Even though we generally think of entrepreneurs as progressive and their entrepreneurial companies as highly creative, the opposite might be true.

As Bill Dresselhaus, founder of a leading industrial design firm, has said, "(A) traditional bureaucratic structure, with its need for predictability, linear logic, conformance to accepted norms and the dictates of the most recent 'long range' vision statement, is a nearly perfect idea-killing machine."

You might ask, how can an entrepreneurial company be bureaucratic? How can a company that depends on changing the market fall into linear logic and conformance to norms?

The answer lies in three areas that can all contribute to either high creativity or to mediocre conformity: attitude, structure and practices.

Create an attitude of creativity. Most entrepreneurial companies worry about cash flow and profits, sometimes reaching a near panic stage. Certainly money matters cannot be neglected, but they don't have to be the focus of the company. Experience has shown that if creativity is a focus, with money matters as a constant background concern, the company is more likely to succeed, because it will do the things that cause improvements and dynamic growth.

To emphasize creativity, management must create an atmosphere that allows for creativity. Creative individuals need to be rewarded. Failure, an inevitable consequence of innovative experimentation, should be allowed. Prototyping of products and ideas, even new market approaches, should be done early and often so that the consequences of failure are minimized. But, most of all, tender ideas need to be nurtured.

Scott Thorpe, who writes about creative thinking, has said: "Ideas are like children. They must grow before they are viable. You must support the infant ideas in your organization until they have grown enough to be evaluated on their merit. Otherwise, your organization's best new thinking will either be stillborn or vanish out the door."

The structure of a company can affect creativity. Most companies are organized like a pyramid with the boss on top and the workers on the bottom in successive layers of responsibility. While this structure may give responsiveness to the boss's commands, it works against creativity. A much more flexible structure is like a tree, where management is the trunk and they have the responsibility of getting the resources (like the water and the nutrients) to the leaves (workers) where all of the really important activities are carried out. The tree structure encourages workers to think freely and creatively.

The practices and procedure of a company can stimulate creativity. When problems arise, form teams to solve them. These teams should meet daily for brainstorming about the problem, never for more than an hour, and bring their best thinking to bear on the issue of the day. You'll be surprised at how much progress can be made in a short period of time.

Also, the company should encourage everyone to spend about 10 percent of their time on non-assigned projects. One company that has done this for many years is 3M, and its record of innovative new products has been among the best in the world for decades.

The company should also regularly re-examine paradigms. For example, a Corning Glass executive went to the director of research and said: "Glass breaks. Do something about that." Rather than dismiss this statement as obvious and stupid, the director took this as a challenge and, as a result, focused his research team on the problem of making glass that didn't break. The result was Corelle dining ware, one of the most profitable products Corning has ever had.

If these three elements - attitude, structure and practices - are all in line and functioning in a way that is conducive to creativity and innovation, the company will take on new life, which will lead to profits and cash flow. Remember what Tom Peters said: "Innovate or die."