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A Closer Look at Creativity

New research suggests companies continue to struggle to translate creativity into business performance.

Monday, May 5, 2014
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Most companies operating today aren't doing a very good job translating creative ideas in ways that impact business performance.

So suggests Jing Zhou, professor of management at Rice's Jones Graduate School of Business. Zhou recently co-authored a paper titled "Innovation and Creativity in Organizations: A State-of-the-Science Review, Perspective Commentary and Guiding Framework" with Neil Anderson, a professor of human resource management at Brunel, and Kristina Potocnik, a lecturer in human resource management at Edinburgh.

Slated to be published in an upcoming issue of the Journal of Management, the paper contends that management needs to pay greater attention to capturing employee creativity and implementing creative ideas.

Part of the solution is training managers on how to both spur and capture creativity, says Zhou.

"We need to better train managers to see an idea and run with it," Zhou says. "If you wait for the idea to be ready to be implemented, it might be too late. Managers need to capture promising ideas and then translate them into products, processes and improved customer service."

HRE Editor David Shadovitz recently spoke to Zhou about this latest research and what both business leaders and HR leaders need to do differently to foster greater creativity and innovation in their organizations.  Excerpts follow:

What led you to focus your research on creativity and innovation?

http://www.hreonline.com/images/Zhou,Jing1.jpgIf you look around and see which companies have sustainable growth and competitive advantage, it's often because [they promote] creativity and innovation. I've been fascinated by this topic for quite a few years. Especially in the U.S., companies can't really compete in terms of cost, because there is always a cheaper way to do things elsewhere.

How would you characterize the research that's been done on this topic?

I would say this is a relatively new field in the general field of management. If you look at the past 15 or 20 years, there's definitely been greater attention paid to the topic.

Creativity isn't just limited to R&D employees. Whatever you do in a corporation, there's always a newer and better way of doing it, whether it involves products, services or improving the work processes. This is a very inclusive definition of creativity … .

But while creativity may be relatively new, it's also growing fast. More and more employers and managers are saying this is something they need more of.

Creativity is not a natural-born ability. It's something the work environment and management can influence, either positively or negatively.

What were some of the key findings in the research you just completed?

One of the key findings is the correlation between knowledge-worker creativity and the firm's performance. Interestingly, we found the correlation to be a  -.03; or not statistically significant.

So what this says is that creativity does not necessarily lead to higher performance.

That intrigued us, because all previous creativity research [included the] assumption that creative ideas produced by employees would be fully utilized by companies. Well, this research is saying, "Wait a minute, this isn't true." In the 100 firms we studied, creativity didn't lead to better firm performance.

In looking for the reasons behind this, we found there was a disconnect between creativity and innovation. Innovation is defined as the implementation of the creative ideas in the unit or organization. So the research essentially showed there was a disconnect between employees generating new ideas and how well their companies use and implement these ideas.

Why do you think this is the case?

I could only speculate. More research is needed.

One reason may be that most managers are not trained by their companies to capture creative ideas. Most people become managers because they're good at executing whatever goals their companies set for them for the year – so, as a result, they're putting all their attention to short-term goals. They've never really been trained to discover creative ideas from their employees.

This can obviously be fixed by teaching managers how to do that.

Another reason might be the incentive system. If I'm a manager and you evaluate my performance at the end of this year, trying to capture and implement creative ideas is not typically something you'll find on a performance-evaluation form.

Many organizations simply don't have an evaluation system that motivates managers to capture creative ideas.

Then, at the top manager level, many think they're there to set strategies and goals, and employees should just follow. Many are unable to say, "Though I'm a very successful leader, maybe I need to spend more time encouraging my middle managers to listen to employees, to see if they can contribute to finding new ways of doing things."

Were there any other findings in the research that surprised you?

One of the other things we found in looking at the [existing] research was that even employees who have a low baseline or low readiness to be creative, can be creative if they have a leadership that demonstrates the right behaviors or co-workers who encourage creativity.

In other words, leaders and co-workers can enhance these employees' ability to be creative.

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You mention in your article that companies are reluctant to take risks. Why do you think that's the case?

Because our behaviors are motivated by quarterly earnings -- so you're putting your efforts behind short-term goals. The notion of creativity, by definition, involves finding new ways of doing things. The new way could be hugely successful or could lead to failure. You just don't know. On one hand, I could travel the tried and true to meet my performance target for the year. Or I could pursue a more [creative path] and be distracted from meeting these short-term goals. It's no wonder people won't go the creativity route. It's uncertain and not familiar.

Given a choice, most people will take the safer route, especially if they're not going to be rewarded for creativity and will be punished for failure on the employee evaluation form.

What should leaders be doing differently to spur creativity and innovation in their organizations?

We found in our studies that people who demonstrate transformational leadership are more likely to encourage creativity. If you're a leader who listens to employees and provides them with intellectual stimulation, you're more likely to see greater creativity.

Leaders also need to be less arrogant. My colleagues in the field found the higher people move on the corporate ladder, the more likely they are to be overconfident. And when you think you are better than your employees, you inevitably will become arrogant. And when you become arrogant, you're not going to be in a position to discover creativity.

This also leads to the questions: Are companies selecting leaders in the right way? Are they selecting people who are good at demonstrating they're confident and that they're better than others in the crowd? Or are they selecting leaders who are a little quieter and maybe not all that good at self-promoting, but are willing to spend time trying to develop their employees and get them to take initiative.

I would say a lot of organizations tend to promote people in the former category.

What part do you think HR leaders play in terms of fostering creativity?

I think HR leaders can do a lot.

If HR leaders want to play a strategic role, they really need to think strategically in terms of how they're going to help their companies build this competitive advantage. One such competitive advantage is creativity. So one question they need to ask is, "What can I do as an HR professional to help my company encourage creativity?" And do we have any programs that will help managers and employees become creative … ?

Another thing HR professionals can do is take a look at their leadership development programs and ask, "Are we really doing all we can to select leaders who can encourage creativity -- or are we selecting leaders who end up [squashing] creativity?"

Finally, they need to make sure their organizations have performance-evaluation systems in place that measure creativity. Very few companies actually include encouraging creativity as part of their performance appraisals.

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