Tag Archive: Strategy

Why Creativity in Business Matters

“I never made one of my discoveries through the process of rational thinking”

– Albert Einstein


Building a modern business requires grit and a great deal of creativity. Marketing a new product, or creating items or services consumers want, beckons the entrepreneur to expand and abandon traditional business models. Giant companies like Amazon, Apple, Facebook, Tesla etc, prove a creative and ever evolving business model conquers competition, drives sales, and increases consumer loyalty.

So what’s the big deal about Creativity in Business and Why does It Matter?

The simple answer – Your Success in business counts on creative thinking

Fact is, we are living in times where companies are facing major disruptions in their markets and managers are forced to respond strategically in order to remain competitive.  According to a study conducted by IBM CEOs  “believe that — more than rigor, management discipline, integrity or even vision — successfully navigating an increasing complex world will require creativity.”

Another study conducted by Forrester Consulting and Adobe also found direct correlation between a entrepreneur’s ability to create new ways to engage the market, and the success of their companies. Over half of the companies surveyed in the study showed revenue growth due to enhanced creative practices—such as hiring interesting and unorthodox employees who foster innovation, increase brand recognition, and inspire methods of production and delivery never tried before.

“Creativity is thinking up new things. Innovation is doing new things.”

— Theodore Levitt

Good Leadership Fosters Creativity –

When it comes to problem solving, creativity and leadership can have a huge effect on the  performance of a company in various. Modern company leaders who allow freedom and creativity within their workforce see incredible dividends down the road. The most successful example, Amazon’s Jeff Bezos, created Amazon in 1994 with the mantra and philosophy: “Its easier to invent the future than to predict it.” That one line says it all. Creativity in the modern era makes or breaks companies. Small business owner’s ability to diversify ideas, products, and marketing techniques determines their success rate and bottom line. But, as Amazon proves, even well established companies use evolutionary creative business models to continue to maintain and increase their market placement.

Where do we go from here?

The simple lesson:  While ancient marketing, production, and branding methods still generate revenue,  business creativity flourishes success and helps avoid stagnation which leads to the dreaded going out of business.

Further reading on importance of creativity in business

How Senior Executives Find Time to Be Creative- (Harvard Business Review)

-Your Team Is Brainstorming All Wrong- (Harvard Business Review)

-Leading others to think innovatively together: Creative leadership (The Leadership Quarterly-ScienceDirect)


“Creativity takes courage. ”  ― Henri Matisse

The Debate about Gender Equality Is Far From Over!

I was surprised when i read about Saatchi & Saatchi chairman Kevin Roberts thoughts on gender diversity. Roberts told Business Insider that didn’t think the lack of women in leadership roles was a problem in the advertising industry, and that the debate on Gender inequality in his industry was ‘over.’ -Oh Really?!

Well, according to sources, he stepped down after sparking the roar, and later apologized for his comments. (Read more on The Guardian)

Apology accepted! But i must confess that i didn’t expect that from such a high profile man!

I’m also tempted to ask – Why on earth would he say such a thing? And how many more agree with him?

Certainly not  US President, Barack Obama who publicly called himself a feminist. How awesome!


Or  Canada’s prime minister Justin Trudeau who understands what it’s like to be living in the 21 century!


There’s an excellent report by McKinsey on “How advancing women’s equality can add $12 trillion to global growth” which explains in depth why the public, private, and social sectors will need to work on closing  gender gaps in work and society. (Read all about it here)

On a separate article, “A CEO’s guide to gender equality“-McKinsey highlights why progress towards gender equality is so slow.

Big as the prize may be, gender equality still eludes companies around the globe. Despite modest improvements in the past few years, women are underrepresented at every level in the corporate pipeline—especially the senior level

The guide offers a solution for  executives to think about pressing forward with their own gender initiatives. Read on here

What makes companies in one country so much more productive than in another?

In the 1950s, Ghana was twice as rich as South Korea. By 2011, the most recent year for which data is available, South Korea’s income was more than ten times higher than Ghana’s.

