Innovation and Entrepreneurship

Innovation and Entrepreneurship is one of the foundation stones of the world as we see it today. By no means novel, the book is slightly older than I am, it still has some sage wisdom even if the specific case studies have slipped from relevance. Drucker's object were threefold: he provides a more rigorous definition of entrepreneurship that reclaims the field from its obsession with the high-tech genius inventor. He uses entrepreneurship to explain the success of the American and Japanese economy after World War 2, particularly how millions of jobs were created for men and women even as traditional smoke stack industries cratered. Finally, he offers some advice for entrepreneurial organizations.

In order, for Drucker entrepreneurship is show more the profitable harnessing of change to move capital from an area of low productivity to one of higher productivity. New scientific knowledge is just one of seven possible sources of innovation, and is in actually the most expensive and uncertain. The most important skill of the entrepreneur is a keen eye for incongruities and unmet market needs. One of the more moving case studies is a New York department store which "knew" that appliance sales should only be 20% of its business. It spent the consumer boom of the 60s trying to knock down its appliance numbers, and eventually lost position to a competitor who found a market in the gadget hungry Betty Drapers of the era. Novelty is also tied to entrepreneurship. While opening any business is a venture, opening yet another franchise restaurant is not really entrepreneurial.

The best section is on what kills entrepreneurial ventures. Drucker sees an entrepreneurial venture as being like a child. In existing businesses, expecting the new to carry the weight of a mature unit is like asking a six year old to march with a 60 pound pack; neither will get very far. A focus on the profitability of the present business can hinder entrepreneurship. He sees Johnson & Johnson and 3M as companies with the best practices, where a specialized division handles new businesses, which are given a few years to succeed or fail on their own merits before being upgraded to stable parts of the business. Established companies should conduct a regular audit with the aim of killing products which are not succeeding (RIP Google reader) because the time and attention of your employees is the most valuable resource you have.

The other side of innovation is the start-up, though I don't recall Drucker using that specific term. A small and new business can capitalize on doing one thing supremely well to capture a major market, but rapid growth is fraught with pain. Startups invariable run into cashflow and founder problems, and often at the most critical point when they need to rapidly ramp up capacity to succeed. Getting a solid managerial team in place before the crisis is the way to survive it, but good teams are expensive.

Drucker is full of solid 'horse sense' about running a business, and the fundamental are the fundamentals, but his focus on economics renders him somewhat blind to other aspects of entrepreneurship. Entrepreneurship can also be read as cognitive, as a series of decisions which bring about a new state of the world. And change is hard because it runs up against allocations not only of money, but also power and prestige. Drucker's unstated bias, that concerns about power and prestige should melt away in the face of the capital enhancing power of new ways of doing things, ignores the realities of human psychology.

Innovation and Entrepreneurship is an older book, but well worth checking out. And on a personal note of bitterness, I spent six years earning a PhD in a school which branded itself as "studying innovation" and Drucker never came up once. I'm fully for raiding and pillaging those over-endowed jerks at the B-school, and we should take their ideas along with their nice colloquium room furniture! show less

An entrepreneur classic. Tremendous insight from an innovative opportunity & entrepreneurial management standpoint. As always, I highly recommend all of Peter Drucker's books.

Compare Drucker's strategic and pragmatic practices, published in 1985, with the program outlined by Barack Obama when he was running for President after the economic collapse of 2008. Pragmatism for the entrepreneurs.

Interesting book on innovative process; recommended

El primer libro en la historia de los libros del management que se ocupa con profundidad y riqueza del por qué, cómo y para qué de la Innovación. Peter F. Drucker (fallecido el 11 de noviembre de 2005) no escatima argumentos, ilustración y expresividad para enseñarnos que el camino de la innovación es el único para la empresa líder. Y que es la fuente de riqueza de la sociedad, entendida ésta como el mejor aprovechamiento de los recursos (escasos), y la mayor satisfacción del ser humano. Hoy ya son muchos los que han publicado sobre innovación y desarrollo de producto, y mucho se ha investigado y reflexionado sobre el tema; Drucker lo hizo cuando ésta era la fruta de más difícil alcance para la organización, y más a la show more mano estaban las reingenierías, los downsizing, etc. Esa siempre fue la virtud de él: ser el primero en poner y exponer (se), los grandes temas show less