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Innovation and Entrepreneurship by Peter F. Drucker

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  1. Innovation and Entrepreneurship by Peter F. Drucker David E. Goldberg University of Illinois at Urbana-Champaign

  2. Text • Drucker, P. F. (1986). Innovation and entrepreneurship. New York, NY: Harper & Row. • Long career at Claremont College.

  3. Entrepreneur • J. B. Say, “The entrepreneur shifts resources out of an area of lower and into an area of higher productivity and greater yield.” • Joseph Schumpeter 1911, Theory of creative destruction. Change is normal.

  4. 7 Sources of Innovative Opportunity • Systematic innovation consists in the purposeful and organized search for changes and in the systematic analysis of the opportunities such changes might offer for economic or social innovation. • Internal: unexpected, incongruity, process need, changes in industry structure • External: demographics, changes in perception, mood, and meaning, new knowledge

  5. Unexpected • Unexpected success: Macy’s and appliance sales. • Unexpected failure: Example of locks in India. • Unexpected outside activity: PC & IBM.

  6. Incongruity • Between is and ought • Types: • Between different economic realities. • Between industry reality and assumptions. • Between industry effort and values and expectations of customers. • Internal logic of a process.

  7. Principles of Innovation • Begin with analysis of opportunities. • Innovation as conceptual and perceptual. • Simple and focused. • Start small. • Aims at leadership.

  8. Don’ts • Don’t be clever. • Don’t diversify. • Don’t diversify for the future; diversify for the present.

  9. 3 Conditions • Innovation is work. • It builds on strength. • Innovation is an effect in economy and society.

  10. Conservative Innovator • Tries to minimize risk (cf Vincenti). • Not the usual stereotype.

  11. Overcoming Resistance to Change • Culture of innovation necessary. • Need innovation plan. • Greed for new things. • Systematic abandonment.

  12. Practices • Focus on opportunity: Usually focus on problems. • Create entrepreneurial spirit among team. • Listen to young people.

  13. Measuring Innovative Performance • Feedback from results to expectations. • Systematic review across the board. • Compare results to expectations innovation.

  14. Structure • Separate old and new. • Special locus for new. • Consider different incentives, monetary and administrative. • Differential returns on innovation. • Hold new stuff accountable.

  15. 4 Strategies • Fustest with the mostest. High risk. • Hitting them where they ain’t: creative imitation, entrepreneurial judo. • Occupy a niche. • Changing economics of product, market, or industry.

  16. Bad Habits • NIH • Cream skimming. • Quality: in eyes of customer not producer. • Premium price. • Maximizing not optimizing.

  17. Niches • Toll-gate • Specialty skill • Specialty market