Book: Innovation and Entrepreneurship

Innovation and Entrepreneurship: Practice and Principles

Peter F. Drucker

According to Drucker, the essential purpose of a business is to create a customer. To this end, only marketing and innovation can produce results; all other activities are simply part of the cost of doing business.

The Practice of Innovation: Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.

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.

The purposeful innovation resulting from analysis, system, and hard work is all that can be discussed and presented as the practice of innovation. But this is all that need be presented since it surely covers at least 90 percent of all effective innovations. And the extraordinary performer in innovation, as in every other area, will be effective only if grounded in the discipline and master of it.

Purposeful, systematic innovation begins with the analysis of the opportunities. It begins with the analysis of the opportunities. It begins with thinking through what I have called the sources of innovative opportunities.

All the sources of innovation should be systematically analyzed and systematically studied. It is not enough to be alerted to them. The search has to be organized, and must be done on a regular systematic basis.

Innovation is both conceptual and perceptual. Go out to look, to ask, to listen. This cannot be stressed often enough. 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.

An innovation, to be effective, has to be simple and it has to be focused. It should do only one thing, otherwise it confuses. If it is not simple, it won’t work.

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 are not grandiose. They try to do one specific thing.

A successful innovation aims at leadership. 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.