Accounting Concepts for Borrowing Costs

Accounting Concepts for Borrowing Costs Abstract To prescribe the accounting treatment for borrowing cost incurred irrespective of its nature either capital or revenue and to interpret the said accounting standard in a fairly manner with the help of accounting standard interpretation as issued by ICAI. Introduction With the advent of Industrialisation, Organisations need more resources so as to compete in the Industry which it pertains as well as to achieve its vision. Among those resources, Money is foremost and it is needed for various reasons which may include meeting its working capital requirement, construction of asset, etc. Most of the organisation opts for borrowings from banks, other financial institutions for the same. Borrowings may include some outflow of cash even before such borrowings are made, which we may call as borrowing cost such as interest, loan processing charges by banks, other charges other than the principal amount while repaying. Definitions Borrowing Cost Interest charges on bank borrowings including short term and long term borrowingsBorrowing cost can be illustrated with many interpretations. But AS 16 provides an inclusive definition comprising of, Amortisation of discounts, premiums Ancillary costs in connection with arrangement of borrowings Finance charges in respect of assets acquired on finance lease Exchange difference arising in foreign currency borrowings to the extent they are regarded as an adjustment to interest costs. Qualifying asset There are certain exceptions to qualifying asset. They are, Investments other than investment properties Inventories that are routinely manufactured over a short period of time How to interpret? In order to guide for a proper interpretation ICAI has issued ACCOUNTING STANDARD INTERPRETATION (ASI). With reference to ASI-1, Substantial period of time dependents on the facts and circumstances of each case. However, ordinarily, a period of 12 months is considered, unless a shorter or longer period can be justified on the basis of circumstances of the case. With reference to ASI-10, Adjustment to interest cost means the difference between the interest cost on foreign currency loan and interest that would have been paid on local currency loan had this loan been in local currency Recognition: Borrowing cost will be recognised only if such cost or expense is absolutely and directly attributable to acquisition, construction or production of qualifying asset and its is also important that the cost incurred only be capitalised when it is probable that they will result in future economic benefits to enterprise and can be measured reliably Borrowing cost that are not recognised and as a result it is not eligible for capitalisation can be charged to the profit and loss account in the period which it occurs. Interrelation of AS-16 with other accounting standards AS-11 Exchange differences arising from foreign currency borrowing are considered as borrowing cost for which the increase in liability towards principal amount should be capitalised to the extent of increase in the interest would be paid if loan was taken in Indian currency and the balance has to be treated as exchange difference as per AS-11, The effects of changes in foreign exchange rates. Illustration: ABC ltd Company has taken a loan of USD 10,000 on April 1, 20X3, for a specific project at an interest rate of 5% p.a. On April 1, 20X3, the exchange between the currencies was Rs.45 per USD. The exchange rate as at March 31,20X4 was Rs.48 per USD. The corresponding amount could have been borrowed by ABC ltd in local currency at an interest rate of 11% p.a. Solution: (i) Interest = USD 10,000 X 5% X Rs.48 = Rs.24000 (ii) Increase in liability towards the principal amount = USD 10,000 X (48-45) = Rs.30,000. (iii) Interest that would have resulted if the loan was taken in Indian currency =USD 10,000 X 45 X 11% = 49,500 (iv) Difference between (iii) and (i) = 49500 – 24000 = 25,500. 30000 AS-16 AS-11 25,500 4,500 Therefore out of Rs.30,000 increase in liability towards principal amount, only Rs.25,500 will be considered as borrowing cost and the remaining Rs.4,500 will be considered as exchange difference and charged to Profit and Loss as per AS-11 Total Borrowing cost as per AS-16 = 24,000+25,500 = Rs.49,500 Additional Illustration How will you answer change in the above case it the local interest rate is 13% Solution: (i) Interest = USD 10,000 X 5% X Rs.48 = Rs.24,000 (ii) Increase in liability towards the principal amount = USD 10,000 X (48-45) = Rs.30,000. (iii) Interest that would have resulted if the loan was taken in Indian currency =USD 10,000 X 45 X 13% = Rs.58,500 (iv) Difference between (iii) and (i) = 58,500 – 24,000 = Rs.34,500. Therefore, whole 30,000 will be considered as borrowing cost. Total Borrowing cost as per AS-16 = 24,000+30,000 = Rs.54,000 What will be the situation under Income-tax act? Sec.43A Income-tax act explains how to deal with exchange rate differences arising from acquiring asset from a country outside India for the purposes of business or profession as a result increase or reduction in liability for making payment or for repayment of loan borrowed in foreign currency specially acquiring for asset. It clearly states that exchange difference has to be treated in Income tax only in relation to payment, and not on accrual basis as required under AS-16. Therefore, only the exchange differences arising from the assets acquired or loan borrowed from outside India is to be capitalised. It never speaks about the concept of adjustment of interest costs. So, even if one has followed AS-16 for treating exchange difference as an adjustment to interest cost, it has to be nullify that effect while arriving at the block of assets as per Income tax act and instead, adjustment of assets only to the extent of exchange differences has to be made. AS-12 Expenditure on a qualifying asset comprises of only those that has resulted in payments of cash, transfers of other assets or the assumption of interest bearing liabilities. Such expenditure has to be decreased for any progress payment received and grants received in connection with asset .This is also similar in the case of Accounting standard-12, Government grants, as it prescribes that asset has to be accounted after deducting the amount of monetary grant received from the gross value of the asset. AS-19 In the inclusive definition of borrowing cost, it says that finance charge arising on account of assets acquired on financial lease is to be capitalised to the extent of such finance charges. Such finance charges will be computed as per the Accounting standard-19, Leases. Measurement Measurement of borrowing costs includes such costs incurred in both specific and general borrowing. In case of specific borrowing, the money borrowed is used particularly for the purpose of acquiring a qualifying asset. Such cost has to be capitalised less any income on temporary investment made on such borrowings On the other hand, it is general borrowing for which the money is borrowed generally for the purpose of various qualifying assets, the amount of borrowing cost to be capitalised to be determined by applying an appropriate capitalisation rate on the expenditure of the capitalisation rate. Capitalisation rate is the weighted average of the borrowing cost applicable to the borrowings of the enterprise outstanding during the period other than the borrowings made specifically for the purpose of obtaining qualifying asset. Capitalisation Rate = Total Interest on borrowing Total Borrowings Therefore, the relationship is, Specific borrowings one loan with one asset or many assets General borrowings – Many loans with many assets Expenditure on qualifying asset Payment of cash XX Transfer of other assets XX Interest bearing liabilities XX Less: Receipt of progress payment (XX) Grant received in connection with asset (XX) ________ Expenditure XX Another important note is that the amount of borrowing costs capitalised during the period should not exceed the amount of borrowing cost incurred during the period. Commencement Capitalisation of borrowing coast will be commenced on the basis of three conditions. They include that the expenditure for acquisition, production of asset has been actually incurred and activities necessary to prepare the asset for which the asset has been originally assessed to be used and actual borrowing cost has been incurred for the same. Suspension Borrowing costs in relation to qualifying assets are normally continuous for capitalisation. But in certain case they are suspended as prescribed when there is interruption in the active development of the asset. But there is exception to such suspension is not necessary in these cases, When substantial technical and administrative work is being carried out. When temporary delay is a necessary part of process of getting an asset ready for its intended use or sale. (E.g. Interest on loan taken to finance working capital requirement for a vineyard) Cessation There is a point in which the capitalisation of borrowing cost should to be stopped. Such capitalisation should be ceased if construction of a certain portion of the asset is completed and such asset can be used independently for its intended use or sale. On the other hand, if the assets are completed in parts and cannot be used independently, then the capitalisation should continue till the asset is ready for its intended use. The other kind of situation is that the capitalisation should be stopped if the asset is physically completed and only the routine administrative work is going on. Even if decoration work is remaining then the asset is deemed to be completed and the capitalisation of borrowing cost should be stopped for such asset. Disclosure Borrowing costs are disclosed in financial statements in terms of the particular accounting policy adopted and the amount of borrowing costs capitalised during the financial year. What are the significant differences between AS-16, IAS, and US GAAP? There is a marked difference in the way US GAAP and IAS deal with capitalisation of borrowing costs. Under IAS-23, there are two treatments that are allowed, The benchmark treatment which requires borrowing cost to be expensed when incurred Alternative treatment which requires capitalisation of borrowing cost when certain rules and conditions are fulfilled. But AS-16 does not allow dual treatment, i.e. borrowing costs are compulsorily capitalised when certain conditions are fulfilled and compulsorily not capitalised when certain conditions are not fulfilled. The same situation exists in the case of US GAAP-FAS-34 interest cost is capitalisable for all assets that require a period of time for their intended use, unless they are not material. Conclusion In spite of various accounting policies and financial reporting framework, AS-16, Borrowing costs are important to prepare those financial statements and so that the accounting information presented to the management is accurate and discloses material facts.