Yet these differences in productivity between the overall economies of the two countries are modest compared with the differences that appear to exist in the productivity of their manufacturing firms. My colleague Simon Baptist and I set up such a comparison and were surprised by the size of these differences.

You could argue that rich countries simply have more resources so their companies are bound to be more productive – or have higher levels of output per worker. But my research suggests that this is not the answer.

The surveys covered the main sectors within manufacturing, textiles, garments, furniture, food and electrical goods. While the sectors are the same, clearly the type of firms within them will be very different across the two countries.

Median output – the amount of garments or furniture produced per employee – is nearly 20 times higher in South Korean manufacturing firms than in Ghanaian ones. Whereas in South Korea the median worker produces US$193,000 of output a year, the comparable number in Ghana is US$10,000.

If you look at this in terms of the value added to the products by the worker, the differences are even larger: the average Korean worker produces US$117,000 and a Ghanaian worker only US$3,000, nearly 40 times less in terms of added value. The Ghana data comes from a panel survey of the country’s manufacturing firms over the period from 1991 to 2003 and the South Korean data is for the period 1996-1998.

Making use of what you put in

In our search for the source of that difference, we identified three factors. First, the amount of capital the firms employ; second, the importance of education and, third, the differences in the underlying efficiency with which the firms operate.

This concept of underlying efficiency is sometimes called “total factor productivity” and can be thought of as how much more effective a firm is at using all of its inputs – such as its capital and labour – than other firms. Most economists think differences in underlying efficiency are the most important reason for the large differences we see across countries and also across firms.

At first sight that also appears to be the case in our comparison of Ghanaian and Korean firms. In the first graph below, the vertical axis shows output per labour hour and the horizontal axis, capital per labour hour. The key point in the figure is the distance between the two lines, which measures the average differences in the efficiency with which firms in the two countries use capital and labour.

Labour productivity on capital per labour hours
Author provided

While there is some overlap, showing that some Ghanaian firms are as efficient as Korean ones, on average the differences are large. The chart implies that, on average, Korean firms produce six times more output with the same capital and labour as Ghanaian ones. That is one measure of underlying productivity.

The importance of education

Yet, the chart omits the possible role of education. When we included education in our analysis we find that its impact on output was massively larger in Korea than in Ghana.

The second graph below shows how education affects output per labour hour: the green line shows the effect for South Korea, the blue line the effect for Ghana. Most firms employ a workforce that have had on average between five and 15 years of education. Over this range, output per labour hour in South Korea increases dramatically; but for Ghana it scarcely changes.

How does education increase labour productivity?
Author provided

This analysis implies that all the differences in productivity across the two countries can be explained by how much more effective education is at increasing output in South Korea than it is in Ghana.

It is very hard to show whether these changes in education actually cause the differences seen in the chart. But it is clear that something associated with education is having very different effects in the two countries.

A quality controller at a South Korean mobile phone component plant.
Kim Hong-Ji/Reuters

Several possible explanations suggest themselves. The first and most obvious is that the quality of education differs across the countries. A second possibility is that human and physical capital are being combined in fundamentally different ways in the two countries.

Take a simple example: a machine operator in South Korea operating a robot to produce garments may have the same number of years education as a machine operator in Ghana operating an electrical sewing machine. Even allowing for the substantial differences in capital – between a high-tech robot and a sewing machine – it is still very possible that one can be five times as productive as the other.

A third possibility is that the quality of the management is the key difference. Recent research, provides some evidence that poor management may explain low productivity within firms, although further research is needed to explain how management is linked to the uses made of educated labour.

Taken together these explanations imply that while the quality of education makes a massive difference to manufacturing output in South Korea, it would be a mistake to think that investing in education alone is the answer to increasing productivity. It’s important to also consider the quality of that education, the technology the firms are able to employ cost-effectively, and the quality of the management.

The Conversation

Francis Teal, Research Associate, Centre for the Study of African Economies, University of Oxford

This article was originally published on The Conversation. Read the original article.