Peter Drucker and the Discipline of Innovation

Peter F. Drucker, renowned widely for his contributions to management theory, was also one of the first people to focus on the management of innovation. Rather than viewing innovation as the magical end-product birthed by an almost mystical ‘entrepreneurial personality,’ he held that the process of innovation is work, like any other, and therefore needs to managed, like any other corporate function.

Drucker defined innovation as the ‘effort to create purposeful, focused change in an enterprise’s economic or social potential,’ and claimed that the best innovations usually arose not out of an individual’s eureka! moment, but rather from a conscious and purposeful, usually collaborative, search for opportunities for innovation. He identified seven areas of opportunity, four of which lie within the organization and three of which are external to it, all of which would be scrutinized constantly by a good innovation manager. These are:

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2. Incongruities: Incongruities or conflicts between opposing functions, requirements or values may be the start of an innovation. These may be incongruities between expectations and results, incongruities within the logic of a process, or may be incongruities between needs and realities. All these, however, may provide an opportunity for innovation to happen, whether through the development of an entirely new product, service or technology, or simply through a reconfiguration of viewpoint.

3. Process Needs: An old proverb says that “necessity is the mother of invention,” and indeed, it is often also the mother of innovation. Gaps in processes, and the desire to make them as efficient as possible, are often the inspirations for creative thinking, and by extension, innovation.

4. Industry and Market Changes: Industry and market structures can change almost overnight with the introduction of a new technology or a new process. Traditional market leaders often fail to anticipate these changes, and too often focus more on maintaining their dominance in the existing structure than trying to adapt to the new one, therefore making it possible for new players to enter and take over the industry or market.

5. Demographics: Demographics have long been a major source of innovation, creating opportunities for new types of products and services. The needs of the young are different from those of the elderly, and as new technologies and processes are developed that can better lives, these are then often tweaked and tailored, often in ingenious ways, to meet the needs of a specific demographic segment of the population.

6. Changes in Perception: An example of changes in perception as source of innovation is the following. In older days health was seen as related to body mass, meaning fatter people were perceived as more healthy. In the last century this perception changed as a result of medical studies that revealed that being overweight was a risk factor. Since that time many light products and sugar substitutes have come to the market.

7. New Knowledge: Last but not least new knowledge has produced many opportunities for new products. The emergence of micro-electronics and new programming methods and tools, biotechnology, nano-technology etc have been the main motors of innovation and progress over the last decades, and may continue to direct innovation trends in the future.

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