Innovation is the responsability of every executive and it begins with a conscious search for opportunities.
Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.
Most innovations result from a conscious, purposeful search for innovation opportunities, which are found in only a few situations.
Four areas of opportunity exist within a company or industry:
- Unexpected occurrences: Easiest source of innovation opportunity whether it is a success or a failure mainly because businesses dismiss them (typically monthly or quarterly report are good sources of information).
- Incongruities: An incongruity within the logic or rhythm of a process is a possibility for innovation, as well as incongruity between economic realities.
- Process needs
- Industry and market changes: Industry structures can change overnight and it creates tremendous opportunity for innovations. New opportunities rarely fit the way industry has always approached the market, defined it, or organized to serve it.
Three additional sources of opportunities exist outside the company:
- Demographic changes: Most reliable source of innovation because those events have a known lead times. Changes in the number of people, their age distribution, education, occupations and geographic location are amongst the most rewarding and least risky of entrepreneurial pursuits
- Changes in perception: A change in perception does not alter facts, it changes their meaning (for instance: healthcare in US, PC industry,…)
- New knowledge: Innovations based on new knowledge are what people usually mean when they talk of innovation. Long lead times and the need for convergence among different kinds of knowledge.
Systematic innovation begins with the analysis of the sources of new opportunities. Depending on the context, sources will have different importance at different times but innovators must analyse all opportunity sources.
Few observations on my side:
- Keeping up to date Porter’s and PESTEL analysis of the industry should help to cope and maybe foresee those innovation opportunities
- The Innovator’s Dilemma by Clayton M. Christensen is a must-read (I knew it already and went through it quickly but a deep dive is required)
Source: The Discipline of Innovation by Peter F. Drucker, HBR, Reprint 98604
Why this post? I am currently going through a few readings about innovation and entrepreneurship… I did not know where to save my notes and my references… I thought that my blog will do it.