The problem of the current study was to search for the most important and prominent obstacles facing small and medium business organizations in terms of creativity and innovation in the city of Baghdad. Small and medium enterprises in general, and in particular in Baghdad, have suffered because of imported goods and goods at very low prices, which has become one of the most important obstacles in this field. Therefore, it was necessary in this study to focus on addressing these obstacles through creativity in the production process for small and medium industrial projects to suit the local market and how to develop these projects. The research aims to identify the obstacles of the creative process of projects in Baghdad and what are the scientific methods through technical development and speed in completing the plans and studies that advance these projects to compete with imported products to meet the needs of the local market. The current research used the descriptive historical and inductive method in the field experiment to achieve the marked goal of the study by distributing the questionnaire form to some workers in this field. The study concluded that the supreme authority is not focused on giving opportunities to workers in the field of industry to invent new products that compete with imported products in addition to the need to work on facilitating loan procedures regarding encouraging cadres to establish small and medium enterprises that develop and stimulate the movement of the local market.