Transcript Innovation and Entrepreneurship-DEG-04
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: Macy’s 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.
Don’ts
• Don’t be clever.
• Don’t diversify.
• Don’t 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 ain’t: 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.
• Toll-gate • Specialty skill • Specialty market