Peter Drucker on Innovation

Peter Drucker on InnovationMany people struggle with trying to define innovation, or what innovation is within an organization. I’ve recently been re-reading one of the best business books I have, “The Essential Drucker. The Best of Sixty Years of Peter Drucker’s Writings on Management” which is a compendium of his writings.

Drucker wrote that purposeful innovation results from analysis, systemic review and hard work and can be taught, replicated and learned.

Purposeful, systemic innovation begins with the analysis of opportunities. 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 seem really obscure. Drucker identified seven sources of opportunity 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 behavior.
  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 to 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 (his words, not this author’s!).

Another key factor was to not try to 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 innovation to be successful including:

  1. Innovation is work. It requires 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, a change in the behavior 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, as is all economic activity. But defending what was done yesterday is far more risky than making tomorrow.

Innovators define risks and seek to minimize them. Innovations are successful to the extent that they systematically analyze 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.

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Roy LuebkeRoy Luebke is an innovation expert focused on discovering new, customer-driven opportunity areas to help define the future of a company. He is inspired by knowledge and learning, and applying structured tools and methods at the crossroads of strategy and innovation to achieve business growth.

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6 Responses to Peter Drucker on Innovation

  1. Jeff Ogden says:

    Huge fan of Peter Drucker. He is the top management expert in the world, in my opinion. Thanks for sharing his great insights on innovation.

    Jeff Ogden, the Fearless Competitor
    President, Find New Customers “Lead Generation Made Simple
    http://www.findnewcustomers.net

  2. John W Lewis says:

    A very useful post, thank you!

    You capture the combination of directness, rigour and simplicity in Drucker’s thinking.

    I am, finally, currently reading his book “Innovation and entrepreneurship”, in which he also makes many of these points. I’m now regretting that I never saw him present on this or other subjects.

    To my mind, this is the sharp end of “knowledge work”.

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  4. AJ Dimitri says:

    Reading the thoughts of Peter Drucker helps me “connect the dots” for the key concepts of innovation.

    This post was a nice summary.

    If you want the perspective of one of Drucker’s PhD students at Claremont University, I found William Cohen’s book “A Class with Drucker” very insightful. William shares his experience during classes as well as his personal relationship with Peter Drucker over the years following Cohen’s graduation.

    Through the stories of Drucker’s interaction with his students, you see the depth of his personality.

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