(FORTUNE Magazine) – NO SET OF WORKERS is at once so valuable and yet, typically, so poorly managed as creative people. Incomprehension and at times outright distaste on the part of many managers feed this neglect: According to the stereotype, creative people are too cute for their own good. They're showboats. Eccentrics. They make bad puns and wear berets. But oddballs or not, they can pay off like slot machines when managed the right way. They find a cure for cancer or write a best-selling bit of software, and -- voila -- their berets get forgiven. Did the late William Shockley, while he was a researcher at AT&T Bell Laboratories, display impeccable table manners in the cafeteria? Was he unfailingly generous to United Way? Did he file timely expense reports? Who cares? One day he coughed up the transistor, and that was enough. Does Sean Selitrennikoff, a software designer at Microsoft, make any apologies for his unconventional office (pictured left)? Of course not. ''If I'm having a tough day, I pick up one of my stuffed animals and carry it around with me,'' he says. ''That's my way of telling people: 'Hey, I'm having an odd day. Approach with caution.' '' What matters to Microsoft is that Selitrennikoff has proved himself a prolific and valuable contributor to the team developing networking software for Windows. If you don't think you have anyone like this in your office, think again. Highly creative workers, in actuality, can be gray flannel-suited or bereted. What most have in common are certain habits of mind and an obsessive dedication to their work. Whether you find their sometime eccentricities obnoxious or merely amusing hardly matters. In a world of oceanic change, these people are destined to become an ever more valuable asset. Why? After companies have downsized and rightsized, improved quality and reengineered themselves -- after they have made themselves very, very fit -- a central question will emerge: fit for what? On the new competitive playing field, with what cudgels will players batter one another? How about . . . ideas? Competition doesn't get any more basic than that. Creativity precedes innovation, which is its physical expression. It's the source of all intellectual property. While Americans view creativity as uniquely suited to their national character -- a game played best by rebels and loners -- it may not be that bumptiously simple. ''The Japanese may not be good at being Marlboro men or festering alone,'' says John Kao, who teaches a course in creativity at the Harvard business school. ''But those traits aren't indispensable to creativity.'' Books on creativity by such experts as Edward de Bono and Roger von Oech are selling briskly in Japan, and Kao believes both Japan and the U.S. will make creativity ''a major management agenda item for the 1990s.'' As for creative people themselves, Leon Royer, executive director of organizational learning at 3M, says, ''Either you'll learn to acquire and cultivate them or you'll be eaten alive.'' Learn to cultivate the most talented, and you'll get a second benefit: Many of the ways you nurture them, applied broadly, can elicit better creative efforts from every employee. WHO ARE these champion creatives? They aren't necessarily the best-educated or the brightest. They are self-motivated, love risk, thrive on ambiguity, and delight in novelty, twists, and reversals. Jeff Millman, a creative director at Leo Burnett, sums it up. Creatives, he says, are people who passionately believe ''the answers worth getting are never in the back of the book.'' To get those answers, they may pose cockeyed questions or entertain paradoxical propositions. What's good about toxic waste? Engineers at Connoco asked that and, by so doing, discovered a substance in waste that they now are turning into both a synthetic lubricant and -- they hope -- a promising new market. You die before you die. Ronald Barbaro, as president of Prudential Insurance, considered that idea and came up with ''living benefit'' life insurance, which pays people suffering from terminal illnesses death benefits before they die. Prudential has sold over a million such policies. We will reduce costs by spending more. Nancy McDonald, head of printing and publishing for Du Pont Information Systems, made that proposition and is saving $400,000 a year in purchasing costs. How? By spending more money on fewer vendors, she got far better price breaks. Though techniques to encourage such innovative ways of thinking can be taught (see box), few creative people apply them consciously. Most, in fact, are mystified by their own talent, a fact that reinforces the inclination of many executives to dismiss the idea of ever ''managing'' anything so unfathomable. But as Horst Stormer, director of physical research at Bell Labs, points out: ''Nobody manages creativity. People are what gets managed.'' And how do you do that? One school of thought maintains that the best you can do is basically lock your creative people in a room, say ''I'll be back in an hour, and it better be ready,'' then leave -- hoping they don't kill one another or spoil the carpet while you're gone. A subtler variant suggests that creative people can be managed, but the techniques are so inscrutable as to be almost inexpressible. This is the view of Jim Henson Productions. A spokeswoman explains that the Muppet makers have a system. But the management of creative talent is a subject too intimate, ''too . . . too painful'' to be discussed. ''We hope you understand,'' she says. ''We just don't like to share the magic.'' To her and to all such obscurantists we say, spinach. There is, if not necessarily a system, some generally useful wisdom on the subject. And it applies equally well to writers of Miss Piggy's dialogue and to scientists working on the Manhattan Project.