The Impact of the 1920’s

The decade of the 1920's was a period of American prosperity, new technology, and a new role for women. As World War I came to an end, society began bursting into many different things. The twenties were a time when people laughed more often than cried, partied more often than worked, and dreamed more often than faced reality. Athletes were looked up to as heroes, authors helped people escape into a different life, and women dressed as flappers and started voting. The Harlem Renaissance, the model T, prohibition, sports heroes, the role of women, and new technologies all helped influence the social changes in the â€Å"Roaring Twenties†. In the 1920's, African Americans were â€Å"roaring† in their culture. African American music, literature, dance, art, and social commentary all boomed in Harlem, New York. Their culture movement was known to be called â€Å"The New Negro Movement† and later called the Harlem Renaissance. The Harlem Renaissance showed the different cultures of African American. One of the main factors leading to the rise of the Harlem Renaissance was the urban migration. There were different people of the arts, such as Nora Thurston Zeale who was an anthropologist, Countee Cullen who was a romantic poet, Langston Hughes who was a poet as well as a playwright. Marcus Garvey, James Weldon Johnston, and W. E. B. Dubois were three political figures who helped people have hope of freedom for African Americans and made the Harlem Renaissance what it came to be known for, all the arts, literature, and music. Marcus Garvey was the leader of the Universal Negro Improvement Association, the first African American leader in the American history to organize masses of people in a political movement. He advocated â€Å"black nationalism† and financial independence for African Americans. W. E. B.  Dubois was an author and a teacher who helped found the National Association for the Advancement of Colored People and helped African Americans try to improve their lives. James Weldon Johnston also helped found the National Association for the Advancement of Colored People and was also the secretary. He was also an influential poet that influenced jazz music. Another black famous figure in the 1920's was Louis Armstrong. He was an amazing trumpet player who played jazz for the first time ever heard north of the Mason-Dixon Line. Langston Hughes was a great writer who wrote funny poems, stories, essays, and poetry. The Harlem Renaissance was a time period which had a huge influence across America and even around the world. The automobile really changed the way people lived in the 1920's. The automobile became the backbone of the American economy. It altered the American landscape and American's society, and it was only one of the several factors in the country's business boom in the 1920's. The automobile changed the way people lived their lives, the way the city was run, and how the economy was dealt with. The automobile changed the way everyday people lived their lives. Rural families now could travel to the city for shopping and entertainment. It also gave families the opportunity to take a vacation in places far away. Automobiles also gave younger people and women additional opportunities to be more independent. It allowed people to live far away from their jobs causing the urban sprawl. The automobile changed the way the city was run in a few ways. It was evident in the construction of the paved roads suitable for driving in all weather. Houses were being built with garages or carports and a driveway and a smaller lawn due to more people having automobiles. Gas stations, repair shops, public garages, motels, tourist camps, traffic signals, and shopping centers were all being built as well. The economy also had a big change when the automobile came into power. The industry provided an economic underpinning for cities like Akron and Detroit. It drew people to oil-producing states like California and Texas. The automobile industry also helped promote the free enterprise system. In the late 1920's, about one in every five people owned a vehicle in America. On January 16, 1920, the 18th amendment went to affect which banned all consumption, distribution, and creation of any alcoholic beverages. This created uproar, because people really did not like being told what they could or could not drink. The soul purpose was to reduce the quantity of alcohol consumed. It at first worked, it began to be very difficult to get alcohol, plus the prices went up a lot, and the quantity consumed was less than it used to be. At that time, most bootleggers were from the mafia, which were families that controlled areas of a city. Speakeasies were made to keep people happy when the alcohol was banned. They gave out alcohol illegally. Besides speakeasies, the American population came up with different kind of ways to get around the 18th Amendment, such as putting alcohol in hot water bottles, coconut shells, garden hoses, and other unique things to get alcohol. The mafia saw the amendment as a way to make money. The time between 1920 until 1933 when prohibition ended, mafia families, such as Al Capone, were taking in about sixty million dollars. It was pretty hard to uphold the Prohibition law. So in 1933, the Prohibition law came to an end. There were many sports heroes in the 1920's, such as George Herman Ruth, Jack Dempsey, Johnny Weismuller, Steve Donoghue, Harold Edward Grange, Helen Newington Wills, and William Tilden. George Herman Ruth, later dubbed Babe Ruth from his fans, set the baseball record of sixty home runs in one season in 1927. This record stood until 1961 when Roger Maris hit 61 home runs. He might have been the best baseball player who ever played the game. He led the Yankees to seven World Series and made two million dollars in his career. Jack â€Å"the Manassa Mauler† Dempsey was one of the best heavyweight boxers of all time. He was a heavyweight champion and fought and won against Georges Carpentier. The battle was later called â€Å"The Battle of the Century† and they were the first people to be paid more than one million dollars for promotion of the fight. Johnny Weismuller was a swimmer who won a lot of Olympic gold medals. He won 52 United States titles and 28 world distance records. He also starred in many films as Tarzan Lord of the Jungle. Steve Donoghue won several Derby's. He won six total Derby's and was named the champion jockey from 1914-1923. Harold Edward Grange was a college football hero who helped get the game of American football popular. Helen Newington Wills was a woman's tennis champion. She won Wimbledon for the first time in 1927. She had won two Olympic gold medals and 19 singles championships. She was later inducted into the U. S. Lawn Tennis Hall of Fame. William â€Å"Big Bill† Tilden was a men's tennis champion. He was the first American to win the Wimbledon title in 1920. These two champions helped get the game of tennis popular during the twenties. On August 26th, 1920, President Wilson ratified the Nineteenth Amendment. The Nineteenth Amendment was for women suffrage. In the twenties, many roles changed for women. Women were declared the right to vote, their styles changed, they began doing other jobs such as doctors, bankers, lawyers, and other different jobs which were usually reserved for men. Women's style changed from wearing clothes that went all the way down to their ankles and with long hair all pinned up to short â€Å"bob† hair cuts and short skirts. These women were called â€Å"flappers†. In the twenties, the jobs that were usually seen as womanly such as household things dropped. Women started doing jobs that men usually did. It was still seen that women were to be in the home and men brought home the money. A lot of new technology thrived in the 1920's. In 1927, Philo Farnsworth patented the â€Å"dissector tube† which turned out to be important to inventing the television. Late in 1922, the first movie with sound, â€Å"The Jazz Singer† came out. Television's first drama came out on September 11, 1928, which was called â€Å"The Queen's Messenger†. In 1926, the first movie with sound and color came out. The Harlem Renaissance, the model T, prohibition, sports heroes, the role of women, and new technologies all helped influence the social changes in the â€Å"Roaring Twenties†. The prosperity and experiences that America went through in the â€Å"Roaring Twenties† looked like they would go on forever. There were not any signs that the country that was thriving would go into a complete and total economic depression. New inventions, new advancements, and new discoveries helped make life better in America. Life seemed so easy in the twenties thanks to all the new advancements. No one would have guessed what laid ahead for the powerful country.

