Innovation and Entrepreneurship by Peter Drucker is a business book, written in 1973. It provides an overview of innovation from the perspective of management theory and discusses how new technologies can help companies become more efficient or adaptive to changing markets.
Innovation and Entrepreneurship by Peter Drucker is a book about entrepreneurship, innovation and entrepreneurship. It was written in 1954 and has been translated into more than 50 languages. Innovation and Entrepreneurship is the most popular of all his books.
Are you seeking for a synopsis of Peter Drucker’s book Innovation and Entrepreneurship? You’ve arrived to the correct location.
After reading Peter Drucker’s book, I scribbled down a few significant takeaways.
If you don’t have time, you don’t have to read the whole book. This book synopsis gives you a quick rundown of all you can take away from it.
Let’s get this party started right now.
I’ll go through the following themes in this book synopsis for Innovation and Entrepreneurship: Discover how everyone in any position may be an entrepreneur:
What is the difference between innovation and entrepreneurship?
How to be inventive and what techniques to utilize to generate clients are covered in Innovation and Entrepreneurship. Entrepreneurs show how to develop and apply entrepreneurial skills not just to new companies but also to current businesses in this book.
Who wrote the book “Innovation and Entrepreneurship”?
Peter Drucker, a corporate management theorist, is considered as one of his generation’s most influential intellectuals. He had a varied career that included consulting, teaching, and writing. He wrote over 35 books, a significant body of work that served to create the groundwork for current business thought. In 2002, George W. Bush awarded Drucker the Presidential Medal of Freedom.
What is the Purpose of Innovation and Entrepreneurship?
Reading Innovation and Entrepreneurship is not for everyone. It could be perfect for you if you are one of the following categories of people:
- Anyone who is interested in starting a business
- Senior executives in large corporations
- People who develop brilliant new product or service concepts
Summary of the Book on Innovation and Entrepreneurship
Introduction
There is no such thing as a “personality of the entrepreneur.” Anyone may start their own business. The ability to use the proper methods and comprehend innovation is crucial to being a successful entrepreneur. You don’t have to create anything new to be creative; you may also reinvent how you run your firm.
Lesson 1: You must seek for sources of creativity in order to innovate.
What is the key to launching a successful business? Some claim it’s a lot of labor. To be a great entrepreneur, you must always be looking for new methods to improve your company. To put it another way, you must actively seek for possibilities for innovation.
They might be internal – occurring inside a company, market, or industry – or external – occurring outside of the company, market, or industry.
Take a look at the organization’s sources of innovation.
There’s the unexpected, for starters.
When consumers began buying appliances in larger numbers, Macy’s, New York’s largest department store, faced the same issue. Macy’s didn’t start the trend; it simply occurred.
Unexpected circumstances will be used by a savvy entrepreneur or corporation.
Macy’s, on the other hand, wasn’t quite that polished. When faced with this unanticipated success, they attempted to curtail appliance sales since it was out of the ordinary. As a result, they lost a significant amount of market share.
Bloomingdale’s and other department shops had the same problem. However, unlike Macy’s, they took advantage of the trend and boosted revenues by promoting their appliance sections.
Changes or developments within an industry or market may also lead to innovation.
For example, in the 1960s, the car industry, which had previously been controlled by local enterprises in each nation, became a worldwide industry.
Volvo, for example, actively promoted itself over the globe in reaction to this shift. As a result, Volvo has grown from a modest manufacturer just breaking even to a global success.
Citroen, on the other hand, failed to adapt to the changes and became obsolete.
If you are able to use the unexpected and adapt to a changing market, you will get additional benefits.
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Lesson 2: Identifying flaws in a process or misdiagnoses in a circumstance leads to innovation.
So far, we’ve looked at two different types of internal innovation. In this chapter, there are two additional things to think about: process requirements and inconsistencies.
Entrepreneurs focusing on process should look for a weak link in a process since a weak link gives an opportunity for innovation.
Consider the procedure for an eye surgery as an example. Cataract surgery was one of the most popular treatments done on the eyes in the 1950s.
Despite the near-perfect outcomes, there was one issue with a ligament severance. Bleeding into the eye was a possibility.
A pharmaceutical salesperson named William Connor identified this flaw and devised a cure. He devised a method of storing an enzyme capable of dissolving ligaments without cutting them, as well as a method of dissolving ligaments without cutting them.
After his idea established a recognized step in cataract-removal technology, he was able to sell his firm for a tidy profit.
Incongruities, or inconsistencies between reality and people’s views, may also stimulate innovation.
Wherever there is a gap, it is always feasible to innovate.
Before the 1950s, shipping corporations, for example, attempted to make their ships quicker in order to go from port to port more rapidly. Meanwhile, shipping prices have risen dramatically.
The true problem, not the speed between ports, is ships that are sitting idle in ports. The problem was misdiagnosed by the transportation firms.
There was a “inconsistency” between the corporations’ perceptions of the issue and the real situation.
To fill this need, container ships were developed, which could load and unload cargo considerably more swiftly. As a consequence, shipping expenses were reduced by 60%.