-- Accommodate. Wait a minute, sounds like coddling. Yes. Creatives may be high maintenance, but they repay the effort. Recalls David Tanner, a former director of R&D at Du Pont: ''We had this guy who worked in one of our labs. He refused to write progress reports. He refused to talk to peers. His supervisor threatened to fire him many times.'' Why didn't he? ''That son of a gun just kept coming out with great inventions.'' Eventually Du Pont adjusted its ways to suit his ornery talent. Also, never forget that creatives can't always choose when they'll create -- and that unlike many other employees, they don't leave their work behind when they leave the office. Microsoft's Selitrennikoff has only one complaint about his work: He can't turn it off. Ideas pop up, uninvited, on weekends, at night. ''Whatever you're doing gets put on hold,'' he says. So give them some choice about which hours they will work and which they'll play. You say your office is turning into Grand Central Station? That's good. It means your creative people like you. Cherry Ann Murray, head of condensed- matter physics research at Bell Labs, says you should worry only if they don't drop by to tell you, ad nauseam, about their latest potential breakthrough. And whatever you do, don't laugh, advises Ted Pettus, a creative director at McCann-Ericson. Just stroke away, as you would a cat. Pettus also believes it's important to let creatives give full play to their temperament. Translation: Let them yell at you. If there's room for only one ego, squelch yours. While it's merely good management these days not to punish failure, you ought to be especially restrained with creatives, since failure is so conspicuous a byproduct of their work. Even the best, of necessity, generate more daft ideas than sound ones. Moreover, because they love what they do and invest themselves wholly in it, those failures hurt. ''There's an ugly side to creative work,'' observes Harvard's Kao. ''It imposes a very high human cost'' -- a cost measured in things like sleepless nights and high blood pressure. Don't add to it.

-- Stimulate. At Hallmark, whose more than 600 artists, writers, and designers constitute what they claim is the largest creative staff in the world, management brings in some 30 speakers a year to scatter intellectual pollen. Writers and artists also get sent on what seem like vacations to soak up atmosphere and inspiration. Artist and manager Marita Wesely-Clough, just back from two weeks in Mexico, found ''stimulus galore,'' leading her to suggest such new products as a line of cards whose colors mimic the patina of adobe walls. Bell Labs' Horst Stormer is willing to grant creatives purple offices and pretty much anything else they feel they need. But he draws the line at their missing lunch, which he sees as a crucial part of the creative process. At lunch tables and in the hallways, scientists schmooze, cross-pollinate, and breed ideas. Sometimes the best stimulus is quiet. Staring out the window must be permitted. John Cleese, of Monty Python fame, makes business training tapes for Video Arts, a Chicago company. In one he says that a sure-fire way to stifle creativity is ''to demand that people always be doing things. If you catch anybody pondering, accuse them of laziness or indecision.''

-- Recognize and reward -- the right way. Since creative people are self- starters, giving them greater autonomy can be a powerful reward. What's the most powerful dis-incentive? A manager's trying to hog the spotlight or appropriate a creative worker's ideas. ''They're very possessive, almost paranoid,'' says Ted Pettus; ''they hate for a manager to take credit for their work.'' They especially care what peers think, so managers should help them get recognition by entering their work in competitions. Another creative-pleaser: good execution of their ideas. No architect, for example, wants to see a beautiful design given to a stumblebum contractor. At Gensler & Associates Architects, the largest architectural practice in the U.S., architects consider being guaranteed a good contractor a form of compensation. WHAT ABOUT money? Teresa Amabile, a professor of psychology at Brandeis, says her research suggests that paying creatives more doesn't necessarily increase the commitment they feel to a project. ''In fact, under some circumstances offering more money can backfire if it leads them to feel you're trying to control them,'' she says. It's not that creative people wouldn't welcome a little extra sparkle in their paychecks. It's just that compared with, say, your average compensation- conscious salesperson, they haven't chosen their vocation primarily -- or even secondarily -- for the dough. From a good capitalist's standpoint that makes creatives a vast improvement on Rumpelstiltskin: Give them straw, they spin it into gold -- and never even ask for your first-born. A case in point: For the past 30 years, whenever Bob Christie entered a supermarket, he went to the dairy case to admire his handiwork: Miracle Margarine by Kraft. Thanks to a process he invented, Kraft was able to turn four sticks of margarine into six by whipping air into them. Six from four! A miracle indeed. What did Mr. Christie get? ''I think I got quite a lot,'' he says, speaking slowly and sincerely. ''I got the J.L. Kraft merit award. That's a ring. Mr. Kraft collected jade, and the award is a piece of jade he collected set into a ring. I got the satisfaction of seeing the margarine every time I went into a store. I got promoted eventually. And . . . I got my name on the patent.'' This last seems to rankle. Why? ''Well, I invented it. But two other people wanted to get their names on too'' (managers hogging the glory). For nine years Steve O'Donnell was David Letterman's head writer. Asked if he personally dreamed up anything that could be considered a pillar of the show, he thinks a moment. ''Well . . . I came up with the top ten lists.'' Did he ever get any special compensation tied to that particular contribution? ''No. It never occurred to me. I did get a couple of thousand dollars to edit the two top ten books that came out, but I did that because I thought it was important to get them to the public the right way. I'm probably the biggest simp about money of anybody over 12 years old. A pat on the back, making Dave happy, the thrill of hearing the audience laugh -- that's what matters most.'' In 1993, the chief rewards for most creators remain exactly as H.L. Mencken described them more than 60 years ago: ''Freedom, opportunity, and the incomparable delights of self-expression.'' That, however, may change. Kao of Harvard believes creatives' compensation may rise, not because their personalities will be reconfigured but because it will be in the interests of third parties -- agents -- to peel them from their happy homes and resell their talent to higher bidders. Calling Mr. Ovitz! Kao sees Hollywood and, to a lesser extent, biotech and the software industry as leading the way toward a new economy of talent. Meantime, it's cheap insurance to treat your creative people in a way that will seem to them, simps that they are, generous.

