Creativity is a process through which people develop new ideas unique perspectives, while innovation is creativity in action: the ability and wherewithal to transform creative ideas into concrete achievements. The difference between creativity and innovation is the difference between thought and application.
In the real world, a great deal of overlap exists between creativity and innovation. Innovation is dependent on creativity, as thoughts always precede action; nevertheless, many creative ideas are not developed. Particularly in business, where innovation is key to success, it is important to look at the process of meeting challenges creatively as a continuum rather than a linear progression. Creative thinkers should be encouraged to experiment and brainstorm without practical considerations getting in the way.
Innovation addresses actual problems or needs, so creative thinking must be linked to concrete issues to be of value. Innovation often involves taking financial risks, so a certain amount of critical thinking and analysis must go into the process. As a result, creativity and innovation sometimes move back and forth along the continuum many times before actual implementation of an idea takes place. However, the end result should be a consistent, meaningful innovation that addresses the needs of problem at hand.