Innovation and Entrepreneurship

by Peter F. Drucker
David E. Goldberg
University of Illinois at Urbana-Champaign
Text
Drucker, P. F. (1986).
Innovation and
entrepreneurship.
New York, NY:
Harper & Row.
Long career at
Claremont College.

Entrepreneur
J. B. Say, The entrepreneur shifts resources
out of an area of lower and into an area of
higher productivity and greater yield.
Joseph Schumpeter 1911, Theory of
creative destruction. Change is normal.

7 Sources of Innovative Opportunity
Systematic innovation consists in the purposeful
and organized search for changes and in the
systematic analysis of the opportunities such
changes might offer for economic or social
innovation.
Internal: unexpected, incongruity, process need,
changes in industry structure
External: demographics, changes in perception,
mood, and meaning, new knowledge
Unexpected
Unexpected success: Macys and appliance
sales.
Unexpected failure: Example of locks in
India.
Unexpected outside activity: PC & IBM.

Incongruity
Between is and ought
Types:
Between different economic realities.
Between industry reality and assumptions.
Between industry effort and values and
expectations of customers.
Internal logic of a process.
Principles of Innovation
Begin with analysis of opportunities.
Innovation as conceptual and perceptual.
Simple and focused.
Start small.
Aims at leadership.
Donts
Dont be clever.
Dont diversify.
Dont diversify for the future; diversify for
the present.
3 Conditions
Innovation is work.
It builds on strength.
Innovation is an effect in economy and
society.
Conservative Innovator
Tries to minimize risk (cf Vincenti).
Not the usual stereotype.
Overcoming Resistance to Change
Culture of innovation necessary.
Need innovation plan.
Greed for new things.
Systematic abandonment.

Practices
Focus on opportunity: Usually focus on
problems.
Create entrepreneurial spirit among team.
Listen to young people.

Measuring Innovative Performance
Feedback from results to expectations.
Systematic review across the board.
Compare results to expectations innovation.

Structure
Separate old and new.
Special locus for new.
Consider different incentives, monetary and
administrative.
Differential returns on innovation.
Hold new stuff accountable.
4 Strategies
Fustest with the mostest. High risk.
Hitting them where they aint: creative
imitation, entrepreneurial judo.
Occupy a niche.
Changing economics of product, market, or
industry.

Bad Habits
NIH
Cream skimming.
Quality: in eyes of customer not producer.
Premium price.
Maximizing not optimizing.

Niches
Toll-gate
Specialty skill
Specialty market