unimagined futures

Developing a work approach that is adequate to the challenges ahead
a world moving toward new and different futureS

Innovation

Why? Prevent wasting years of misdirected effort.

The following are quotes from Peter Drucker's Innovation and Entrepreneurship plus an Inc. Magazine Interview on Entrepreneurship and Innovation. The purpose of this introduction is to help readers determine what needs to be on their radar.

Innovation is not a technical term. It is an economic and social term. Its criterion is not science or technology, but a change in the economic or social environment, a change in the behavior of people as consumers or producers, as citizens, as students or as teachers, and so on. Innovation creates new wealth or new potential of action rather than new knowledge. This means that the bulk of innovative efforts will have to come from the places that control the manpower and the money needed for development and marketing, that is, from the existing large aggregation of trained manpower and disposable money—existing businesses and existing public-service institutions

And it is change that always provides the opportunity for the new and different. Systematic innovation therefore 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.

Specifically, systematic innovation means monitoring seven sources for innovative opportunity.

As a rule, these are changes that have already occurred or are under way. The overwhelming majority of successful innovations exploit change. To be sure, there are innovations that in themselves constitute a major change; some of the major technical innovations, such as the Wright Brothers' airplane, are examples. But these are exceptions, and fairly uncommon ones. Most successful innovations are far more prosaic; they exploit change. And thus the discipline of innovation (and it is the knowledge base of entrepreneurship) is a diagnostic discipline: a systematic examination of the areas of change that typically offer entrepreneurial opportunities.

These executives know that it is as difficult and risky to convert a small idea into successful reality as it is to make a major innovation. They do not aim at "improvements" or "modifications" in products or technology. They aim at innovating a new business. And they know that innovation is not a term of the scientist or technologist. It is a term of the businessman.

For innovation means the creation of new value and new satisfaction for the customer. Organizations therefore measure innovations not by their scientific or technological importance but by what they contribute to market and customer. They consider social innovation as important as technological innovation.

A successful innovation aims at leadership. It does not aim necessarily at becoming eventually a "big business"; in fact, no one can foretell whether a given innovation will end up as a big business or a modest achievement. But if an innovation does not aim at leadership from the beginning, it is unlikely to be innovative enough, and therefore unlikely to be capable of establishing itself. Strategies (to be discussed in Chapters 16 through 19) vary greatly, from those that aim at dominance in an industry or a market to those that aim at finding and occupying a small "ecological niche" in a process or market. But all entrepreneurial strategies, that is, all strategies aimed at exploiting an innovation, must achieve leadership within a given environment. Otherwise they will simply create an opportunity for the competition

The test of an innovation, after all, lies not its novelty, its scientific content, or its cleverness. It lies in its success in the marketplace

Above all, we know that an entrepreneurial strategy has more chance of success the more it starts out with the users—their utilities, their values, their realities. An innovation is a change in market or society. It produces a greater yield for the user, greater wealth-producing capacity for society, higher value or greater satisfaction. The test of an innovation is always what it does for the user. Hence, entrepreneurship always needs to be market-focused, indeed, market-driven

Q: Would you define entrepreneur?

A: The definition is very old. It is somebody who endows resources with new wealth-producing capacity. That's all.

Entrepreneurship is not a romantic subject. It's hard work

We have reached the point [in entrepreneurial management] where we know what the practice is, and it's not waiting around for the muse to kiss you. The muse is very, very choosy, not only in whom she kisses but in where she kisses them. And so one can't wait.

Q: You make the point that small business and entrepreneurial business are not necessarily the same thing.

A: The great majority of small businesses are incapable of innovation, partly because they don't have the resources, but a lot more because they don't have the time and they don't have the ambition. I'm not even talking of the corner cigar store. Look at the typical small business. It's grotesquely understaffed. It doesn't have the resources and the cash flow. Maybe the boss doesn't sweep the store anymore, but he's not that far away. He's basically fighting the daily battle. He doesn't have, by and large, the discipline. He doesn't have the background. The most successful of the young entrepreneurs today are people who have spent five to eight years in a big organization.

Q: What does that do for them?

A: They learn. They get tools. They learn how to do a cash-flow analysis and how one trains people and how one delegates and how one builds a team. The ones without that background are the entrepreneurs who, no matter how great their success, are being pushed out.

You see, there is entrepreneurial work and there is managerial work, and the two are not the same (and most people can do both). (But not everybody is attracted to them equally. The young man I told you about who starts companies, he asked himself the question, and his answer was, "I don't want to run a business.") But you can't be a successful entrepreneur unless you manage, and if you try to manage without some entrepreneurship, you are in danger of becoming a bureaucrat. Yes, the work is different, but that's not so unusual

Successful entrepreneurs, whatever their individual motivation—be it money, power, curiosity, or the desire for fame and recognition—try to create value and to make a contribution. Still, successful entrepreneurs aim high. They are not content simply to improve on what already exists, or to modify it. They try to create new and different values and new and different satisfactions, to convert a "material" into a "resource," or to combine existing resources in a new and more productive configuration.

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