by new information. For creativity context does not exists (mostly). Information for innovation can be relatively easily examined and value this new information brings may be estimated. Information for creativity hardly can be evaluated (that's why most of managers does not like creativity).

Context for Innovation has much lower uncertainty than context for Creativity. There is specific term for uncertainty - Entropy (informational entropy as it defined by Claude Shannon). More precisely would be to say, context of creativity has much higher entropy than entropy of innovation context.

I would like to give an example of creativity and innovation to understand better what I mean. Television inventor Philo Taylor Farnsworth got idea how his device should work when he look at potato field. That was a moment of creativity. He got this idea unpredictably. It just happen. Then after he got this idea, he started to think how to improve and implement this idea. This process improving new idea is innovation. That's the point. Creativity it's when new idea comes suddenly. Innovation is when new ideas come in context already existing idea.

Any product is created with creativity point and improved continuously with innovation process.

Here we can get some important conclusions:

  - Creativity is a moment, innovation is a process.

  - Creativity is unpredictable event that accepted and understood 

  - Entropy of Context of product goes with time from very high to very low. Decreasing entropy with time is more formal representation of well known "Ideality Law of technical systems".

Here it may be very interesting point to compare thermodynamic entropy and informational entropy. In nature decrease of entropy may happen only in open systems - dissipative systems. It may be very interesting to apply studies of dissipative systems (one of central elements of complexity theory) to technical systems evolution.

As I already said both creativity and innovation create new information. Creating new information is explained by "Dynamic Theory of Information". It's not "Information Theory" by Claude Shannon. Shannon's theory only analyze how information affect uncertainty, but does not explain how information is created.

Tactics vs. Strategy 

Creativity is much more important than Innovation. Everyone understand that, especially managers of big corporations that do not want to become new Nokia. Now we can explain it mathematically. Information is measured by decrease in entropy. Creativity happen when entropy is very very high, which means amount of information created at creativity point is enormously high. In many cases much higher than all information created during innovation process.

Now is the question, how to do creativity? While innovation process already have some methodologies, most known of them is TRIZ (I hope some days it will become science). We can understand how to do creativity if understand difference between tactics and strategy.

Tactics is set of actions that should be taken to resolve some problem. Strategy is creating environment in which problem will be resolved somehow, indirectly. Strategy is about creating conditions when self organization happen. Self organization is domain of "Complexity theory". It's very long story and not for this blog post.

Same we can say about Innovation and Creativity. Innovation can be done directly using methodologies like TRIZ. There is no yet well defined methodology for creativity. Complexity theory can be useful for that. While many commercial companies already integrating innovation processes using TRIZ, Creativity is still not managed properly.

Corporation vs. Startup

Nokia was a company with very high level of innovation, but it's creativity side almost did not exist. Nokia (as many other big companies) did not develop self organization processes. It is too stiff company that does not allow any fluctuation required for high uncertainty.

We can say that the bigger company, the less it's creativity level. Big company cannot handle high uncertainty required for creativity, because high uncertainty means high risk. Big company is very complicated system with so many inter-dependencies, so even small uncertainty can bring to very serious negative results. Modern economics solved this problem with localization of risk out of big companies, in startups. Startup get idea with high entropy and bring this entropy to level that is acceptable for big corporation. Only then big companies acquire startups. Is it possible for big company to be creative? Yes. We can find it how to be creative if we'll properly define contradiction which we'll resolve using TRIZ.