Investing in creative potential
Creativity doesn’t spark in a vacuum. Nurturing it with the right ingredients and trusting in the eventual payoff is what sets a creative business apart.
Creativity as both noun and verb
When we think of creativity, we often think of some essential but rare human attribute—the gift of a lone genius touched by the gods or born with a unique genetic inheritance. Creativity is seen as an inborn trait that can be nurtured, but also as something that is fundamentally a quality of the person possessing it. We picture Leonardo da Vinci or Thomas Edison feverishly working away in their studio or workshop, to emerge with the Mona Lisa or the first practical electric light—creative works sprung fully formed from their solitary efforts.
This, of course, is a romantic fiction. Though brilliant, both da Vinci and Edison owed their creations as much to the context in which they worked as to their own considerable talents. It’s far from certain that da Vinci would have been as productive and innovative had he lived in the Dark Ages instead of the Renaissance. And without the equipment and staff of his famous Menlo Park laboratory, Edison would likely have won far fewer than the thousand-plus patents he acquired over his career. Individual talent is important to creativity, but there’s much more to it than that.
Research shows that creativity is the result of multiple factors that must converge for it to spark. It’s an “ecological” or “systems” phenomenon that arises out of the interactions of individuals and teams, both with each other and with the environment around them.1 Creativity is not just something we have; it’s also something we do—both noun and verb.
This is as true for organizations as it is for individuals. Creative organizations—those that generate new, useful, and commercially successful products and ideas—become that way by embedding creative teams within a supportive social and physical context. These supports include not just material resources—funding, equipment, and so on—but also a culture that values new ideas, appropriate mechanisms for vetting and developing them, and methods and governance frameworks that allow teams to engage creatively with internal and external stakeholders. Without such supports in place, an organization risks its creative ideas dying on the vine, strangled by bureaucracy, poorly aligned incentives, unfortunate group dynamics, or an inability to find customers.
Sparking creativity
What does it mean to invest in creativity?
All organizations that prioritize innovation understand that they need to focus on their people—the groups charged with developing new and useful things to take to market. The research on creativity conventionally terms these groups as the creative person—the individuals and teams (and their skills, talents, knowledge, and experience) involved in creative work. This is where most organizations direct their investments in creativity—toward hiring people with the “right” skills and putting them to work.
However, research into creativity also points to three more factors that shape creative outcomes: process, place, and product.2 Process is a creative team’s development journey, the steps and actions they take to do the work. Place refers to the setting in which the work is done, covering everything from access to material resources to high-level organizational policies and governance to an organization’s culture and its social norms.3 And product is the creative work itself—the new object, idea, or behavior that the organization hopes to commercialize.4
Researchers conventionally see creativity as emerging from the interactions between these four P’s. But in organizations where teams are so interdependent that getting things done needs a great deal of interteam coordination, we should also add persuasion as an equally important factor.5 A team wishing to execute a creative idea must convince other teams, managers, executives, and even external stakeholders that what they want to do is novel and useful enough to be worth helping along.
Adding persuasion as a factor helps us to recognize that the five P’s naturally fall into two groups (figure 1). First, there is creative potential, comprising person, process, and place—the elements that influence how creative the new product, idea, or behavior could be. Second, we have creative performance comprising product and persuasion—the creative outcome, composed of the novelty and utility of the product, idea, or behavior, mediated by the effectiveness of the persuasion that goes into convincing others that it’s valuable.6
Investing in the five P’s
The five P’s are a useful way to think through what kinds of investments an organization can make to increase its ratio of creative hits to misses. Investments in creative potential aim to make person, process, and place more conducive to generating and realizing creative ideas. Investments in creative performance aim to remove creative barriers, (re)defining creative products and enabling persuasion to create space for ideas to flourish.
Firms must invest in both creative potential and creative performance if they are to foster creativity. Invest only in creative potential and the space to pursue creative ideas will likely be limited—opportunities will be set aside due to lack of time and resources or the firm’s inability to deviate from standard operating procedures. Similarly, investments solely in creative performance—investments designed to create the organizational space for creativity—are likely to go to waste without simultaneous investments in the creative potential necessary to generate new and useful ideas for exploration.
Person
While person is not the only source of creativity, it’s still essential to equip teams with skills and knowledge that they can draw on to come up with and develop creative ideas, and to judge when creativity is (and isn’t) appropriate. Some people, like Batman, need tools and methodologies to realize their creative superpower. For these people, who may struggle to step outside their usual thinking to develop creative ideas, tools such as problem-posing or methodologies like design-thinking can be helpful.7 Others are more like Superman, with a natural flair for generating novel ideas, a more innate creative superpower. Superman’s challenge is that he struggles to understand when his powers detract from the work (for example, by distracting or annoying coworkers with a seemingly endless stream of new ideas) rather than adding to it. To benefit from Superman’s contributions, the organization needs to help him fit in, to be Clark Kent,8 to understand when creativity is appropriate and new ideas are useful rather than distracting.