Lesson 3: Entrepreneurs may create new products and services outside of their industry, markets, or businesses.
Not all inventions originate inside a particular industry, market, or company. Outside of the industry, market, or company, new ideas might emerge. External innovations are those that occur outside of the company. Let’s take a closer look at them.
Understanding demography may be an external source of innovation since as the population changes, so does the market.
A shift in the population’s age or size is one example of demographic change. As a consequence, market needs shift as individuals seek out new products and services.
Those who can forecast and prepare for these developments have the greatest chance of succeeding.
For example, following WWII, birth rates in the United States skyrocketed, resulting in the “baby boom.”
Melville, a shoe shop, took advantage of this. Melville started to target the adolescent shoe and apparel industry as many of these “boomers” entered puberty. Melville had a lot of success with this strategy.
External sources of innovation include knowledge-based innovation.
When most people think of developing a new concept or invention, they think of innovation.
Using information to develop an invention, on the other hand, is often a long and difficult process that requires a diverse set of skills.
Take, for example, the computer. It’s the product of millennia of math, electronics, and programming study and development.
In the seventeenth century, a binary number system was developed, which led to the development of the computer. In the early nineteenth century, a method was used to develop a basic calculating machine. In 1880, a machine was invented that enabled humans to program instructions into it. The first computer, however, did not become operational until 1946.
Although no creation takes centuries, knowledge-based innovation might take a long time.
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Lesson 4: Entrepreneurship is not restricted to start-ups; large corporations may also be entrepreneurs.
It’s a common misconception that innovation is limited to tiny, hungry businesses, but this isn’t the case. Within enterprises, too, innovation is possible. It does, however, need the execution of specified actions.
The first step in fostering creativity is to establish uniform policies.
Businesses should question themselves, “How can we support innovation in our company?” in order to design the best policy.
To solve this issue, a company should have a policy in place that allows them to reject obsolete processes as needed and seek out creative new ones. It is critical to recognize that all products, services, and technologies have a finite lifespan, which is why alternative solutions are necessary.
The firm should establish a strategy for when new innovations will be required in order to be ready to profit from them.
The second step a company must do is to join an organization that encourages entrepreneurship.
It’s a good idea to segregate new creative initiatives from existing ones, give them their own place, and hire a manager to supervise them.
There should be an assessment system in place to enhance the firm’s entrepreneurial performance, since it is critical for the company to know if the outcomes of its efforts fulfill its expectations.
A feedback mechanism was employed by one big bank to determine how new projects would succeed. They would be able to predict when new endeavors would start to provide returns based on the input they received.
An organization should examine all creative activities.
This is accomplished by the world’s biggest pharmaceutical firm examining new medication discoveries on an annual basis to choose whether to pursue them or discard them.
Businesses may follow these steps to become entrepreneurial organizations as well.
Lesson 5: In order to thrive, new businesses must know where they’re going.
A business plan is required for all new businesses. Their present behaviors must be planned in order for them to progress in the appropriate way. To develop a successful company, you must follow four stages.
The first stage is to locate a market.
The majority of entrepreneurs thrive in markets other than the ones they expected, thus it’s critical for a new business to keep an eye on a range of sectors.
Several Indian firms purchased rights for European-designed bicycles with modest motors that they saw as perfect for the Indian market. Everyone wanted the motor, but no one wanted the bicycle. Thankfully, it functioned well as an irrigation pump.
The firm owner made a profit by taking advantage of this unanticipated market.
It is critical to have the correct financial focus in order to develop a successful firm.
A company must ensure that it has enough money to invest, expand, and survive if it encounters problems in addition to maximizing profits.
Knowing how much money is required and for what reasons 12 months in ahead is a solid rule of thumb.
The last two processes are to put together a competent management team and decide on the role of the founding entrepreneur.
The entrepreneur should build a management team before the firm becomes too big for one person to handle.
Now that the founders have put together a team, they need think about how they can best serve the organization. “What am I excellent at?” in particular. “How can I best assist the company?” and “How can I best assist the company?”
It’s vital to remember that if a founder can’t provide value to the firm any more, they may have to depart.
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Lesson 6: Being the first to enter a market provides you a significant competitive edge.
If you wish to enter a market as an entrepreneur, you must first obtain a market share. The easiest way to do this is to adopt an entrepreneurial approach.
Being “Fust with the Mostest” is aiming to be the first in your profession and then capitalizing on that position.
It takes an all-out effort to get there. You only have one shot to be the first entrepreneur in your sector, therefore you must work hard for it.
In the 1920s, Hoffmann-La Roche, for example, was a modest chemical business that made colors. It seemed to be a risk at the time.
Vitamin research drew little attention at first since it was a relatively new topic.
After acquiring the patents, the corporation paid its discoverers large sums of money to produce and advertise the vitamins. It also took out a large loan to do so.
It was a wise decision on their side. The firm was the first to join the vitamin industry and has been the market leader for the last 60 years.
