Manage Innovation

PETER DRUCKER

Innovation is the function of entrepreneurship, whether in an existing business, a public service institution or a new venture started by an individual in the family kitchen. It is the means by which the entrepreneur creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.

Some observers use the term entrepreneurship to refer to all small businesses; others, to all new businesses. In practice, however, a great many well-established businesses engage in highly successful entrepreneurship. The term, then, refers not to an enterprise’s size or age but to a certain kind of activity.

At the heart of that activity is innovation: the effort to create purposeful, focused change in an enterprise’s economic or social potential.

There are, of course, innovations that spring from a flash of genius. Most innovations, however, especially the successful ones, result from a conscious, purposeful search for innovation opportunities, which are found only in a few situations.

Four such areas of opportunity exist within a company or industry: unexpected occurrences, incongruities, process needs, and industry and market changes.

Three additional sources of opportunity exist outside a company in its social and intellectual environment: demographic changes, changes in perception, and new knowledge.

From “The Discipline of Innovation”