Innovation and Entrepreneurship: Practice and Principles by Peter F. DruckerFar from my previous post about Perkins, Peter Drucker’s book Innovation and Entrepreneurship was a paradoxical reading. The first chapters were painful even if brilliant. I understood there that innovation is a process which will be successful if carefully planned and managed. Fortunately, chapter 9 completely changed my perception when the author dealt with knowledge-based innovation, which includes innovations based on science and technology. So let me summarize the main points of this chapter:
1- the characteristics of knowledge-based innovation:
a. the time span between the emergence of the technology and its application is long, 20 to 30 years,
b. it is a convergence of several knowledge and until all the needed ones are available, this innovation can not succeed,
2- the requirements:
a. a careful analysis of the required factors, i.e. the available knowledge and the missing ones,
b. a clear focus on the strategic position, i.e. you have to be right the first time or others will take your place,
c. learn and practice entrepreneurial management, because most tech. innovators lack management skills ,
3- the risks:
a. first, even after a careful analysis, knowledge-based innovation remain unpredictable and turbulent (see also Moore’s books about the chasm and the tornado), and this is linked to its characteristics above; this has two important implication:
i. time plays against innovators,
ii. survival rate is low,
b. there is a limited window where new ventures start, and when it closes, there is a general shakeout, where few survive; who survives is also unpredictable. The only chance of surviving is to have a strong management and resources,… and luck;
c. there is also a receptivity gamble. Even market research does not work with these innovations and the reason why an innovation is accepted or not is also unpredictable.
I have to admit this confirms an intuition I had since my VC years: you have to make a bet and then work hard. But there is no way, you can really plan the success of knowledge-based innovations.
The end of the book is quite good, in particular its conclusion: “The first priority in talking about public policies is to define what will not work: Planning is actually incompatible with an entrepreneurial society and economy. Innovation has to be decentralized, ad hoc, autonomous, specific. It had better start small, tentative, flexible. […] It is popular today [1983!], especially in Europe, to believe that a country can have “high-tech entrepreneurship” by itself. But it is a delusion. In fact a policy which promotes high-tech and high-tech alone will not even produce high tech. All it can come with is another expensive flop, another Concorde. […] The French are right, economic and political strength requires high tech but there must be an economy full of innovators with vision and entrepreneurial values, with access to venture capital, and full of economic vigour.”
peter drucker Entrepreneurship Summary Ch-1 and Ch- 2
A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work. Marketing and innovation produce results; all the rest are costs. Drucker's Innovation and Entrepreneurship was the first book to discussion business innovation and entrepreneurship in a systematic way. By examining where innovation and entrepreneurial activity happens, you'll be able to create and manage a successful entrepreneurial business without undue risk. Drucker discusses seven clear signs that indicate opportunity for business innovation: 1 unexpected success, 2 incongruity between reality and ideal, 3 identification of an unmet need, 4 changes in industry or market structure, 5 demographic shifts, 6 changes in public perception, and 7 discovery of new knowledge.
He has discussed various Qualitative, Quantitative, Demographic, Geographic and few more factors that had its impact on the emergence and growth of entrepreneurship in the US and other huge economies. The total jobs in America grew by 24million from US has not created this many jobs in any other peace time period. In the same period job creation was declining in Western Europe and Japan. US provided employment to many women and in many cases the jobs were far better than women had ever held before. The old job creators had lost jobs from early —