Innovation and Entrepreneurship by Peter F. Drucker

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Innovation and Entrepreneurship by Peter F.
Drucker

• David E. Goldberg
• University of Illinois at Urbana-Champaign

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Text

• Drucker, P. F. (1986). Innovation and
  entrepreneurship. New York, NY Harper Row.
• Long career at Claremont College.

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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.

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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

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Unexpected

• Unexpected success Macys and appliance sales.
• Unexpected failure Example of locks in India.
• Unexpected outside activity PC IBM.

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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.

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Principles of Innovation

• Begin with analysis of opportunities.
• Innovation as conceptual and perceptual.
• Simple and focused.
• Start small.
• Aims at leadership.

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Donts

• Dont be clever.
• Dont diversify.
• Dont diversify for the future diversify for the
  present.

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3 Conditions

• Innovation is work.
• It builds on strength.
• Innovation is an effect in economy and society.

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Conservative Innovator

• Tries to minimize risk (cf Vincenti).
• Not the usual stereotype.

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Overcoming Resistance to Change

• Culture of innovation necessary.
• Need innovation plan.
• Greed for new things.
• Systematic abandonment.

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Practices

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

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Measuring Innovative Performance

• Feedback from results to expectations.
• Systematic review across the board.
• Compare results to expectations innovation.

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Structure

• Separate old and new.
• Special locus for new.
• Consider different incentives, monetary and
  administrative.
• Differential returns on innovation.
• Hold new stuff accountable.

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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.

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Bad Habits

• NIH
• Cream skimming.
• Quality in eyes of customer not producer.
• Premium price.
• Maximizing not optimizing.

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Niches

• Toll-gate
• Specialty skill
• Specialty market