Investing in person can also involve fostering norms and practices within teams that promote creative thinking and behavior. How should a team react, for example, if an interesting idea emerges quite late in a meeting? They might set the idea aside—it’s late and some participants have planes to catch. Or they could extend the meeting indefinitely, pursuing the idea until it either bears fruit or proves to be a dead end. There’s also a middle ground where the team allows a little time to explore how the idea is connected to the topic at hand—an investment in seeing if the idea is worth capturing for more in-depth exploration later. What’s important is not so much what they choose to do as that they know how to find the approach that would be most productive at that time.
A third aspect of person is team diversity. As is well known, diversity of identity and demographics, such as gender, age, ethnicity, and socioeconomic factors improves creative potential by allowing teams to tap into different viewpoints and lived experiences.9 Organizations should also consider cognitive diversity, the variety of ways that individuals can approach and think about problems.10 In business, this is often tied to the business area or discipline in which people have the most experience. A team of accountants, for example, is likely to frame all problems as accounting problems and assume accounting solutions.11 In contrast, a team that includes accountants alongside engineers, anthropologists, and skilled tradespeople, will have the different perspectives needed to develop a multidisciplinary understanding of the problem and will likely come up with a superior solution.
Process
Research suggests that the creative process is most effective when it’s iterative, allowing teams to engage in multiple cycles of divergence (generating new ideas) and convergence (winnowing out the poor ideas and developing the good ones). Does the project schedule or organizational culture effectively ensure that only one approach can be tried? Or does the process give teams room to experiment, to develop a range of approaches to see which is best, to deliver something a little different and potentially more valuable than expected? The latter process requires budgets and timelines to be flexible and procedures for requesting and evaluating changes to be formalized, well understood, and accessible.
Place
Place, the setting in which person and process operate, is important for creating favorable conditions for both.12 Besides the actual physical and virtual work environment and tools, place also extends to culture, norms, and expectations. The historical and social milieu of the team, department, and organization that people belong to all influence creativity. Even as seemingly small an act as including “Creative” in some workers’ job titles can stifle creativity as it implicitly labels other workers as “Not Creative.”
Performance management and organizational metrics are especially important elements of place. They need to foster creativity rather than stifle it: A worker measured mainly or solely on financial metrics will be implicitly punished if they spend time on actions without a direct, immediate link to financial results. For example, salespeople who are measured solely on revenue will have little interest in creativity. Any creativity in their work will not be considered in performance reviews, even though engaging creatively with their clients and collaborating to find novel and valuable solutions to unusual problems may lead to more numerous and larger future opportunities. Similarly, operations groups measured only on cost and levels of service delivered are unlikely to have an incentive to consider a novel and potentially valuable idea that the marketing team wants to explore.13 A well-designed performance management system understands the creative process and recognizes inputs, which are under the team member’s control, as well as outputs, which also depend on factors outside the team member’s control.
Product
In one sense, the creative product is an output—the thing or idea born of person, process, and place. At the same time, the way in which the product is defined can also be an important input to its eventual value. Just as we need to create space in the process for it to be a creative process, we also need to create space with the product if it is to be a creative product.
Creating space with product involves recognizing that iteration and experimentation can sometimes yield a result that is different in some way from what is expected. It might be delivered a little later than originally planned, solve the problem in an unanticipated or unconventional way, or even solve a different, but more relevant, problem. As an example, the Chinese domestic appliance company Haier developed a washing machine that could successfully wash potatoes as well as clothes after discovering that farmers were using washing machines for both and having problems with them becoming clogged with dirt.14
The challenge is that being flexible with the product needs to be reconciled with other teams’ counting on the product to be delivered on time and to original specifications. Hence, if the potential benefit justifies changes to a product’s functionality or schedule, an organization will need to invest in updating governance processes to cascade these changes across the relevant teams and into portfolio governance bodies such as program management offices.
Persuasion
The last of our P’s, persuasion, is essential to securing the support required to make the other four P’s productive. The major investment here is in integrating creativity into governance mechanisms to allow leaders to consider creativity’s “investment-opportunity” value alongside the more usual cost-benefit metrics.15 In this way, creativity and efficiency can be put on an equal footing in an organization’s operating model—otherwise, efficiency will always trump creativity.
To create these mechanisms, governance teams need to develop metrics that track both how much value creativity generates and how much the organization is spending on promoting creativity. These metrics should cover investments in individual projects as well as in improving the overall creative infrastructure, such as by training workers or instituting governance processes that consider efficiency and creativity. They can then be integrated into decision-making and performance management,16 as well as be used to appropriately direct the organization’s investments. For instance, teams may be asked to integrate formal investment-opportunity metrics into business cases to help leaders decide which projects to fund and how best to support them.
Investments under this kind of system are unlikely to be a blank check, where every request to pursue a creative opportunity is granted. Instead, they will arise out of a negotiation where the team describes the opportunity and outlines how it intends to explore it, and the governance team determines if the opportunity justifies an investment. It’s also important for governance to consider the organization’s portfolio of creative pursuits as a whole. While an investment in a single opportunity might not pay off, investments in enough of the right opportunities across the organization almost certainly will.
