Real Creativity Requires the Right Business Constraints

TODAY, PRODUCT INNOVATION COMES FROM THE RIGHT MIX OF CREATIVE FREEDOM AND MANAGEMENT CONTROL, AS A NEW RESEARCH STUDY ON FASHION COMPANIES REVEALS

by Angelo Ditillo, Dept. of Accounting, Bocconi
Translated by Alex Foti


The development of new products is one of the central processes for building  competitive advantage in many businesses. The success of this process is the result of the creativity of working teams devoted to designing new market solutions, and the ability of the organization to translate creative ideas into profitable innovations. Therefore, one of the major challenges facing firms is to be able to stimulate creativity, while at the same time meeting business constraints.
 
For a long time, experimental psychology studies have suggested that creativity is stimulated when creatives operate in groups characterized by high levels of autonomy and independence, and management studies have similarly argued that control systems are counterproductive when it comes to achieving innovation.

New research, however, has challenged these convictions and underlined the importance of implementing effective control systems to manage the ever-present trade-off between the flexibility needed to stimulate creativity and the functional efficiency required to achieve high levels of performance. What we have found is that total autonomy is not necessarily the best recipe for creative performance. In contrast, autonomy seems to fulfill all its potential when some constraints are introduced. This is because, with total autonomy, individuals tend to propose ideas that are already known and tried, in order to avoid the cognitive complexity resulting from dealing with what's uncharted and unexplored. In addition, an excessive degree of freedom in the creative process leads to the development of overly expensive solutions that can create problems on both the technological and commercial fronts.
 
These are the conclusions reached in a research study focusing on companies in the fashion industry, where the development of new collections requires, on the one hand, the creation of a given mood to explore new conceptions of fashion style, and on the other a collection brief specifying the degrees of freedom allowed in the choice of colors, fabrics, accessories etc. for the development of new garments. Creative teams, therefore, are not totally autonomous, but move across a creative space that is both new and bordered.
 
In addition, to ensure proper coordination between the creative group and other company functions that oversee the business dimension of the product's technical feasibility, market attractiveness and economic sustainability of the new product must be evaluated by adequate management control systems. Contrary to what has been traditionally considered the dominant view, the introduction of control systems is not problematic in innovative contexts, provided they are employed correctly and with an appropriate style of control. If, as Robert Simons of Harvard Business School argues, control systems are used in a diagnostic form, with the primary goal of measuring organizational results and correcting deviations from standard performance results, innovation is likely to get stunted. On the other hand, if used interactively with the aim of involving top managers in the decision-making process of new product development and of promoting dialogue between them and their subordinates, then control systems can contribute to generating successful innovations .

Finally, the control style shouldn't resemble that of an inspection and incentives should not be mostly linked to performance targets, but rather oriented toward activating the motivation and self-determination of creative individuals who create for the pleasure of doing it. In this way, creativity is stimulated and contributes to attaining high levels of business performance.