For a company to be innovative it needs resources. Everybody knows that. And it makes sense, doesn’t it? The importance of resources to company success was emphasized in the resource based view theory: “firms obtain sustained competitive advantages by implementing strategies that exploit their internal strengths, through responding to environmental opportunities, while neutralizing external threats and avoiding internal weaknesses” (Barney, “Firm resources and sustained competitive advantage”, 1991).
Different types of resources were addressed in literature: financial and budgetary, materials, time, personnel, tools, facilities, geography, and manufacturing, However, most researchers emphasized monetary funding as the main resource needed for innovation. After all, everything else can be purchased with money, if you only had enough. And because Creativity and Innovation are tied together (Innovation, an organizational function, is the implementation of a creative idea, an individual event) we assume that if resources are required for innovation, then abundance of resources are important to creativity as well. But is it?
In my 2008-2010 study of creativity in startup and mature companies, close to 80% of participants reported unequivocally that they had more resources available to them in the mature companies compared to the startup companies (all participants worked for both types of companies at different times and were thus able to compare through the same perspective), 10% reported having the same amount of resources available to them in both types of companies, and only 10% reported having more resources available at the startup companies. This is surprising when you consider that more than 90% of the participants felt more creative in the startup companies than they did in the mature ones.
An interesting result came from a secondary question in my interviews: “how did the lack of resources affect you?” Several of the participants felt they were more creative when resource availability was low. One participant described: “…you have to be more creative when you have less resources, because you have to do more with less and it kind of spurs the creativity process.” Another participant said: “The more resource-constrained you are—the more creative you end up being, and I think… when you have more resources, you come up with maybe less efficient ideas, or maybe more resource-intensive ideas, whereas when you know you have a lot more finite resources, you typically tend to be more creative.”
Was research prior to mine wrong? Does the availability of resources have an adverse impact on creativity and innovation? The answer is two-fold. Let’s start by addressing the impact of resources on creativity.
When I discussed the results of my findings in this area with one member of my dissertation committee he suggested that the relationship between availability and resources is neither strictly positive nor strictly negative. He suggested, and I agree, that the relationship looks like an upside-down U-shape curve as in the above graph. I contacted a few of my research participants who confirmed: you need to have a minimal level of resources to be able to do anything, but beyond a certain level of resources available to you, more resources meant that you didn’t have to be as creative as you were when you were vying for resources.
You don’t need to try and “do more with less.” You just have everything you need, and that requires you to be less creative. My conclusion here is that there is an optimal level of resources that would maximize the creativity of team members, and we need to find that right level and keep the creative team on that specific resource “diet”.
However, we need to remember that a creative idea is useless if it done not get implemented, and turned into a company innovation that is released into the market. The implementation part of innovation does not require a high level of creativity (beyond the original idea, of course), but requires resources for prototyping, experimenting, development, and market launch.
Here the relationship between the level of resources and the probability of successful implementation and product launch are strictly positive. Once the creative idea was generated–more resources means better development, faster time to market, and faster adoption.
In summary: there is a dichotomous relationship between resource availability (specifically funding) and innovation. There needs to be the right amount (not too much, not too little) of resources available to the creative team to keep it challenged and creative. However, more resources will allow successful implementation and market launch.
image credit: Norman Lear Center
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Dr. Yoram Solomon is an inventor, a creativity researcher, coach, consultant, and trainer to large companies and their employees. For his Ph.D. he studied why people are more creative in startup companies than in mature ones. He also holds an MBA and LLB. Yoram was a professor of Technology and Industry Forecasting at the Institute for Innovation and Entrepreneurship, UT Dallas School of Management; is active in regional innovation and technology commercialization; and is also a speaker and author on predicting the technology future and identifying opportunities for market disruption.