innovation and entrepreneurship, peter drucker on innovation and entrepreneurship

Innovation and Entrepreneurship

Agsb entrepreneurship elective lecture

Book by Peter Drucker, management guru

Peter Drucker

Definitions

• Entrepreneurship – “shift of economic resources out of an area of lower to higher productivity of greater yield.” J. B. Say 1800

• Innovation – “creating value out of existing

resources.” A specific tool of entrepreneurship.

They go hand in hand!

Innovation & Entrepreneurship

Entrepreneurship

NEW VALUE FROM EXISTING

• Entrepreneurship – “destroying old order and creating something new.” Schumpeter

• Innovation – innovare to make new

- creating value from existing things

processes

- not just new things; they have to be

NEW VALUE

Types of innovation

• Technical

• Social

• Economic

Most innovations are social and economic. THEY HAVE THE MOST IMPACT!

Social innovations

• Textbooks• Hospitals• Management• Organizations• Universities• Night/adult schools

Technological Innovations

Review

• Creativity

• Innovation

• Inventor

• Entrepreneur

Who was Edison?

Is innovation only for small businesses?

Characteristics of innovation

• It is hard work

• It is systematic

• It focuses on opportunities; not problems

• It is focussed

• It is customer-centric

• Its effect is felt in the economy and society

Practices of innovative companies

1. Responsibility for innovation

2. Rewarding innovators

3. “Hiving off” – divisionalisation

4. Changing corporate rules to nurture

innovation

Skunk works at Lockheed

3M

3m products

R & D

Johnson & Johnson

R & D

R & D

Innovation Strategies

1.“The Fustest with the Mostest”

Original innovations

At the Lead Pack..

Example companies

Original innovators

2. Creative imitators

“Not the orig..”

“Wheel suckers?”

Examples

• IBM

• J &J

• Seiko

• National

• Swatch

Battle of the watches

3. Creating main value propositions

Business model

How does a company earn? – business model

MVP

1. Utility to the customer

2. Price

3. Customer’s reality

4. True value

Innovation policies in nations

WHAT WILL NOT WORK:

• CENTRAL PLANNING

• RELYING ON TECHNOLOGICAL INNOVATION ONLY

Communist Party approving a central dev’t plan

What will work?

CREATIVE DESTRUCTION OF THE OBSOLETE:

• New tax laws that will favor sale of non – performing assets.

• Sunset laws for obsolete gov’t agencies.

“Every generation needs a revolution”

-Thomas Jefferson

French Revolution

Entrepreneurial Revolution?

Another revolution in Egypt –entrepreneurial revolution

Vernuft wind Unsinn,Wohltat Plage“Reason becomes nonsense, Boons

afflictions”

Goethe

Obsolescence

Old Manila

The new gets old

Thank you!

Profjorge.entrep@gmail.com

acknowledgement

• The picture and photographs are from Google images;

• The bulk of the presentation are interpretation of the work of Peter Drucker’s book on innovation and entrepreneurship. (creative innovation?)