GE 493 DEG Innovation and Entrepreneurship Practice and Principles. Peter F Drucker

The practice of Innovation Systematic Entrepreneurship Innovation is the specific tool of Entrepreneurs It is capable of being presented as a discipline, capable of being learned, capable of being practiced In US, the entrepreneur is often defined as one who starts his own, new business. Not every one of these represents Entrepreneurship McDonalds was Entrepreneurship! JP Morgan did not aim for ownership

Purposeful Innovation and the Seven Sources for Innovation Opportunity. Entrepreneurs shift resources from areas of low productivity and yield to areas of higher productivity and yield. Systematic innovation therefore consists in the purposeful and organized search Innovation is an economic or social rather than a technical term. e.g. textbook

The Unexpected Success What would it mean to us if we exploited it. E.g. Pharmaceutical Company. Where could it lead us Macy’s what do we have to do to covert it into an innovation. IBM how do we go about it Evening Program for adults Failure

Incongruities Reality as it is, or as assumed. Discrepancy, dissonance Symptom of opportunity to innovate Steel Mill e.g.

Process Need Opportunity is the source of innovation E.g. Process Need Innovation Spread of literacy brought increased magazine, newspaper circulation Typesetting was the only slow process Keyboard was invented, to select the right letter from the type font

Industry and Market Structures They always seem to be very stable Actually, one small scratch and the structure disintegrates fast. Automobile Story Markets grew so fast during early 19 th C. Not a luxury product Rolls Royce – 1904 Ford – mass produced, semi skilled labor, owner repaired.

Demographics Analysis of Demographics begins with population figures. Age distribution is far more important. Sears chairman looked into Latin American for potential Markets. Vacation resorts were designed around the needs of people. Study the way people like to shop. For those willing to go out into the field, to look and to listen, changing demographics is both a highly productive and a highly dependable innovative opportunity

Changes in Perception The Glass is Half Full

New Knowledge Super Star of Entrepreneurship. It gets the publicity, money. The actual meaning of Entrepreneurship Longest lead time. (Emergence and application into real world) They are always convergences of different kinds of knowledge, not all scientific or technological. Charles Babbage- Father of Computers. Never build a computer since he had no metals and electric power. Even if he did so, the best he could have done is a calculator. There was no logic or program feedback then.

Knowledge based innovation requires Careful Analysis Clear focus on strategic position.(market-IBM leased computers first) Learn and Practice Management Quality means what is technically sophisticated rather than value to customers.(High Tech companies- Knowledge based innovation risks are so high)

The Bright Idea Innovations based on these outnumber everything else. 8 out of 10 Patents belong to this category. The Zipper, ballpoint pen, tab to open a beer can. Yet, they are the riskiest and least successful at the same time.

Principles of Innovation The Do’s Analysis-importance at different times Conceptual and Perceptual Look, ask, listen. Focused, Start small The Donts Don’t be too clever Don’t bring in too many things at once, they will remain as ideas not innovations Don’t innovate for the future. Do it for the present.