The success and survival of companies in today’s marketplace depend on creativity, innovation, discovery and inventiveness. The challenge, therefore, for many companies is to be innovative and creative to bring to the market a stream of new and improved, added value products and services that enable the business to achieve higher margins and thus profits to re-invest in the business. Innovation can be defined as the successful exploitation of new ideas.

 Virtually all companies talk about innovation and many may actually attempt to “do it”, but only a few actually succeed in doing it. To be creative, an organization requires an innovation strategy, a strategy that promotes the development and implementation of new products and services. The origin of creativity and innovation lies in a shared vision and mission, which are focused on the future. Furthermore, the vision and mission of a creative and innovative organization are also customer and market oriented- focusing on solving customers’ problems among other things. In addition, a structure that supports creativity and innovation, values like flexibility, freedom and cooperative teamwork is required to promote creativity and innovation. Support mechanisms should be present in an organization to create an environment that will promote creativity and innovation. Rewards and recognition and the availability of resources, namely time, information technology and creative people, are mechanisms that play this role.

 The key distinguishing factor between innovative and less innovative firms is the ability of management to create a sense of community in the workplace. Highly innovative companies behave as focused communities whereas less innovative companies units behave more like traditional bureaucratic departments. The concept of autonomy appears to be one of central importance for building creative organizations. Operational autonomy encourages a sense of the individual and Innovation promotes entrepreneurial spirit, whereas strategic autonomy is more to do with the level of alignment with organizational goals. It appears that firms that are most innovative emphasize operational autonomy but retain strategic autonomy for top management.

Innovative companies appear to rely heavily on personalized intrinsic awards, both for individuals as well as groups. Less innovative companies tend to place almost exclusive emphasis on extrinsic awards. Extrinsic rewards are things such as pay increases, bonuses and shares and stock options. Intrinsic rewards are those that are based on internal feelings of accomplishment by the recipient. Highly innovative companies appear to place equal emphasis on the technical side as well as the social side of the organization. In other words, they look to nurture not only technical abilities and expertise but also promote a sense of sharing and togetherness. Slack is the cushion of resources, which allows an organization to adapt to internal and external pressures. Slack has been correlated positively to innovation. Moreover, it is not just the existence of slack but also the existence of slack over time that appears to have positive impact upon innovation. 

Creativity involves more than the sudden moment of inspiration in which an idea suddenly flashes in the brain. There are four stages to the creative process: preparation, incubation, insight, and verification. Good problem solving occurs when managers have many viable, creative alternatives to consider. To inspire employees to approach problems creatively and to nurture a creative environment, organizations follow three general approaches. These include hiring creative individuals, applying specific creativity-enhancement techniques, and developing a creative organization. A wide variety of popular techniques have been developed to enhance creativity, which include Gordon Technique, Synectics, Idea Checklists, Attribute Listing, Checkerboard Method and Retroduction.