Drucker on Principles of Innovation, Part 1

In his book, The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, Peter Drucker analyzed the ways that management practices and principles affect the performance of organizations, individuals, and society. The book covers the basic principles of management and gives professionals the tools to perform the tasks that the environment of tomorrow will require of them.

These are my takeaways from reading the book.

Drucker believed that innovation is a practice. While we view some innovations as a “flash of genius,” innovation-as-a-practice is something that we can learn to do by applying hard, organized, purposeful work.

The purposeful innovation requires systematic analysis and hard work, and this approach certainly covers at least 90 percent of all effective innovations. Just like in every other area, the extraordinary performance in innovation also requires us to be a master in the discipline.

Drucker outlined five items of the “dos”— things that we must do when building a practice of innovation.

#1: Purposeful, systematic innovation begins with the analysis of the opportunities. It begins with thinking through what Drucker had called the seven sources of innovative opportunity.

  • The organization’s own unexpected successes and unexpected failures, but also the unexpected successes and unexpected failures of the organization’s competitors
  • Incongruities, especially incongruities in the process, whether of production or distribution, or incongruities in customer behavior
  • Process needs
  • Changes in industry and market structures
  • Changes in demographics
  • Changes in meaning and perception
  • New knowledge

All the sources of innovative opportunity should be systematically analyzed and systematically studied. It is not enough to be alerted to them. We must search for those opportunities on an organized and systematic basis.

#2: Innovation requires both thinking and doing. It is not enough to simply think of something “innovative;” we need to go out to look, to ask, to listen. Another word, successful innovators use both the right side and the left side of their brains.

#3: Effective innovation must be simple and focused. All effective innovations are breathtakingly simple. Even the innovation that creates new uses and new markets should be directed toward a specific, clear, designed application.

#4: Effective innovations start small, not grandiose. Starting small can allow the innovators to get started at first with little money, few people, and only a small and limited market. Grandiose ideas or plans that aim at “revolutionizing an industry” right from the start usually do not work.

#5: A successful innovation aims at leadership. Successful innovation does not aim necessarily at becoming eventually the biggest. It aims to be a leader of some market segment or mindshare. Drucker asserted that all strategies aimed at exploiting an innovation must achieve leadership within a given environment. Otherwise, they will simply create a low-barrier opportunity for the competition.