How to Create Behavior Contracts for Students

Every teacher has at least one challenging student in her class, a child who needs extra structure and incentive to change bad behavior habits. These arent bad kids; they often just need a little extra support, structure, and discipline. Behavior contracts can help you mold the behavior of these students so that they no longer disrupt learning in your classroom. What Is a Behavior Contract? A behavior contract is an agreement between the teacher, student, and the students parents that sets limits for student behavior, rewards good choices, and outlines consequences for bad choices. This type of program sends a clear message to the child by communicating with them that their disruptive behavior cannot continue. It lets them know your expectations and what the consequences of their actions, both good and bad, will be.   Step 1, Customize the Contract First, make a plan for change. Use this behavior contract form as a guide for the meeting you will soon have with the student and his/her parents. Tailor the form to your particular situation, taking into consideration the personality and preferences of the child you are helping. Step 2, Set Up A Meeting Next, hold a meeting with the involved parties. Perhaps your school has an assistant principal in charge of discipline; if so, invite this person to the meeting. The student and his/her parents should attend as well. Focus on 1 to 2 particular behaviors that you would like to see change. Dont try to change everything at once. Take baby steps toward major improvement and set goals that the student will perceive as achievable. Make it clear that you care about this child and want to see him/her improve in school this year. Emphasize that the parent, student, and teacher are all part of the same team.   Step 3, Communicate the Consequences Define the tracking method to be used on a daily basis for monitoring student behavior. Describe the rewards and consequences that correlate with behavior choices. Be very specific and clear in this area and use quantitative explanations whenever possible. Involve the parents in designing a system of rewards and consequences. Make sure that the chosen consequences are truly important to this particular child; you can even ask the child for input which will make him/her buy into the process even further. Have all involved parties sign the agreement and end the meeting on a positive note. Step 4, Schedule a Follow-Up Meeting Schedule a follow-up meeting 2 to 6 weeks from your initial meeting to discuss progress and make adjustments to the plan as needed. Let the child know that the group will be meeting again soon to discuss their progress. Step 5, Be Consistent in the Classroom In the meantime, be very consistent with this child in the classroom. Stick to the wording of the behavior contract agreement as much as you can. When the child makes good behavior choices, offer praise. When the child makes poor choices, do not be apologetic; if needed, pull out the contract and review the terms that the child agreed upon. Emphasize the positive consequences that can come as a result of good behavior and enforce any negative consequences of the childs bad behavior that you agreed upon in the contract.   Step 6, Be Patient and Trust the Plan Most of all, be patient. Do not give up on this child. Misbehaved children often need extra love and positive attention and your investment in their well-being can go a long way.   In Conclusion You might be surprised at the huge feeling of relief that all involved parties feel just by having an agreed-upon plan. Use your teachers intuition to start yourself on a more peaceful and productive path with this child.

Analysis of Patrick Henrys Speech to the Virginia...

â€Å"Give me liberty or give me death!† This statement from Patrick Henry’s â€Å"Speech to the Virginia Convention,† delivered to the House of Burgesses, has been quoted by many, becoming almost clichà ©. However, the declaration is truly understood by a select few. The unjust Stamp Act passed by the British crown in 1765, brought fame and notoriety to Henry as he spoke out against the unjust taxation without representation. Ten years later on the eve of revolution, Henry calls upon the Colonial government of which he is part, to act for the betterment of the people. Patrick Henry attempts to persuade the House of Burgesses to revolt and declare war against Britain by logically convincing them that it is their natural right to be free and calling on†¦show more content†¦As he goes on in his speech, he says that to not be free, would be worse than death. Therefore, according to Patrick Henry’s logical argument, and substitution, they must revolt , or face a condition worse than death. Pathos or, playing on the emotions of the leaders of colonial America, is another tactic Henry draws on to convince them that revolution is essential. He uses the patriotism and pride of the colonial leaders to make them see how the British crown is taking away their natural rights as human beings. He states that outsiders say the colonies are â€Å"weak† because they would be â€Å"unable to cope with Britain as their adversary.† The leaders of the colonies are not used to being called weak, because they are of the upper classes of the Americas. Therefore this would ignite them to revolution, because the British would be against them, they who had dared question the strength of the members of the colonial Americas. Also, this statement of colonial American weakness would make the members of the House feel slighted because they have been working towards strengthening the Americas and saying they are weak is saying they are failing as leaders of the colonies. 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Oi 361 - Week 1 - Definitions Paper - 825 Words

Definitions Paper What are creativity, innovation, and design, and how are these concepts important to meeting the objectives of an organization? To understand these concepts they must first be defined. Webster’s dictionary (http://www.merriam-webster.com) defines creativity as the â€Å"Ability to produce something new through imaginative skill, whether a new solution to a problem, a new method or device, or a new artistic objects or form. The term generally refers to a richness of ideas and originality of thinking. Psychological studies of highly creative people have shown that many have a strong interest in apparent disorder, contradiction, and imbalance, which seem to be perceived as challenges. Such individuals may possess an†¦show more content†¦New sciences have also contributed to technology, as in the theoretical preparation for the invention of the steam engine. In the 20th century, innovations in semiconductor technology increased the performance and decreased the cost of electronic materials and devices by a factor of a million, an achievement unparalleled in the history of any technology.† I would define innovation as the ability to apply this creative thinking to an existing product, solution or approach that improves the outcome of a solution to a problem or usefulness of a product. Innovation is the ability to put creative thoughts to use in a way that is beneficial to a person, product, object, problem or situation. . Design is defined by Webster as â€Å"to create, fashion, execute, or construct according to plan; to conceive and plan out in the mind; to have as a purpose; to devise for a specific function or end; to conceive or execute a plan; or to draw, lay out, or prepare a design.† I would define design as taking these creative thoughts and ideas, or applying an innovative concept, and putting them into a plan of action. Design is the point at which creativity and innovation become a useful part of a solution. It is the ability to take creative thoughts and manifest them into a tangible object or cohesive solution, and incorporate that into a plan of action to solve a particular problem or take a product to market,Show MoreRelatedInternational Financial Accounting155754 Words   |  624 Pages1457 www.ebooks2000.blogspot.com S T U D Y PAPER F3 FINANCIAL ACCOUNTING (INTERNATIONAL) In this edition, approved by ACCA We discuss the best strategies for studying for ACCA exams We highlight the most important elements in the syllabus and the key skills you will need We signpost how each chapter links to the syllabus and the study guide We provide lots of exam focus points demonstrating what the examiner will want you to do We emphasise key points in regular fast forward summariesRead MoreProject Managment Case Studies214937 Words   |  860 PagesSTUDIES, SECOND EDITION - PROJECT MANAGEMENT CASE STUDIES, SECOND EDITION HAROLD KERZNER, Ph.D. Division of Business Administration Baldwin-Wallace College Berea, Ohio John Wiley Sons, Inc. This book is printed on acid-free paper. @ Copyright O 2006 by John Wiley Sons, Inc. All rights reserved. Published by John Wiley Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted

Innovation Free Essays

CREATIVITY REATIVITY Report produced for the EC funded project INNOREGIO: dissemination of innovation and knowledge management techniques by Dr Eleni Sefertzi J A N U A R Y 2 0 0 0 CREATIVITY 1 Contents 1 Description 1. 1 1. 2 1. We will write a custom essay sample on Innovation or any similar topic only for you Order Now 3 1. 4 1. 5 What is Creativity Objectives of Creativity Description /structure of the methodology /alternative solutions Expected results /benefits Characteristics of providers 2 Application 2. 1 2. 2 2. 3 2. 4 Where Creativity development has been applied Types of firms /organisations concerned Implementation cost Conditions for implementation Implementation Brainstorming Story boarding Lotus Blossom Checklists Morphological Analysis Mapping Process The Excursion Technique Computer-based creativity techniques Artificial Intelligence models of creativity Idea processors software Visualisation and graphical systems Spatial representation tools 4 Bibliographic references Annexes Table 1: Stimulus to extend perspective to approach a problem Table 2: Brainstorming Phases Table 3: Osborn’s Checklist Figure 1: Lotus Blossom sample INNOREGIO project Dr E. Sefertzi CREATIVITY 1 1. 