Persuasion could, in a sense, be described as “politics.” While many people shy away from the term, the best organizations recognize that politics in this sense is inescapable in the allocation of resources. The genius who assumes that their ideas will attract budget on their own merit is doing their employer a disservice. The role of leaders in a creative organization is to ensure that politics is in fact about persuasion, not about playing the person.
Creativity inside requires investments outside
So far, we’ve discussed the five P’s in the context of teams within organizations. But creativity also operates in broader domains—the industry and institutional ecosystems with which the organization engages, as well as the larger marketplace (figure 2).17 Each domain influences the creativity of the one below it, with practices and norms that can encourage or discourage creativity all the way down to the team level.
Creativity emerges from the bottom up, from teams at the coalface of the organization working together to ideate and experiment, to test and develop, and to inspire each other to work in new ways. For example, during the first few months of the pandemic, the bespoke stage construction firm Stagekings was able to quickly transition to selling flat-packed furniture to home workers not just because of adroit leadership, but also a community pulling together to quickly solve the myriad challenges of developing, manufacturing, and selling a new product to new customers via new channels.18 Haier’s potato-washing machine emerged from a chance observation by a field technician, triggering a long chain of creative actions that culminated in a successful new product.19
Supporting creativity at the team level takes investments at the organizational level—developing training, defining metrics, adjusting processes, and evolving governance—to make person, process, and place conducive to creativity. Since these investments are made by executives and managers who themselves work in teams, a positive-feedback loop can occur in which investing in organization-level creativity helps leadership teams take a more creative, and potentially more effective, approach to future investments.
Investing in creativity in the institutional and market domains is trickier as organizations have less control over external ecosystems and markets than what happens within their own four walls. Still, opportunities exist. As with groups of workers, organizations can enhance the creativity of supplier and partner ecosystems by constructing a diverse network, and they can promote governance and performance management processes in the ecosystem that measure and factor creativity into contract management. They might even advocate for different and more flexible norms and practices in their industry through industry forums, lobbying, and one-on-one negotiation.
As for markets, practices to enhance a firm’s creative potential, such as involving customers in helping to discover and solve problems, are a well-mined seam. Much has also already been written about the need to field creative products and convince clients and customers that the product is in fact creative and thus worthy of purchase.
We will only add that organizations will likely need to establish their creative credentials in the marketplace, demonstrating their ability to successfully pull off small creative ideas, before progressing to more ambitious creative efforts.20 It’s only when an organization has persuaded its customers and clients of both the organization’s and product’s creativity that there is permission to be creative. This is why creative products need to be beautifully packaged in persuasive reasoning. It takes time to develop this persuasive reasoning—to defend with data, build trust, and educate on best practice—but it’s an investment that must be made to build a more creative business. Being an organization that has creative ideas is only half the battle. Inspiring customers, clients, partners, and suppliers to join you on the journey is the real trick.
The mindset for leading a creative business
Unshackling our creative businesses, integrating creativity (the verb) into our operations, is a major undertaking. The interplay between creative performance and creative potential within each domain needs to be carefully considered, as does the influence of each domain on creativity in the domain below. Metrics need to be developed, organizational measures updated, governance modified, new processes constructed, job profiles rethought, training designed, and a new to-be operating model imagined. Leaders also need ways to understand not just the scope of the investment, but also how improved creativity will translate into increased value—and how this increased value will be accounted for. Then begins the hard work of instituting the needed changes.
Perhaps the most important investment in creativity is in developing executive and leadership teams’ ability to lead a creative organization. This is not the same as leaders being personally creative or having a creative leadership style. Rather, it’s the adoption of a fundamentally different mindset from traditional philosophies that insist that all investments lead directly to predictable outcomes.
To really invest in creativity, at scale and with full commitment, leaders need to value initiatives for what the organization can learn from them and for the opportunity to explore potentially useful new avenues as well as for how efficiently they can deliver a solution. Leaders of a creative business understand that not every project, initiative, or interaction needs to (nor should) deliver a creative outcome, while also understanding that all projects, initiatives, and interactions are possible sources of creativity. They’re sensitive to the trade-off between creativity and efficiency, and they trust that the seemingly unproductive activity of the generative creative process will result in greater value in the end. They have confidence in the fact that if the ingredients for creativity are consistently present, the organization will stimulate enough creative outcomes to make the investment worthwhile, and it will sustain these investments when times are troubled and cash tight, as this is when creativity is most valuable.21
When creativity sparks, it’s often not clear why it sparked in that instance and not in other similar situations. And even under the best of conditions, creativity just doesn’t spark. But leaders who understand that this is part of what it means to invest in creativity will see creativity spark more often and more productively, lighting the path to innovation and greater commercial success.
Human Capital Consulting
Deloitte’s Human Capital consulting leverages design thinking, digital innovation, and data-driven industry insights to develop and implement talent and HR strategies that enhance our clients’ organizational value through their people—in particular, innovative talent, leadership, and change programs.