However, it is an extremely hazardous method since there is no option to start again if you miss the goal. If you don’t get there first, you’ll lose your market dominance.
To earn the top rank, it’s critical that you know your market completely and out and that you’re looking for suitable chances. If you make the incorrect option, you will fail.
Shooting for the moon, like aiming for the moon on a rocket, requires accurate calculations and observations prior to launch. If you aim even slightly off, you will miss the moon.
Lesson 7: You may achieve huge success by spotting market gaps that your rivals do not recognize.
The next entrepreneurial tactic is to identify the holes that your competitors overlook. This method is described by the author as “Hit Them Where They Ain’t.” Two methods for doing this are creative imitation and entrepreneurial judo.
Entrepreneurs that utilize creative imitation embrace pre-existing concepts and apply them in a more customer-friendly manner.
IBM created the first computer in the 1940s. The corporation, on the other hand, quickly abandoned its development. But why is that? When they saw the potential of a competitor’s computer, they knew it.
ENIAC was IBM’s competitor, and IBM felt ENIAC’s computer was ideal for commercial operations like payroll, which ENIAC hadn’t considered.
IBM sought to emulate the ENIAC computer in order to produce a business-friendly ENIAC computer.
IBM’s version became the industry standard and a big success as a consequence.
Another business tactic is to use entrepreneurial judo to attack your competitor’s weak places.
Arrogance is often shown as a flaw by established businesses.
Companies sometimes disregard fresh ideas because they believe their approach is the best. Other businesses, fortunately, can take advantage of this.
In the 1970s, a modest American business created the transistor. The large American corporations didn’t think it was significant enough since it wasn’t created by one of them.
However, a little-known business at the time identified the transistor. Sony paid $25,000 for the transistor, taking advantage of their bigger competitors’ hubris.
With their first transistor radio, Sony was able to conquer the market in the United States in only a few years.
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Lesson 8: Successful businesses identify market niches.
When an entrepreneur focuses on one topic, he or she is more likely to succeed. Ecological niches are a kind of strategy that may be found in a number of ways.
To begin, you may follow a toll-gate approach, in which your product or service is a critical component of another product or service, allowing you to gain market domination.
The creation of an enzyme by William Connors is a wonderful illustration of this. It was necessary for cataract removal.
This method has the benefit of ensuring that your product remains the market leader since competing against it is inconvenient for your rivals.
Connors’ cataract could not be removed without the enzyme. Despite its low price, there is little demand for a lower-cost product since its cost is so modest in proportion to the whole process.
As a consequence, a less expensive enzyme version would be unprofitable.
As a result, Connors’ firm is in a strong position.
This technique, however, is risky since it is dependant on the other product. If a drug that could replace the eye procedure, for example, was developed, Connors’ company would go bankrupt.
Focusing on specific talents and niche markets is another method.
There are several parallels between the two. They need the acquisition of information that others lack, such as the ability to do a task or understanding of a certain market.
Manufacturers, for example, were great mechanics in the early years of the automotive business, but they were inexperienced in the electronics that went into each vehicle. As a result, several electronics companies with the appropriate expertise arose.
Keep in mind, though, that if your specialist talent becomes ubiquitous, you may lose your specialization.
Lesson 9: Entrepreneurs may thrive by increasing demand for already available items.
The novelty in this final plan is the approach itself, not the product or service. By improving an existing product and making it more desirable to buyers, a new product demand is produced.
Let’s look at two options for doing so.
Taking a current product and refining it to meet the demands of consumers is what innovation is all about.
This method entails not modifying the product, but rather getting it closer to the customer’s desires.
On their wedding day, many American ladies asked for a set of “excellent china.” Guests couldn’t afford to purchase the full set as a gift, and it was difficult for them to pick individual pieces since they didn’t know which to buy.
The Lenox China Company had a brilliant concept. As a response, the firm modified the wedding registry system: the bride would choose a pattern from the company’s collections ahead of time, and guests would then be able to buy goods from those collections.
As a consequence, the Lenox China Company was able to meet client demand while keeping the product same.
A pricing strategy is another way to reinvent an old product.
You may use this method to guarantee that your emphasis is on what customers will pay for your goods rather than the price.
When Gillette safety razors were introduced, going to the barber was more costly.
As a result, Gillette chose to sell its razors at a loss since customers would not pay more for a razor than a shave.
They recouped their investment by requiring that only Gillette razors be used with Gillette blades, which were sold at a profit.
The price approach used by Gillette resulted in long-term earnings.
Final Thoughts
Being a successful entrepreneur necessitates keeping an eye on new ideas. You will be able to acquire an edge over your competition by recognizing these sources. Being a successful entrepreneur requires a strong emphasis on the customer. Market expectations must be met by your goods or services.
Additional Reading
If you enjoyed reading Innovation and Entrepreneurship, you may also like the following book summaries:
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Peter Drucker is a well-known American business thinker who was born in Austria. His book “Innovation and Entrepreneurship” discusses the theory of entrepreneurship development. Reference: peter drucker theory of entrepreneurship development.
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