1 DESCRIPTION What is Creativity There are many definitions of creativity. A number of them suggest that creativity is the generation of imaginative new ideas (Newell and Shaw 1972), involving a radical newness innovation or solution to a problem, and a radical reformulation of problems. Other definitions propose that a creative solution can simply integrate existing knowledge in a different way. A third set of definitions proposes that a creative solution, either new or recombined, must have value (Higgins 1999). A novel idea is not a creative idea unless it is valuable or it implies positive evaluation. Also, according to dt ogilvie (1998), imagination, which involves the generation of ideas not previously available as well as the generation of different ways of seeing events, is important to achieve creative actions. To combine this variety of definitions, we can say that creativity involves the generation of new ideas or the recombination of known elements into something new, providing valuable solutions to a problem. It also involves motivation and emotion. Creativity â€Å"is a fundamental feature of human intelligence in general. It is grounded in everyday capacities such as the association of ideas, reminding, perception, analogical thinking, searching a structured problem-space, and reflecting self-criticism. It involves not only a cognitive dimension (the generation of new ideas) but also motivation and emotion, and is closely linked to cultural context and personality factors. † (Boden 1998). According to Boden (1998), there are three main types of creativity, involving different ways of generating the novel ideas: a) The â€Å"combinational† creativity that involves new combinations of familiar ideas. b) The â€Å"exploratory† creativity that involves the generation of new ideas by the exploration of structured concepts. c) The â€Å"transformational† creativity that involves the transformation of some dimension of the structure, so that new structures can be generated. Creative thinking in a disciplined manner can play a real role in innovation. Creativity and innovation are normally complementary activities, since creativity generates the basis of innovation, which, in its development, raises difficulties that must be solved once again, with creativity†¦It is not possible to conceive innovation without creative ideas, as these are the starting point. † (European Commission 1998). Innovation results when creativity occurs within the right organisational culture. The right organisational culture is one that provides through creativity processes (creative techniques) the possibilities for the development of personal and group creativity skills. We can define creativity IMT as the establishment of skills by implementing creativity generation techniques. 1. 2 Objectives of Creativity Main objectives of a creative thinking process is to think beyond existing boundaries, to awake curiosity, to break away from rational, conventional ideas and formalised procedures, to rely on the imagination, the divergent, the random and to consider multiple solutions and alternatives (Candy 1997, Schlange and Juttner 1997). INNOREGIO project Dr E. Sefertzi CREATIVITY 3 The result of the creative thinking process is especially important for businesses. Managers and managerial decisions and actions, confronted with fast-changing and ambiguous environments in business, need to develop creative solutions and creative action-based strategies to solve problems, as they allow to increase understanding of problematic situations, to find multiple problems, to produce new combinations, to generate multiple solutions that are different from the past, to consider possible alternatives in various situations that could occur in the future and â€Å"to expand the opportunity horizon and competence base of firms† (dt ogilvie 1998). . 3 Description / structure of the methodology / alternative solutions Creativity is not an innate quality of only a few selected people. Creativity is present in everyone. It can be learned, practised and developed by the use of proven techniques which, enhancing and stimulating the creative abilities, ideas and creative results, help people to move out of their normal problem-solving mode, to enable them to co nsider a wide range of alternatives and to improve productivity and quality of work. Creativity is thus constructed as a learned ability that enables us to define new relationships between concepts or events, which seemed apparently unconnected before, and which results in a new entity of knowledge† (European Commission 1998). Knowledge and information are the basis for creativity. The scientific research is recently oriented towards the development of creativity as an educational process. Many studies show that creative abilities can be developed by the implementation of creativity techniques (see Mansfield, Busse and Krepelka 1978, Parnes and Brunelle 1967, Rose and Lin 1984, Taylor 1972). Concrete creativity supporting techniques, including also computer-based support tools (artificial intelligence models, computer software idea processors, information systems, etc. ), are developed to promote and generate creativity, to break fixed ideas, to stimulate imagination, as well as to define the conditions in which creativity takes place (the creative environment or climate). Using such techniques, a company aims to â€Å"incorporate the employees’ potential of creativity into the process of performance creation† (Bullinger 1999). There are numerous creative techniques, which are also classified in many ways (Higgins 1994). In general, a certain type of question or a certain area of application (such as marketing, product or service development, strategic and decision planning, design, quality management, etc. ) often calls for a certain type or a certain group of creativity techniques. The description of some well-known and basic techniques and their implementation procedure is presented in session 3. A classification for these techniques can be made between analytical techniques and intuitive techniques. Analytical techniques follow a linear pattern of thought or sequence of steps, such as the â€Å"5 Ws and H† technique (it asks the questions who, what, when, where, why, and how) and have better application for very specific, analytical questions (Higgins 1999). They stimulate different ways of organising known information and help approach problems from new angles (Miller 1987). Intuitive techniques are less structured techniques. They tend to skip steps in a sequence and tend to provide a whole answer all at once, such as the â€Å"wishful thinking† technique (based on ideal possibilities and solutions), and they are more appropriate for ill-defined questions (Higgins 1999). INNOREGIO project Dr E. Sefertzi CREATIVITY 4 Another classification can be made between techniques that are more appropriate to generate creativity in individuals, and techniques, which generate creativity in groups undertaken within work groups. Improving personal creativity for individuals involves enhancing the individual’s use of intuition and reducing mental blocks creativity, such as fear of failure. At the group level it requires team building and other efforts to enhance the use of group dynamics to achieve creativity and innovation† (Higgins 1996). However, this classification is not rigorous, since many group idea generation techniques can also be used by individuals. On the other hand, the individual and th e group are two main agents that always interact in the process of creativity in business and industrial innovation. Creativity is an attribute of the individual, though generally it can only be developed efficiently when it is tackled within a group of team. For this reason, most creative techniques are proposed and undertaken within the framework of specific work groups, within companies or other organisations† (European Commission 1998). A third classification might be between creative techniques that rely upon divergent thinking and techniques that rely upon convergent thinking. Divergent thinking is the generation and the free flow of ideas and it demands considerable discipline, which is aided by the introduction of rigorous techniques forcing divergence toward many alternatives. Convergent thinking, on the contrast, demands techniques of filtering and focus to identify the ideas that have a truly innovative value, to converge on an acceptable solution (Hall 1996). Divergent and convergent thinking are complementary phases of a procedure, since divergence helps forcing towards many alternatives and possible options before convergence on an appropriate solution. Fundamental concepts for all creative techniques are: †¢ The suspension of premature judgement and the lack of filtering of ideas. †¢ Use the intermediate impossible. †¢ Create analogies and metaphors, through symbols, etc. , by finding similarities between the situation, which we wish to understand and another situation, which we already understand. †¢ Build imaginative and ideal situations (invent the ideal vision). †¢ Find ways to make the ideal vision happen. †¢ Relate things or ideas which were previously unrelated. †¢ Generate multiple solutions to a problem. Main points to increase or encourage creativity in a company are: †¢ to be happy, to have fun †¢ keep channels of communication open †¢ trust, failure accepted †¢ contacts with external sources of information †¢ independence, initiatives taken †¢ support participatory decision-making and employees’ contribution †¢ experiment with new ideas 1. 4 Expected results / benefits Creativity, through the generation of ideas with value, is needed in order to solve concrete problems, ease the adaptation to change, optimise the performance of the organisation and best practice manufacturing, and change the attitude of the staff of the INNOREGIO project Dr E. Sefertzi CREATIVITY 5 organisation. Creative thought processes are also important at all stages in the RD process. Some expected results of the creativity process are: †¢ innovation through new product and process ideas †¢ continuous improvement of products or services †¢ productivity increase †¢ efficiency †¢ rapidity †¢ flexibility †¢ quality of products or services †¢ high performance 1. 5 Characteristics of providers The implementation of creative techniques within work groups, requires the assistance and advise of external consultants. One or two consultants, experts in creative techniques, is normally enough to undertake the implementation process in a company. His/hers job normally consists of presenting the different techniques and their application method, defining the problem to be studied for the participants, initiating and clarifying the rules of the technique, gathering the necessary data and information to approach the problem, stimulating the generation of ideas of participants, and evaluating the ideas before proceeding to put them in practice. Training of management staff by experts may also be very useful. Management staff must be trained to stimulate creativity in employees, to provide motivation, to facilitate a creative climate and to encourage the use of creative techniques. Managers can also be trained to implement creative techniques by themselves. 