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Creativity Doesn't Always Lead to Profits, Study Finds

innovation, creativity, ideas
Creativity and innovation are crucial to businesses' growth, new research suggests. / Credit: Creativity image via Shutterstock

Creativity and innovation are crucial to businesses' growth, new research suggests.

If companies fail to integrate creativity and innovation into their business, they could be preventing themselves from reaching their full potential, according to a study from Rice University, the University of Edinburgh and Brunel University.

Creativity and innovation are complex, multilevel phenomena that pan out over time and require skillful leadership to maximize their benefits, the researchers said. Jing Zhou, a researcher at Rice University's Jones Graduate School of Business and one of the study's co-authors, said the vast majority of companies operating today are not doing a good job of translating creative ideas into solutions that improve the firms' performance.

"Management needs to pay attention to capture employee creativity and implement the creative ideas," Zhou said. Moreover, companies focus too much on current goals and don't take the risks required to turn creativity into profits, she said.

Instead, Zhou said, businesses need to do a better job of training managers to recognize a good idea and run with it.

"If you wait for the idea to be ready to be implemented, it might be too late," Zhou said. "Managers need to capture promising ideas and then translate them into products, processes and improved customer service."

The findings are the result of the authors' review of the rapidly growing body of research into creativity and innovation in the workplace, with particular attention to the period from 2002 to 2013.

"There are many of us who study employee creativity and many of us who study innovation and idea implementation, but we don't talk to each other; we're siloed," Zhou said. "The review's goal is to integrate both."

The research comes on the heels of a previous study conducted by Zhou. That study discovered that employee creativity did not lead directly to company performance and that firms had to make an effort in order for creativity to be channeled into positive results. The study suggested that managers need to cultivate, recognize and channel their employees' creativity into actual performance.

"The assumption is that once the employees demonstrate creativity, firms can translate it to firm-level performance," Zhou said. "Our study proved otherwise."

The current research, co-authored by Brunel University professor Neil Anderson and Edinburgh lecturer Kristina Potocnik, will be published in the Journal of Management's annual review issue.

Originally published on Business News Daily.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.