Drucker on Innovation

The search must be organized and conducted on a regular basis. It seems that we may be getting hung up on “the fuzzy front end” and other views that make innovation seems really obscure.  Drucker identified seven sources of opportunities that will ultimately drive innovation:

1. The organization’s own unexpected successes and failures, and also those of the competition.
2. Incongruities, especially those in a process, such as production, distribution, or incongruities in customer behaviour.
3. Process needs.
4. Changes in industry and market structures.
5. Changes in demographics.
6. Changes in meaning and perception.
7. New knowledge.

Innovation is both conceptual and perceptual. The imperative is to go out and look, to ask, to listen. Successful innovators use, both the left and right side of their brains. They look at figures and they look at people. To be successful, Drucker wrote, that an innovation has to be simple and it has to be focused. It should only do one thing or it confuses people and won’t work. All effective innovations are breathtakingly simple. It should focus on a specific need that is satisfied and on a specific end result that it produces. This makes innovation seem pretty straightforward, doesn’t it? Drucker indicated that effective innovations start small and they should not try to be clever. Innovations try to do one specific thing. Starting small allows for adjustments. Starting small keeps the requirements for people and money to be fairly modest. Innovations must be handled by ordinary human beings and if they are to achieve any size and importance at all, by morons or near morons.

Another key factor was to not try and innovate for the future, but innovate for the present. The innovation may have long term impact, but if you can’t get it adopted now, there won’t be any future.

According to Drucker, there are three conditions that must be met for an innovationto be successful, including:

1. Innovation is work. It required knowledge, ingenuity, creativity, etc. Plus, innovators rarely work in more than one area, be it finance, healthcare, retail or whatever. This work requires diligence, perseverance and commitment
2. To succeed, innovators must build on their own strengths. They must look at opportunities over a wide range, then ask which of the opportunities fits me, fits this company. There must be a temperamental fit with the practitioner and a link to business strategy
3. Innovation is an effect in economy and society, any change in the of customers, of teachers, of farmers, of doctors, of people in general. Or, it is a change in a process, in how people work and produce something. Innovation must always be close to the market, focused on the market, and market driven.

Drucker wrote that innovation by its nature is risky, asare all economic activities. But defending what was done yesterday is far riskier than making tomorrow.

Innovators define risks and seek to minimize them. Innovations are successful to the extent that they systematically analyse the sources of opportunity, pinpoint the opportunity, and then exploit it, whether an opportunity has small and definable risk, or larger but still definable risk. Successful innovators are conservative, they are not risk-focused, but rather are opportunity- focused.

While many articles, white papers and books have been written lately about innovation, Peter Drucker seems to have nailed it decades ago.