2 APPLICATION Creativity processes are used regularly by many private and public sector organisations of all sorts in manufacturing, services, banking, or construction companies. Big firms such as Xerox, ATT, Frito-Lay, as well as car manufacturing firms, software development firms, railroad pharmaceutical firms etc. , use creativity techniques to increase efficiency and quality, especially in their research, strategic planning and marketing departments. Small firms and innovative RD organisations, such as biotechnology companies (Arlington 1997), are also becoming to implement creative techniques in order to solve problems and to improve the use of skills, techniques and processes. Creativity techniques may be applied in almost any functional area of the company: strategic planning, corporate business strategy, product development, improvement of services, functional strategy, finance, human resources, marketing, management of collection of information, product design, software design, quality management, etc. 2. 1 Where Creativity development has been applied INNOREGIO project Dr E. Sefertzi CREATIVITY 6 Nearly all innovation management techniques that can be applied in companies (BPR, benchmarking, TQM, MRP II, employee involvement, marketing of innovation, etc. require also the implementation of creativity techniques. For example, in the Innovation Programme of DG XII of European Commission, besides other innovation management techniques, creativity techniques have been applied in the following IMT projects (see European Commission 1998): -INVENT (Pro. 006) – Implementation of a Method for Targeted Economic-Oriented Research in SME Invention Managemen t. – IMPACQT (Pro. 008) – PARTNERS (Pro 010) – Promotion of Innovation Management Techniques in the field of Sub-Contracting. IDEAS (PRO 017 – Integrated Product Development Expertise Applied to SMEs. – PRIISME (Pro 029) – Promoting of IMTs in ISRAELI SMEs. – Programme to Create New Activities in SMEs (Pro 045). – MARKPRO (Pro 050) – Implementation of Market Oriented Product Innovation in Danish SMEs 2. 2 Types of firms / organisations concerned Creativity techniques can be implemented by all firms and public organisations that confront with problem solving and focus on innovation in processes, products or services. In case where the implementation of creative techniques is focused on the support of personal creativity, such as to support individual designers work for new product development, or to support individual scientists work in the laboratory, very small firms or a person can implement creative techniques for individuals. In case where the company focus is to increase group creativity and to create environments where a collaborating team work creatively together, the firm must have at least 20 employees, including 3 members as management staff. 2. 3 Implementation cost The application of creativity techniques is a continuum process. Sessions of creativity within work groups normally take place at company facilities during normal hours and working conditions. The implementation of a creative technique includes the following costs: †¢ The fee of an external consultant for 4-7 days work for undertaking a session of creativity (preparation, application, evaluation). †¢ The cost of software packages developed for personal computers or workstations (if necessary). Hardware and equipment must permit to deal with network communications. Training cost (2-4 days) (if necessary). Cost: from 3000 to 7000 Euro. 2. 4 Conditions for implementation Concerning the implementation of creative techniques, some of them are easy to apply, while others need some infrastructure, experts, work teams, training, collection of INNOREGIO project Dr E. Sefertzi CREATIVITY 7 information, resources, etc. In this case, the assistance of an external consultant is required . Besides the support of external consultants, the company itself must encourage creative environment. This implies the participation of all workers in the concerns of the company, and an open and flexible attitude on the part of management. According to Higgins (1999) factors to encouraging the creative work climate are: †¢ A secure environment with minimal administrative interference. †¢ An organisational culture that makes it attractive and easy for people to discover and solve problems. †¢ Rewards for employee performance and enhancement of intrinsic motivation. †¢ Managerial willingness to take risks for creativity and innovation, as well as an open and flexible attitude on the part of management. Providing people with formal and informal training to enhance creativity. Important conditions for implementation of creative techniques within work groups in a company are also the existence of well-trained human resources, a clear strategic definition of the company and to focus on the core competencies of the company (European Commission 1998). For solving complex problems requiring input by many areas, i. e. marketing, engineering, design, the company would preferably be one employing multidisciplinary teams. 3 IMPLEMENTATION PROCEDURE As mentioned before, there is numerous creativity supporting techniques. The description, in an illustrative manner, of some well-known creative techniques for problem solving will be presented here. See also Annex, Table 1, the use of some stimulus that can extend perspectives to approach a problem. Brainstorming This is one of the best known and most used in the business world group based creativity process for problem solving. It is a method of getting a large number of ideas from a group of people in a short time. It can be used for generating a large number of ideas or solutions for well-defined strategic or operational problems, such as for engineering design processes. It forms also a basic framework or constitutes the initial phase for the implementation of many other groups based on creative techniques. Brainstorming sessions take place in a group of 6-10 people. The presence of a leader is necessary to stimulate the generation of ideas, as well as a preparation phase to gather the necessary data and information to approach the problem. A recorder writes the problem statement and the idea generated by the group on a white board. Several guidelines for brainstorming are available, such as suspend judgement, free wheel, quantity, and crossfertilise. The whole process takes normally one hour and can be conducted through several stages. The session begins with stating the problem and calling for solutions by the leader. The following stages can be: restate the problem in the form of â€Å"How to†¦Ã¢â‚¬ , select a basic restatement and write it down as â€Å"In how many ways can we†¦Ã¢â‚¬ , warm-up session, brainstorming, and identify wildest idea. An evaluation method is additionally used for to identify the ideas that have a value for implementation. The four basic rules of brainstorming are: a) no criticism and no prior judgement of any idea, b) all ideas, INNOREGIO project Dr E. Sefertzi CREATIVITY 8 even the absurd, are welcome, c) quantity has value, the more ideas the better, if a large quantity of ideas is generated, then the idea pool very likely would contain high-quality ideas, d) sharing and combining ideas, and constructing ideas based on those developed by other members of the group for producing new ideas. See: Osborne (1963), Rawlinson (1981), Chen (1998), Higgins (1996), European Commission (1998). See also Annex, Table 2: Brainstorming phases. A special type of brainstorming tool is PMI in which the participants are directed to brainstorm the Plus points, then the Minus points and finally the Interesting points (De Bono 1992, 1993). Related to brainstorming, which is characterised by verbal communication, is also the hand-written communication as a brain-writing technique. The process is that ideas generated by individuals are written down on a piece of paper, and then exchanged and combined with those of the other individuals in the group. Written ideas are circulated and read by the other participants in the group each of whom, in turn, write down new ideas. A variation of this hand-written communication is the 6-3-5 method in which each of the 6 participants in the group generates and writes 3 ideas related to the problem on a piece of paper in 5 minutes. After 5 minutes, each participant passes the piece of paper to the person on the right, who reads it and adds 3 new ideas in 5 minutes. The process continues until each participant gets the original piece of paper back (European Commission 1998). Electronic brainstorming is also a hand-written communication technique, which employ computerised programs to achieve brainstorming. Story boarding It is a creativity technique for strategic and scenario planning based on brainstorming and used mainly by groups. It requires a leader, a secretary and takes place in a group of 8-12 people. The leader arranges the ideas generated by brainstorming in a logical order on a white board creating a story. This technique allows identify the interconnections of ideas and how all the pieces fit together. It can be used to identify issues, problems, solve a complex problem and determine ways to implement solutions. The story boarding process includes four phases: a) planning, b) ideas, c) organisation and d) communication. Each phase includes a creative session (it takes 45 minutes) and a critical session, in which participants critique their story board. †¢ The planning phase begins with the problem definition or the issue being examined the topic header. Purpose header, a miscellaneous column and other, normally 1012, headers (column titles) are laced and brainstormed in order to give Ideas and then items, which are listed under the headers (the purpose header is listed first). †¢ The second phase – the ideas board, is to take one column from the planning board, which becomes the topic header and the items of that column become headers of new ideas. †¢ In the third phase – the organisation board, participants identify who is responsible for implementing chosen solutions, what has to happen, and when. †¢ In the last phase – the communication board, participants identify who must communicate with for all of the events identified in the organisation board to take place. Through the process, visual graphics to summarise or present relevant points are presented by the leader. These might be strategic models, places or things (Higgins 