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Innovation According to Drucker

Innovation According to Drucker. Minder Chen Professor of MIS California State University Channel Islands Minder.chen@csuci.edu. McDonald. McDonald. Innovation Opportunities.

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Innovation According to Drucker

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  1. Innovation According to Drucker Minder Chen Professor of MIS California State University Channel Islands Minder.chen@csuci.edu

  2. McDonald

  3. McDonald

  4. Innovation Opportunities In business, innovation rarely springs from a flash of inspiration. It arises from a cold-eyed analysis of seven kinds of opportunities.

  5.  Seven Opportunities for Innovation • “The unexpected—the unexpected success, the unexpected failure, the unexpected outside event” • “The incongruity—between reality as it actually is and reality as it is assumed to be or as it ‘ought to be’” • “Innovation based on process need”—perfecting a process that already exists, replacing a link that is weak, or supplying a link that’s missing • “Changes in industry structure or market structure that catch everyone unawares” • “Demographics”—changes in a population’s size, age, composition, educational level, employment status, or income • “Changes in perception”—when the customer goes from seeing the glass as half empty to seeing it as half full • “New knowledge”—and not just technical or scientific breakthroughs, but the innovative use of this knowledge to create a new product or service http://www.butler-bowdon.com/Peter-Drucker-Innovation-And-Entrepreneurship

  6. The unexpected success Macy’s, the New York department store, did poorly for several years because it considered itself primarily a fashion store, and was downplaying the growing effect of appliance sales on its bottom line. To the company’s directors, these sales were an ‘embarrassing success’. Only later, after it had accepted the place of appliance sales as a bona fide part of its image and range, did the store again prosper. 

  7. The unexpected success Many antibiotics developed for humans can be used on animals, yet when vets tried to buy these drugs they met resistance from the manufacturers. Allowing the drugs to be sold for animal use was beneath them. But another firm bought the rights to the drugs and marketed them specifically to vets, as a result creating the most profitable segment of the pharmaceutical industry. IBM and Univac initially made computers aimed at the scientific market. Both were surprised by the interest from business users. IBM steamed ahead, though, when it ‘lowered itself’ to sell to the business market.

  8. The unexpected success After television began, everyone ‘knew’ that book sales in America would plummet; no one would be bothered to read again when they could enjoy TV. In fact, the opposite happened; book sales boomed. Yet it was not the traditional bookstore owners who took advantage of this. Large book chains were established, not by book lovers, but by experienced retailers who worked out which titles generated most profit per feet of bookshelf. The big American steel companies, used to gargantuan steel-making complexes requiring huge investment, did not invest in the new type of ‘mini mill’, even though they were throwing off cash and profits, because it was not ‘how things were done’.

  9. Five Principles of Innovation Source: Link • “Purposeful, systematic innovation begins with the analysis of the opportunities. It begins with thinking through…the sources of innovative opportunities.” • “Innovation is both conceptual and perceptual… Successful innovators…look at figures, and they look at people. They work out analytically what the innovation has to be to satisfy an opportunity. And then they go out and look at the customers, the users, to see what their expectations, their values, their needs are.”

  10. “An innovation, to be effective, has to be simple and it has to be focused. It should do only one thing, otherwise, it confuses. All effective innovations are breathtakingly simple. Indeed, the greatest praise an innovation can receive is for people to say: ‘This is obvious. Why didn’t I think of it?’” • “Effective innovations start small… They try to do one specific thing.” • “A successful innovation aims at leadership [within a given market or industry]… If an innovation does not aim at leadership from the beginning, it is unlikely to be innovative enough, and therefore unlikely to be capable of establishing itself.”

  11. Thinking “Five percent of the people think; ten percent of the people think they think; and the other eighty-five percent would rather die than think.” ― Thomas Edison

  12. 5 Critical Thinking Types Critical thinking is the mental process of objectively analyzing a situation by gathering information from all possible sources, and then evaluating both the tangible and intangible aspects, as well as the implications of any course of action. Implementation thinking is the ability to organize ideas and plans in a way that they will be effectively carried out. Conceptual thinking consists of the ability to find connections or patterns between abstract ideas and then piece them together to form a complete picture. Innovative thinking involves generating new ideas or new ways of approaching things to create possibilities and opportunities. Intuitive thinking is the ability to take what you may sense or perceive to be true and, without knowledge or evidence, appropriately factor it in to the final decision. http://www.forbes.com/sites/work-in-progress/2012/03/27/how-to-develop-5-critical-thinking-types/

  13. The customer is everything Most people associate innovation with the ‘bright idea’, like the clothes zip or the ballpoint pen. But Drucker notes that barely one in five hundred such ‘bright ideas’ ever cover the costs of their development. On its own, innovation is not worth a great deal. It is only when it meets the market through the catalyst of entrepreneurial management  that you start to create things of great value. An innovation is much more than a technological advance; it is  “…an effect in economy and society” – something that changes the way people do things. Real innovation is always about the end customer.

  14. The customer is everything For example, De Havilland, the British company, produced the first passenger jet plane, but Boeing and Douglas took the industry lead because they created ways for airlines to finance such expensive purchases. Dupont did not just invent Nylon. It created new markets for its product in women’s hosiery and underwear, and automobile tires. The innovator must figure out the market and system of delivery of their product, or the markets will be taken away from them.

  15. The customer is everything In receptivity to new innovations, conventional wisdom is often wrong. The King of Prussia predicted failure for railroads, because, he asserted, “no one will pay good money to get from Berlin to Potsdam in one hour when he can ride his horse in one day for free”. No one expected people in poor countries to buy television sets, given their high cost. But the experts misjudged the wish for people living in villages to have a window on the larger world, and they found a way to buy TVs anyway.

  16. The customer is everything Good innovations are very focused, not trying to do many things, but just one thing extremely well. They are not too clever, and can be used by simpletons. They attract the comment, ‘Why wasn’t this done before?’ The economist David Ricardo once said, “Profits are not made by differential cleverness, but by differential stupidity”. He meant that the most successful products or services are those which allow their users not to have to think. They save effort, money and time. A good example: the disposable razor developed by King Gillette. Prior to it, shaving was a time-consuming and difficult business best left to barbers – if you could afford them.

  17. The customer is everything You can’t do market research on people’s reactions to things which don’t yet exist. In this sense, innovation will always be a risk, but becomes less risky when you remain open about how, and by whom, your innovation will be used.

  18. The Discipline of Innovation How much of innovation is inspiration, and how much is hard work? If it’s mainly the former (inspiration), then management’s role is limited: Hire the right people, and get out of their way. If it’s largely the latter (hard work), management must play a more vigorous role: Establish the right roles and processes, set clear goals and relevant measures, and review progress at every step. Peter Drucker comes down somewhere in the middle. Innovation is the work of knowing rather than doing.  Ideo; Thinking with your hands

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