Business & Management Studies

Abstract

Despite the positive correlation between innovation and organization performance, many organizations have de-emphasized innovation as a strategic goal in light of the crisis brought on by the Covid pandemic. Despite strategic goal shifting away from innovation, companies can weather the storm and emerge with increased performance post-crisis by expanding the focus on innovation. Innovation, however, remains challenging for many organizations. Building upon a model of inventory management, this paper presents a model of optimized creativity to maximize innovation. First, the necessary amount of creativity, demonstrated through the number of ideas to be developed given an expected profit, can be calculated using the known development and implementation cost of ideation. Optimized innovation leads to cost efficiency and maximized profit. Second, our model demonstrates how the reliability of idea generation impacts the optimal number of ideas to be developed. The optimal number of ideas to be developed increases first as the idea generation process gets more reliable, and then decreases. We discuss how reliability can be increased through the enhanced effectiveness and efficiency of the ideation process.