1996). INNOREGIO project Dr E. Sefertzi CREATIVITY 9 Lotus Blossom This technique can also be used in scenario planning and is very useful for forecasting strategic scenarios. It is designed for groups and is used to provide a more in-depth look at various solutions to problems. It begins with a central core idea surrounded by eight empty boxes or circles. Using brainstorming, eight additional ideas (solutions or issues) are written in these boxes. In the next step, each of these eight ideas becomes the core of another set of eight surrounding empty boxes, which are filled in by new ideas using brainstorming. The process continues until a satisfactory solution or a sufficient number of ideas have emerged (Higgins 1996). See Annex, Figure 1: Lotus blossom sample. Checklists This creative technique is used mainly for product improvement or modification. It involves applying a series of words, verbs, adjectives or phrases contained in checklists or tables to an existing product or service or its attributes. Osborn’s Checklist is the best known and includes the verbs: put to other uses, adapt, modify, magnify, minify, substitute, rearrange, reverse and combine. Each verb contains also an expanded definition in the form of questions. For example, the description of the verb substitute is: Who else instead? What else instead? Other ingredient? Other material? Other process? Other power? Other place? Other approach? Other tone of voice? (Osborn 1963). The method is to apply each of the verbs and its expanded description to a product or service. See Annex:, Table 3: Osborn’s checklist). Another checklist technique is Van Gundy’s PICL (product improvement checklist). Used in the same way as Osborn’s list, gives many options containing 792 words, both standard and unique, that can be applied to existing products or services, and 102 stimulation questions (Van Gundy 1988, 1993). Morphological Analysis This method is another product improvement technique, permitting the in-depth analysis of products or processes. It involves applying a set of words to an item another set of words. Normally, one set of words is verbs and the other set are attributes of the product. Another way is that one set of words would be components of the product (breaking the product down into its parts) and the other set of words would be alternative solutions. The method is to combine each word of one set with each word of the other set. These two sets of words result in a two-dimensional matrix. A three dimensional matrix can be created by adding a third list of factors. The difficulty of this technique is the large number of ideas deriving of the multiple combinations that can be made (Higgins 1996, European Commission 1998). Mapping Process The use of maps is particularly useful in strategic management thinking in organisations, helping to organise discontinuities, contradictions or differences, and bring pattern, order and sense to a confusing situation, acting as a spatial representation of a perspective. There are many forms of mapping, including computer-based tools to support mapping: †¢ Mind Mapping It is an individual brainstorming mapping technique designed by Tony Buzan. It begins with a central focal point, a problem, an object, a name or issue, written in INNOREGIO project Dr E. Sefertzi CREATIVITY 10 the centre of a piece of paper with a circle around it. Each major facet of the problem or the solution to the problem originating from the central idea is then brainstorming in order to generate new ideas. Each of those ideas are then written on lines drowned outward from the circle. The next step is to brainstorm those ideas in order to identify issues related to the problem, or solutions that are written on smaller lines that are drowned on the prime lines forming a branch. Additional perspectives such as implementation factors or further definition of the solutions could go on those lines. One branch may also be chosen in order to develop a whole new mind map based on that branch. When a mind map is completed, its possible interrelations and possible multiple appearances of issues, and its overall meaning in the context of the problem must be examined (Buzan 1983). †¢ Mapping for generate collective creativity The use of maps to support collective creativity is a more complicate process. It is necessary to introduce appropriate maps into a suitable type of organisation that would preferably be one employing multidisciplinary teams. It is also important that the participants find the maps useful for organising and planning their work. The mapping process usually involves three phases: 1st phase starts with a brainstorming exercise in order to initiate a discussion around the problem or the product. Normally, the participants are asked to mention all aspects they regard as relevant to the problem to be dealt with. During this process a large number of visual references are used to elicit the perspectives of the members with regard to the potential new concept. It is emphasised to the participants that the maps are intended to enrich the conversation, and should not be perceived as representations of the concept itself, but more as the semantic terrain or space, which covers all potential strategies. The knowledge elicited is discussed, and in about 2 hours is organised and structured by the participants into a map that intuitively understand. This map is the initial cognitive map, which describes all the problematic areas in brief outlines. In the 2nd phase of the process, which serves to expose the individual participants’ perspective both to themselves and to the other members of the group, the participants discuss the values that they associate with a very large range of objects and images. A number of these images are then selected that are considered to metaphorically represent potential aspects of the product strategy. In the 3rd phase, these images and appropriate annotations are arranged in a twodimensional space, positioning the images depending upon how the values of these objects relate to one another. In doing this, the group is mapping out a terrain constituted by the differences between the images, expressing the range of different product strategies open to the group (Fentem, Dumas McDonnell 1998). For creating maps, many software applications are available (see further down in computer-based creativity techniques). The Excursion Technique Is a very useful technique for forcing a group to have new thought patterns to formulate strategies. The process involves five steps (see Higgins 1996): In the 1st step – the excursion – the consultant asks participants to take an imaginary excursion to a physical location (a museum, a jungle, a city, another planet, etc. ), which INNOREGIO project Dr E. Sefertzi CREATIVITY 11 has nothing to do with the real problem. After the excursion each participant writes down 8-10 images, which he/she saw during the journey (things, people, places or items) in the 1st of 3 columns. In the 2nd step, the consultant asks participants to draw analogies or express relationships between what they saw on the excursion and the problem as defined, and to write them in the column 2 next to each of the items identified in the first column. In the 3rd step, participants are asked to determine what solutions to their problems are suggested by the analogies or the relationships in column 2, and write them in column 3 beside the items and analogies identified in the other columns. In the 4th step, participants share their xperiences from the excursion: what they saw, their analogies and their solutions. In the 5th step, as with brainstorming, participants may discuss on each other’s ideas. Eventually the leader helps the group come to a common solution or a set of solutions to the problem. Computer-based creativity techniques Computer-based supporting techniques to stimulate the human creative process have an immediate and pragmatic aim, which is the implementation of computational models (computer software) for generate and organise ideas for creative work. They are used more frequently in research planning, product design, knowledge acquisition, decisionmaking, motivation, etc. We can distinguish groups of computerised creativity techniques, such as AI models, Idea Processors systems and visualisation and graphical systems. AI (artificial intelligence) models of creativity AI deals with solving non-quantified, unstructured problems. Its task is about knowledge representation and reasoning and to built intelligent, rational, and autonomous agents. Current AI models of creativity involve different types and appropriate techniques of supporting the generation of new ideas. According to Margaret Boden (1998), in respect to the three types of creativity, there are also three main types of computer models that involve: a) The stimulation of the combination of ideas, mainly by using analogies in the sense that associated ideas shares some inherent conceptual structure. b) The exploration of structured concepts, so that novel and unexpected ideas result. It requires considerable domain-expertise and analytical power to define the conceptual space and to specify procedures that enable its potential to be explored. ) The transformation of a problem, so that new structures can be generated which could not have arisen before. New solutions to a problem can be created with transforming a problem into a new problem, solve the new problem and then adapting the solution back to the original problem. AI employs symbolic approaches for creative problem solving and includes stimulus such as heuristics, search, weak methods, knowledge representation and reasoning to fa cilitate problem structuring and idea generation. The focus of AI creativity techniques in the form of computerised programs, is to help users to take a fresh look at roblems by guiding what may be a user’s otherwise undisciplined intuition through a series of INNOREGIO project Dr E. Sefertzi CREATIVITY 12 problem-solving exercises, and to think in non-linear et non-logical ways. The main advantage of computerised, guided problem solving is that the programs prompt a user for ideas in a thorough manner. Recent programs of AI include also knowledge-based approaches, using large-scale databases and narrative systems (Chen 1998). AI researches have also developed efficient search algorithms for problem solving. Some AI programs of creativity are: – The Copycat program that looks for analogies between alphabetic letter-strings (Hofstadter, FARG 1995, Mitchell 1993). – The EURISKO program a transformational system with also an exploratory process that can be