A SUMMARY OF THOUGHTS: INNOVATION & ENTREPRENEURSHIP

According to management guru Peter Drucker, writing in his now classic, 'Innovation & Entrepreneurship: [Published in the mid-80's, this is the first book to present innovation & entrepreneurship as a purposeful and systematic discipline.]

• innovation & entrepreneurship are not limited to high technology industries.

Most innovation & entrepreneurship happens in low technology industries just as most job creation also comes from low technology industries.

• entrepreneurship is doing something differently so as to better use resources & expand markets for the product &/or service.

Ray Kroc took a hamburger stand in a single city and turned it into an international business, McDonalds, by applying innovation to his products, services, & marketing.

Ray Kroc was an entrepreneur. Someone else running that hamburger stand without Kroc’s entrepreneur spirit may have had a thriving hamburger business but it wouldn’t have been McDonalds & that person wouldn’t have been an entrepreneur, just another hamburger stand owner.

• entrepreneurship & innovation are not inborn characteristics. They are behaviors that most anyone who is willing to apply themselves can learn.

• innovation is “a bright idea” and maintains that dependable innovative ideas come from systematic exploration of the seven sources of innovative opportunity as follows:

- The Unexpected - composed of three areas of unexpected events: unexpected success, unexpected failure, unexpected outside event;

- Incongruities - a discrepancy or dissonance between what is and what ought to be or is assumed to be which is composed of four areas: economic realities of an industry (marketplace), other realities of an industry (optimization of local, non-essential areas rather than system optimization), customer expectations versus the industry perception of customer expectations, internal incongruity with a process;

- Process Need - a weak or missing link in a process that makes the process cheaper, easier, or possible (technologically possible or economically possible);

- Industry and Market Structures - changes in industry or market such as new competitors, new customers, more differentiated products, new manufacturing or marketing processes, new substitute or complementary products or services;

- Demographics - changes in population structure such as size, age structure, cultural composition, employment, education, & income;

- Changes in Perception - a change in the way that facts are perceived such as “the glass is half full” versus “the glass is half empty”;

- New Knowledge - the discovery of new knowledge which can be exploited such as a new technology or materials;

• entrepreneurs innovate.

Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth.

Innovation, indeed, creates a resource. There is no such thing as a resource until man finds a use for something in nature & then endows it with economic value. Until then, every plant is a weed and every mineral just another rock.

• The Do’s:

- Purposeful, systematic innovation begins with the analysis of the opportunities;

- Innovation is both conceptual & perceptual, analysis must be followed by testing of the analysis against reality;

- An innovation must be simple and focused because everything new runs into trouble;

- Effective innovations start small providing incremental changes which provide leverage for larger change;

- Effective innovations aim at leadership in a market or industry;

• The Don’ts:

- Don’t try to be clever;

- Don’t try to do too many things at once;

- Don’t try to innovate for the future even if the innovation lead time is long;

• The Conditions:

- Innovation is hard, focused, purposeful work requiring knowledge, experience, & ingenuity;

- Innovators must build on their strengths because of the risks of innovation & the costs of allocating knowledge & performance capacity to the innovative effort;

- Innovation affects the economy & society, requiring a change in the behavior of customers, so it has be close to the market, focused on the market, & market driven;

[To be continued in the Next Post. Excerpted from the 'Lifescaping' seminar participant's manual. The 'Lifescaping' seminar is conducted by Dilip Mukerjea about four times a year under the auspices of the Singapore Institute of Management.]