The Discipline of Innovation - Peter F. Drucker (Best of HBR, 1985)

A note to the reader The primary audience for such material seems to be management professionals or MBA students. I am still working on adding to this article and may update it later. An update will be mentioned in the log section of this site as and when posted.

Entrepreneurship and Innovation Drucker states the Entrepreneurial Personality (whatever that is) does not define a real world entrepreneur. He strikes at the heart of entrepreneurship by looking at the term more broadly. He makes clear that in his career, he has met very few people who are typically identified as having such personalities who do go onwards on the path of entrepreneurship. Instead, he has observed that the successful entrepreneurs that he has come across all shared the common trait of having a commitment towards a systematic approach to innovation.

Drucker is trying very hard here to save the face of management. He clearly states that at the time (this is 1985), there was a debate in society about what entrepreneurship is all about. The commonly held views were that small businesses and new businesses were entrepreneurial in nature, while large well-established orgs were not. Drucker argues for the case of large organizations in this article, making the statement that he has observed large well-established businesses engage in highly successful entrepreneurship.

I think this is to be expected from a management guru. He cannot hope to disappoint or drive away his main audience. Maybe, as it was at a time when he was getting old, he felt the need to reassure his “lot” that they still had some power when it came to displaying the very qualities that they were hired for and that were probably drained out of them over a career spent working at aging dinosaurs. I think this is mainly to appeal to those people who weren’t part of the rising tech boom of the time in America.

He states: “The term (entrepreneurship), then, refers not to an enterprise’s size or age but to a certain kind of activity” He then proceeds to redefine entrepreneurship in terms of applied innovation: “The effort to create purposeful, focused change in an enterprise’s economic or social potential”

In order to do this, Drucker has done the work of classifying sources of innovation as he saw it then.

https://fermatslibrary.com/s/the-discipline-of-innovation

Introduction (by the publishers)

The first few sentences of the introduction to this article ask about the role played by management in innovation. Two leading approaches to how management can foster innovation within an organization are noted:

1. The take a step back passive approach
2. The deliberate enablement of innovative activities by ensuring that certain processes for this enablement are both in place and regularly reviewed.

The question of what qualities lead to innovation is discussed, and two of the most obvious ones are contrasted: inspiration and hard work.

1. In the case of inspiration being a leading cause of innovation, the suggestion is that the take a step back passive approach to management would be most effective. Here, they are talking about the hiring process, where you take great pains to bring in individuals who may be capable of striking innovation at some point in their tenure with the organization, and giving them the space, intellectual and organizational freedoms to both articulate and act upon innovative ideas.
2. In contrast, if hard work is the leading cause of innovation, then management must play a more active role. The action of management is almost dismissed by casually referring to the three main management activities, noted below, as aiding in fostering innovation: 1. Establish the right roles and processes. 2. Set clear goals and relevant measures. 3. Review progress at every step. I think this is because management in the traditional sense, is perceived as more of an active activity, where extroverted individuals excel at throwing their weight around.

The introduction goes on to state that the views of Drucker lie somewhere along the middle of this active-passive spectrum.

Drucker’s view:

• Innovation is real work.
• Innovation can and should be managed like any other corporate function, but that doesn’t imply that innovation is the same as any other business activity.
• Innovation is the work of knowing, rather than doing.

The introduction then proceeds to highlight the core of this article, which is about seven areas of opportunity where most innovative business ideas come from.

Sources of Innovation

1. Unexpected Occurrences
2. Incongruities
3. Process Needs
4. Industry and Market Needs
5. Demographic Changes
6. Changes in Perception
7. New Knowledge

These 7 areas are noted to be divided across the following:

1. Particular companies
2. Particular industries
3. Broader social trends
4. Broader demographic trends

Quote: Astute managers will ensure that their organization maintains a clear focus on all seven.

This statement is made in the introduction for two reasons:

1. First, they want to emphasize that having a clear focus on these seven aspects is the correct and only way to enable innovation.
2. Second, they want to play a psychological trick on the reader, through the use of the word astute, that smart people will inevitably agree with their views.

Once the reader is made to feel smart, he is immediately made to feel dumb again as the next couple of sentences illustrate, concluding the introduction.

Quote: But analysis will take you only so far. Once you’ve identified an attractive opportunity, you still need a leap of imagination to arrive at the right response – call it “functional inspiration.”

Here, they are referring to the role played by management discussed above. Say, someone in the org identifies an opportunity. What do you do about it? What action do you, with all your insights and power, take to capitalize on the opportunity for the benefit of the organization? Basically, this is HBR distancing itself from its own views, which it wants to push to the reader, but with a disclaimer saying, “hey, you need to figure it out in the moment!”