-- Direct (lightly) and give feedback. The days are long gone, says Bell Labs' vice president of research, Arno Penzias, when his scientists could just ''throw research over the wall'' to colleagues in product development, whether it fit their needs or not. Similarly, it's never a good idea to leave creative people without deadlines. Pat Papesh, now head of the creative division at American Greetings after more than ten years' experience in sales and marketing, quickly discovered that her new charges preferred to stay in ''exploring-the-options mode'' much longer than salespeople ever would. ''I'll never again say, 'Take as long as you need,' '' she laughs. At the same time, experts agree that giving creatives too many explicit directions undercuts their prized sense of autonomy. Says Roger Werne, an associate director of the Lawrence Livermore National Laboratory: ''The hardest thing for a manager of creatives to learn is this balance, this lack of structure.'' Lotus Development tries to get around the problem by having its software writers spend time with customers, gaining their outlook almost by osmosis. That way, says June Rockoff, senior vice president of software development, ''they come to understand the larger purpose of their work,'' without a manager having to tell them what it is. Microsoft uses testers, who attempt to use the programs software architects have written while those architects watch from behind a one-way mirror. The writer, instead of arguing over which features are imperfect and which trouble-free, can see for himself what works and what doesn't. How many resources must you give creatives? Many managers have concluded that less is more. Resource deprivation, in fact, can stimulate creativity. Chris Ruppenthal, a writer and supervising producer of the CBS show Harts of the West, loves stampedes and would use them all the time if the show had the budget. It doesn't, and the producers occasionally say to him: ''Chris, one cow maybe we can give you. But a full stampede? You'll have to wait.'' Ruppenthal admits that being denied his favorite plot device has forced him to come up with better twists than he otherwise might have.

-- Protect them. From whom? Dullards who don't understand what makes them tick. Says Ted Pettus: ''The smart manager keeps away people who don't get it -- people who ask, 'Why are we paying this guy to throw darts?' '' At Hewlett- Packard's medical equipment group, worldwide marketing manager Warren Baker sometimes does damage control for his more creative subordinate Dave Nordin. ''Dave's a very passionate guy,'' he says. ''I have to spend a lot of time explaining him to other people, saying, 'Don't take it too personally; that's just Dave's way.' '' Smart managers will also do what they can to defuse organizational problems, such as envy or hostility, early on. As Roger Werne of Lawrence Livermore cautions, ''You don't want to create a privileged class.''

-- Be creative yourself. Here's the fundamental rub between creatives and managers, as writer Ruppenthal sees it: ''They've never walked in my shoes, and I've never walked in theirs.'' Hallmark addresses this problem by inviting managers to change shoes. About 80 executives a year go through Hallmark's creative leadership course, in which they are asked to design and execute a line of cards. Ed Place, director of accounting and financial reporting at Hallmark, took the course a month ago. He came away with many of his misconceptions set right. He'd thought creatives were simply told to do their own thing, but he and his peers were given reams of research on their mythical target audience, the Laplanders. The class got periodic feedback on its work from a review panel of artists. ''And some of that feedback could be very personal,'' says Place. ''There was this sales VP who'd taken a shot at some humor, and it hadn't worked. You could tell the critique he received really got to him.'' Later, Place took his work home because he was a little proud of it. When he showed it to his kids, ages 8, 6, and 3, their response was, ''Daddy we could do that.'' I asked him if Hallmark had ever thought of starting a program to teach creatives about management. No, he said, but we quickly agreed: Now that's a really creative idea.