Innovation and Entrepreneurship: Practice and Principles

The emergence of an econmy in the 1970s was the most significant and hopeful event in recent U.S. social and economic history. For Drucker, innovation and entrepreneurship are a flash of genius, but purposive tasks that can be organized as systematic, rational work fostered by management. Entrepreneurship is treated as personality or intuition but behavior, concept, and theory. Entrepreneurship is high-risk; rather, few so-called entrepreneurs have the method for what they do. The practice of innovation, the practice of entrepreneurship, and strategies compose innovation and entrepreneurship. Instead of pursuing bright ideas, entrepreneurs should focus on the seven successful sources for innovative opportunity: (1) unexpected success, failure, or outside event; (2) incongruity between what is and what ought to be within an industry or market; (3) innovation based on a process need (supplying the missing link); (4) changes in industry structure or market structure; (5) demographics or population changes; (6) changes in perception, mood, and meaning; and (7) new scientific and non-scientific knowledge (requiring analysis of relevant factors, focus on strategic position, and management). The practice of innovation is purposeful innovation resulting from analysis, system, and hard work. The principles of purposeful, systematic innovation are: (1) analyze opportunities, (2) be perceptive, (3) be simple and focused, (4) start small, and (5) aim at leadership. Principles of innovation are (1) innovation is work, (2) build on strengths, and (3) innovations have an effect in the economy and society. Entrepreneurs are risk-takers but opportunity focused. The discipline called management must develop a practical guide for innovation in (1) the existing business (policies to create a climate, practices, measures of innovative performance, and organizational practices), (2) the public-service institution (policies and need to innovate), and (3) the new venture (focus on market, financial foresight, early building of a top management team, role decisions by the founder, and outside advice). Entrepreneurship also requires four strategies, or practices and policies in the marketplace: (1) being Fustest with the Mostest; (2) Hit Them Where They Ain't, or entrepreneurial judo (avoid the not invented here syndrome, don't cream a market, the fallacy of quality, delusion of the premium price, and maximizing instead of optimizing; (3) finding an ecological niche (toll-gate, specialty skill, and specialty market strategies); and (4) changing utility, values, and economic characteristics (creating utility, pricing, adapting to customer's reality, and delivering true value to customer). In conclusion, Drucker argues that an society is needed in which innovation and entrepreneurship are normal, steady, and continuous. What will work is planning or over-reliance on high-technology. Social innovation is needed in the areas of redundant workers and abandoning outworn and obsolete social policies and institutions. Also needed are changes in tax and fiscal policies and government regulations, and individuals must undertake continuous learning and relearning. (TNM)

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