applied to a wide range of domains. – The AARON program for exploring line drawing in particular styles and colouring (McCorduck 1991). – The BACON program of exploratory AI-creativity designed to model scientific discovery (Langley, Simon, Bradshaw and Zytkow 1987). Idea Processors software Idea processors have a close relationship with artificial intelligence and use many artificial intelligence techniques. Idea processors are normally software packages developed for personal computers or workstations. They are used for idea generation and organisation in some specific stages of problem solving acting as knowledge-support systems (Chen 1998). In order to assist the human thinking, idea processors usually perform extensive search in large databases, knowledge bases, or text bases. For many idea processors the electronic brainstorming is the most important technique to generate ideas. The use of computer programs helps to de-structure and then to restructure thinking in a different way. The Idea Generator Plus program provide seven components to the user, that permit to go through a step-by-step problem analysis and solution finding process: examine similar situations, examine metaphors, examine other perspectives, focus on goals, reverse the goals, focus on the people involved, and make the most of the ideas (Nirenberg 1985). In another program, the IdeaFisher, using hypertext databases from Fisher Idea Systems Inc. , all entries in the database are cross-referenced by concept and association. It uses a giant cross-referenced text base of words and phrases representing concepts and images enhanced by a series of questions (see also spatial hypertext systems). The program also allows to generate new ideas based on combination of words by creating a list of people, animals, verbs, adjectives and phrases that are associated with the combination of two words that a user choose. Some other programs related to an idea processor are: The Ideatree system with an exploratory focus, linking laterally or hierarchically concepts that exist into the idea-boxes of the program. The Emergent Media Environment (EME), an interactive computer system that integrates facilities for supporting the generation, collection, organisation and presentation of ideas and advises about the divergence and convergence of the ideas. The GENI (GENerating Ideas) experimental system incorporates a variety of techniques to assist in making different types of connections: internal connections (between elements of the focal problem itself) and external connections (between the focal problem and external factors). INNOREGIO project Dr E. Sefertzi CREATIVITY 13 There are also many idea processors programmes available on the Internet (most of them are commercial products) including the following: http:/ideaprocessor. citi. doc. ca http:/www. maxthink. com http:/www. ozemail. com. au http:/www. inspiration. com http:/www. signet. com. sg/axon2000 Visualisation and graphical systems Computer support methods, such as visualisation of data and graphical techniques for marking up visual phenomena and expressing knowledge about data in rule form, are also available. Visualisation of data and graphical techniques are very important to support creativity. They involve working with visual data such as images, drawings, sketches, diagrams, charts, graphs, graphical objects, that are specific to the domain, and they take the form of expressing ideas and concepts through sketching, annotation and examining multiple or alternative views of the same data, all of which varies according to the domain of interest. There are many such systems giving various opportunities to the users. A visualisation system, the Inspiration (from Inspiration Inc. ) provides a blank canvas in which the user can quickly record and arrange ideas as they occur and allows a visual approach to organising thoughts. The system can also change the relationship between ideas and connect related ideas by dragging kinks between them to create a graphical map of the users thinking. Another visualisation system is Axon 200 used for creating complex flowcharts or concept diagrams and describes how different factors or events influence each other. It uses checklists and visual attributes such as colour, shape, size, scale position, depth, link and icon. It also creates relationship diagrams, which allow the user to represent multiple relationships between various visual objects on the screen (Chen 1998). Visualisation systems are also very important in design such as the Speech Knowledge Interface (SKI) system that support rapid graphical interaction with visual images, the Vehicle Packager Knowledge Support System (VPKSS) that aids designers at the conceptual stage of the design process (Candy 1997). Spatial representation tools In relation with visualisation systems, there are also computer-based tools, such as computer-based information and communication systems, for supporting representations and creating cognitive maps in two-dimensional spaces. Some representations use a specific notation, others use spatial proximity to indicate the relationship between objects (usually words relating to concepts) in the spaces, and others, used in marketing and design departments called â€Å"mood boards†, use collections of images as metaphors that reflect the quality aspects of the product strategy (Fentem, Dumas and Mcdonnell 1998). †¢ Kelly Repertory Grid technique is a knowledge elicitation tool used in the marketing, management and expert systems development. It analyses data using principal components analysis (PCA) software and produces a map by plotting the INNOREGIO project Dr E. Sefertzi CREATIVITY 14 first two components. The map produces a spatial positioning of text with respect to dimensions that are significant or correspond to the personal constructs that the participant member uses to categorise and evaluate the world (Kelly 1955). An Internet version of this tool is Webgrid. Available at http://www. cpsc. ucalgary. ca/ †¢ Spatial Information Systems These systems have been designed to support creativity by mapping objects (concepts, text objects, design requirements and parameters) into two-dimensional spaces, using various combinations of ‘knowledge processing’ and multivariate statistical analysis techniques. Users can also select an area of this space and to create a new space by reprocessing using principal components analysis (PCA) only the data associated with the objects lying within this subspace (Fentem, Dumas and Mcdonnell 1998). For example, one of these systems searches research papers for the frequency of certain keywords and uses a type of PCA to analyse the results of this search and represent these keywords and the papers within a common twodimensional space (Sugimoto, Hori, Ohsuga 1996). Another system named En Passant 2 stores researcher’s notes and triggers to recall and to reconsider. The users can browse their notes and view relations among them interactively (Aihara, Hori 1998). Spatial hypertext systems These systems have been designed for the â€Å"exploration of alternative structures for content, and applications in which the domain structure is not well understood at the outset, or changes during the course of a task†. In spatial hypertext, the links between nodes are conveyed implicitly by arranging the nodes in the space. â€Å"Nodes appear in different contexts through multiple spatial references to the same underling content† (Marshall and Shipman 1995). The users are presented with a window that acts as a work- space in which they organise their material. The nodes arranged in the space represent links to familiar objects such as documents, images, comments, and links to WWW hypertext pages, plus more unique structures known as ‘composites’ and ‘collections’. Marshall and Shipman’s VIKI spatial hypertext system, for example, was designed to support new product development, helping teams to make sense of the many diverse kinds of business-related material relevant to the new product, by assisting them in arranging it spatially. †¢ 4 BIBLIOGRAPHIC REFERENCES (1) Aihara, K. , Hori, K. (1998), â€Å"Enhancing creativity through reorganising mental space concealed in a research notes stack†, Knowledge-Based Systems, No. 11, pp. 469-478. Arlington, S. (1997), â€Å"Accelerating drug discovery: creating the right environment†, Drug Discovery Today, Vol. 2, No. 12, pp. 547-553. Boden, M. A. (1998), â€Å"Creativity and artificial intelligence†, Artificial Intelligence, No. 103, pp. 347-356. Bullinger, H. J. (1999), â€Å"Turbulent times require creative thinking: new European concepts in production management†, Int. J. Production Economics, No. 0-81, pp. 9-27. Buzan, T. (1983) Use Both Sides of Your Brain, Dutton, New York. (2) (3) (4) (5) INNOREGIO project Dr E. Sefertzi CREATIVITY 15 (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) Candy, L. (1997), â€Å"Computers and creativity support: knowledge, visualisation and collaboration†, Knowledge-Based Systems, No. 10, pp. 3-13. Chen, Z. ( 1998), â€Å"Toward a better understanding of idea processors†, Information and Software Technology, No. 40, pp. 541-553. De Bono, E. (1992), Serious Creativity, Harper Collins, London. De Bono, E. (1993), De Bono’s Thinking Course, Facts and on File, New York. t ogilvie (1998), â€Å"Creative action as a dynamic strategy: using imagination to improve strategic solutions in unstable environments†, Journal of Business Research, No. 41, pp. 49-56. European Commission (1998), Innovation Management Techniques in Operation, European Commission, Luxembourg. Fentem, A. C. , Dumas, A. , McDonnell, J. (1998), Knowledge-Based Systems, No. 11, pp. 417-428. Hall, D. J. (1996), â€Å"The role of creativity within best practice manufacturing†, Technovation, Vol. 16, No. 3, pp. 115-121. Higgins, J. M. (1996), â€Å"Innovate or evaporate: creative techniques for strategists†, Long Range Planning, Vol. 9, No. 3, pp. 370-380. Higgins, J. M. (1994), 101 Creative Prob lem Solving Techniques: the Handbook of New Ideas for Business, The New Management Publishing Company, Florida. (16) Higgins, L. F. (1999), â€Å"Applying principles of creativity management to marketing research efforts in high-technology markets†, Industrial Marketing Management, No. 28, pp. 305-317. (17) Hofstadter, D. R. , FARG (1995), Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought, Basic Books, New York. (18) Kelly, G. A. (1955), The Psychology of Personal Constructs, Norton. (19) Langley, P. , Simon, H. A. , Bradshaw, G. L. and Zytkow, J. M. (1987), Scientific Discovery: Computational Explorations of the Creative Process, MIT