Saturday, February 2, 2013

Innovation and Entrepreneurship

Nearly 30 years old, this book still carries itself quite well. Lots of business books are faddish, attempting to capitalize on whatever is trendy.  Others have one good central idea that could be described in 5 pages, and are fluffed out to make them book length.  But I found a number of concepts that were relevant in this book, indeed, many that I've read in other, much later books, so it felt like a highly worthwhile read.  The book's age also helps in another way: rather than focus on the hot startup du jour, the examples are a bit more abstract, in that many of them are not so relevant today.  In other words, Apple makes an appearance, but so does Wang Laboratories.  That's a good thing, because it lets you focus on the idea being conveyed without confusing the issue with all of the hype and excitement about what's popular right now.

But—and this defines entrepreneur and entrepreneurship—the entrepreneur always searches for change, responds to it, and exploits it as an opportunity

Innovation and Entrepreneurship opens with a discussion of different kinds of innovation.  Quoting from the book:
  • The unexpected—the unexpected success, the unexpected failure, the unexpected outside event;
  • The incongruity—between reality as it actually is and reality as it is assumed to be or as it “ought to be” 
  • Innovation based on process need; 
  • Changes in industry structure or market structure that catch everyone unawares. The second set of sources for innovative opportunity, a set of three, involves changes outside the enterprise or industry: 
  • Demographics (population changes); 
  • Changes in perception, mood, and meaning;
  • New knowledge, both scientific and nonscientific
And in discussing these different types of innovation, Drucker points out that the stereotypical "revolutionary idea" is actually pretty rare compared to other types of innovation.  A more typical situation is an industry insider who sees how things could be improved, and strikes out on their own.

Indeed, this is a theme common throughout the book: highly visible high tech innovation of the sort typified by, and glorified in Silicon Valley is probably more of the exception rather than the rule.

Something I noticed throughout the book were ideas I've seen in other, later business books, like Steve Blank's "get out of the building", or this quote about attacking a niche:

Once that beachhead has been secured, that is, once the newcomers have an adequate market and an adequate revenue stream, they then move on to the rest of the “beach” and finally to the whole “island.”
 Which is pretty much exactly the strategy espoused in Crossing the Chasm .

In any event, there's a lot of good material, and it's impossible to summarize all of it, so I'll conclude that this is a good one that is still relevant 30 years after having been written.

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