Here is an excerpt from an article written by Teresa Amabile for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.

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Creativity is under threat. It happens whenever and wherever there’s a squeeze on the ingredients of creativity, and it’s happening in many businesses today. According to the Labor Department’s most recent stats, productivity is up. But stretching fewer employees to cover ever more work in our job-starved recovery is no way to run the future. Without the creativity that produces new and valuable ideas, innovation — the successful implementation of new ideas — withers and dies. Creativity depends on the right people working in the right environment. Too often these days, the people come ill-equipped, and their work environments stink.

A recent story about the 40th anniversary of Xerox PARC stirred my memories of how the creativity ingredients overflowed at that place, in that time. PARC was a first light in the dawning of Silicon Valley.

By 1973, when I moved there, PARC researchers had invented the first user-friendly computer, laser printing, object-oriented programming, a personal workstation, and the foundation of the Ethernet. By the time I left Palo Alto in 1977, they had developed the first graphical user interface (GUI) with icons, pop-up menus, overlapping windows, and the basics of point-and-click screen navigation. At this moment, you are almost certainly using something that sprang from the blossoming creativity at Xerox PARC in the 1970s.

We all wince at the thought of how Xerox utterly failed to innovate on PARC’s inventions, allowing Apple and Microsoft to run away with most of them. But there’s no denying how world-changing those inventions were. The organization that gave birth to them illustrates — by way of contrast — why so many of today’s organizations are creatively sterile.

What made PARC so different from organizations where creativity falters? An abundance of all three key ingredients:

1. Smart people who think differently. The first threat to business creativity is our endangered education system, with its downward trends in science and math, and its increasingly narrow focus on basic subjects. The four dozen people working at PARC were really smart, with two important kinds of smarts. First, they had deep expertise — in computer science, optical science, and system dynamics, as well as broad acquaintance with seemingly unrelated fields. Alan Kay, one of PARC’s first computer scientists, brought his colleagues vast knowledge ranging from music to biology. Second, the PARC inventors had creative smarts. Rather than getting trapped by what was already inside their heads, they voraciously consumed new information and combined it in ways no one had previously imagined. They didn’t develop those habits of mind by following mandated curricula.

2. Passionate engagement. Aside from small startups, too few organizations today give people a chance to do what they love in service of a meaningful mission. Robert Bauer walked into his dream job at PARC three months after its founding. He stayed for over 30 years. As he recently told Computerworld.com, “Conducting research at PARC four decades ago was like magic. …We came to work every day with a passion …” My research has shown that people are most creative when they are on a mission, intrinsically motivated by a love for what they are doing. Bauer and his colleagues found immense interest, enjoyment, satisfaction, and challenge in “dreaming, proving and making things that had never been done before.” Indulging their passion was so exciting, and so much fun, that they worked their tails off. These days, people are more likely to find work frustrating than fun.

3. A creative atmosphere. Under the severe pressures of the financial crisis, contemporary organizational atmospheres resemble assembly lines more than hotbeds of creativity. Too often, the imperative is to do the same thing repeatedly, ever faster and more efficiently; reflection, exploration, and intense collaboration become superfluous luxuries. The PARC culture could hardly have been more different. Like all great organizational cultures, this one started with a bold vision. PARC’s founder, George Pake, was out to create “the office of the future.” He and Bob Taylor,  head of PARC’s Computer Science Laboratory, built a near-perfect work environment for creativity: freedom to pursue passions, challenging goals, collaborative norms, sufficient time to really think, and the resources people needed to follow their dreams. Even the smartest, most passionate people won’t thrive in — or will soon abandon — a work environment that stifles them. Most people who got into PARC never wanted to leave.

PARC was ahead of its time, but it was no anomaly. Even today, many creative hotbeds exist around the world, in new ventures and in a few more established shops like MIT’s Media Lab, SONY, the design firm IDEO, and Disney’s Pixar.