Press, Cambridge, MA. (20) McCorduck, P. (1991), Aaron’s Code, W. H. Freeman, San Francisco, CA. (21) Mansfield, R. S. , Busse, T. V. and Krepelka, E. G. (1978), â€Å"The effectiveness of creative training† Review of Educational Research, Vol. 48, No 4, pp. 517-536. (22) Marshall, C. C. , Shipman, F. M. (1995), â€Å"Spatial hypertext: designing for change†, Communication of the ACM, Vol. 38, No. 8, pp. 88-97. (23) Miller, W. (1986), The Creative Edge, Addison-Wesley, Reading, MA. (24) Mitchell, M. 1993), Analogy-Making as Perception, MIT Press, Cambridge, MA. (25) Newell, A. and Shaw, J. C. (1972), â€Å"The process of creative thinking†, in A. Newell and H. A. Simon (eds), Human Problem Solving, Prentice Hall, Englewood Cliffs, NJ, pp. 144-174. (26) Nirenberg, G. (1985), The Idea Generator, Experience in Software, Berkeley, CA. (2 7) Osborne, A. F. (1963), Applied Imagination: Principles and Procedures of Creative Thinking, 3rd ed. , Scribner, New York. (28) Parnes, S. J. and Brunelle, E. A. (1967), â€Å"The literature of creativity†, Journal of Creative Behavior, Vol. 1, No 1, pp. 52-104. (29) Rose, L. H. and Lin, H. T. 1984), â€Å"A meta-analysis of long-term creativity training programs†, Journal of Creative Behavior, Vol. 18, No 1, pp. 11-22. (30) Rawlinson, J. G. (1981) Creative Thinking and Brainstorming, Gower, UK. (31) Schlange, L. E. , and Juttner, U. (1997), â€Å"Helping managers to identify the key strategic issues†, Long Range Planning, Vol. 30, No. 5, pp. 777-786. INNOREGIO project Dr E. Sefertzi CREATIVITY 16 (32) Sugimoto, M. , Hori, K. , Ohsuga, S. (1996) â€Å"A system to visualise different viewpoints for supporting researches’ creativity†, Knowledge-Based Systems, No. 9, pp. 369-376. (33) Taylor, C. W. (1972), â€Å"Can organisations be creative, too? , in C. W. Taylor (ed. ), Climates for Creativity, Pergamon Press, New York, pp. 1-15. (34) Van Gundy, Jr. A. B. (1988), â€Å"Product improvement check list†, New Product Development Newsletter, New Jersay. (35) Van Gundy, A. B. Jr. (1993), Techniques of Structured Problem Solving, Chapman Hall, London. INNOREGIO project Dr E. Sefertzi CREATIVITY 17 Annexes Table 1: Stimulus to extend perspectives to approach a problem †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ List the elements that would bring on success. List the elements that we visualise as failure. Visualise success seen from the viewpoint of fifty years from now. Visualise success seen from the perspective of one hundred years ago. Look for impossible and desirable ideas. Create analogies with other things that have been successful. Imagine and write down ideas that are wild, illegal, crazy, etc. Insert the problem from its present scenario to a totally different scenario. Return from the fantasy scenario to the present scenario and try to associate the ideas generated in the fantasy scenario, with ideas that might apply to the real problem. Imagine what people we admire would say. Search for pairs of ideas that are apparently unconnected and that can be associated by a third. Imagine that everything exists and all we have to do is find it. Change the level on which the problem is approached. Source: European Commission, Innovation Management Techniques in Operation, European Commission, DG XIII, Luxembourg, 1998. Table 2: Brainstorming Phases Phase Orientation Preparation Warm-up Production of ideas Application Define the problem to be studied for the participants, clarify the rules of the game. Gather data and information necessary to approach the problem in an efficient manner. Carry -out the exercise: redefine a problem different from the one to be studied, experiment with it for a few minutes. Generate the maximum of ideas without prior judgement – always ask â€Å"what else† – quantity of ideas is quality – no limits – no criticise – modify other’s ideas to produce new ones. Let the subconscious work. Gather the ideas generated – analyse them – work with logical thinking. Evaluate the ideas gathered and analysed – develop and combine them before proceeding to put them in practice. Incubation Syntheses Evaluation Source: European Commission, Innovation Management Techniques in Operation, European Commission, DG XIII, Luxembourg, 1998. INNOREGIO project Dr E. Sefertzi CREATIVITY 18 Table 3: Osborn’s Checklist Question Put to other uses? Adapt? Description New ways to use as is? Other uses if modified? What else is like this? What other idea does this suggest? Does past offer parallel? What could I copy? Whom could I emulate? New twist? Change meaning, colour, motion, sound, odour, form, shape? Other changes? What to add? More time? Greater frequency? Stronger? Higher? Longer? Thicker? Extra value? Plus ingredient? Duplicate? Multiply? Exaggerate? What to subtract? Smaller? Condensed? Miniature? Lower? Shorter? Lighter? Omit? Streamline? Split up? Understate? Who else instead? What else instead? Other ingredient? Other Material? Other process? Other power? Other place? Other approach? Other tone of voice? Interchange components? Other pattern? Other layout? Other sequence? Transpose cause and effect? Change pace? Change schedule? Transpose positive and negative? How about opposites? Turn it backward? Turn it upside down? Reverse role? Change shoes? Turn tables? Turn other cheek? How about a blend, an alloy, an assortment, an ensemble? Combine units? Combine purposes? Combine appeals? Combine ideas? Modify? Magnify? Minify? Substitute? Rearrange? Reverse? Combine? Source: J. M. Higgins, â€Å"Innovate or evaporate: creative techniques for strategists†, Long Range Planning, Vol. 9, No 3, pp. 370-380, 1996 (reprinted from Alex Osborn, Applied Imagination, Charles Scribner’s Sons, Inc. , New York). Figure 1: Lotus blossom sample INNOREGIO project Dr E. Sefertzi CREATIVITY 19 1 by packaging 4 smaller / bigger 6 other material 2 by design A product differenti ation 7 change color 3 other uses 5 plus ingredient 8 change meaning A product differentiati on D lower cost F supply flexibility B product quality core idea: increase product consumption G product credibility C customer needs E service quality H competitors product strategies B C D E F G H INNOREGIO project Dr E. Sefertzi How to cite Innovation, Papers

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Question: Non-academic article: The disadvantages of decentralisation management and academic article: Organisational communication and conflict management. Answer: Non-academic article: The disadvantages of decentralisation management The concept of decentralisation suggests the expansion process of ultimate decision making of the higher authority of an organisation rather than very few numbers of associates perceive important decision related something important. As in decentralisation process, there is always possibilities and scope for the employees; therefore, it will be perfect for the current management style of the individuals organisation (Akers 2014). Even the manager of the organisation prefers the suggestion of the employees while taking important decision regarding some critical issues within the organisation. However, the business experts follow decentralisation only because it has become a popular trend in todays competitive business world. Following the decentralisation process, the higher management can concentrate on the critical problem solving with employing relevant and effective strategies. According to Lanaj et al., (2013), the employees of the organisation usually take useful decisions of daily activities of the organisation and it helps the management to take significant financial decisions, training, balancing productive workplace and recruits efficient employees, which are more important for further success of an organisation. This decentralisation process is appropriate for shaping the practices of the higher management and the existing business model of the company. However, while following the decentralisation, there is also a problem including the differences of establishing goals and objectives of the company. As the fundamental philosophy of the higher management of an organisation completely varies from the associated employees of the organisation, therefore, decentralisation is not proved fruitful always in every business scenario. Academic article: Organisational communication and conflict management Communication plays an important role in order to prevent and reduce any kind of conflicts among the employees and the higher management. From various studies it has been reflected that there are hardly any communication, which is free from conflicts. However, there is various organisational communications involving downward, upward, diagonal and horizontal communication, which is maintained in between the employees, the management and the customers in order to retain the perfect organisational culture with prevention of conflicts (Basu Chirantan, 2013). Several issues prevent an employee to interact with the management in an open and direct communication process and the outcome possesses a conflict among the employees. The conflict of an organisation includes vertical conflicts, line staff conflicts, horizontal conflicts and role conflicts. As opined by Bak et al., (2013), conflict management helps to strengthen the basic bond in between the employees and motivate them to perform own tasks ignoring any kind of conflicting issues within the organisation. The individual always supports the concept of conflict management as it reduces the negativity with employing appropriate strategies and enhances productivity with influencing and motivating the employees to perform the allocated tasks for better future of the particular and concerned organisation. Even conflict management offers an alternative solution to the problems arrived within the organisation that influences the entire business operation of the organisation. Conflict management helps to reduce stress and negative consequences, which directly hamper the potentiality and efficiency of the employees. References Akers, H. (2014). The disadvantages of decentralization management. Retrieved from https://www.ehow.com/info_8333562_disadvantages-decentralization-management.html Bak, C. A., Vogt, L. H., George, W. R., Greentree, I. R. (2013). Management by team.Logistics Information Management. Basu Chirantan. (n.D) Weakness of Hierarchical Organizational Structures. Retrieved Spaho, K. (2013). Organizational communication and conflict management and. 18(1), 16. Lanaj, K., Hollenbeck, J. R., Ilgen, D. R., Barnes, C. M., Harmon, S. J. (2013). The double-edged sword of decentralized planning in multiteam systems.Academy of Management Journal,56(3), 735-757.