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"Entrepreneurship is 'risky' mainly because so few of the so-called entrepreneurs know what they are doing." Peter Drucker

It's a common practice to associate entrepreneurship with risk and genius with innovations. According to Peter Drucker, we're getting it wrong on both fronts. The reason entrepreneurship is perceived as risky is because leaders "violate elementary and well-known rules." They can reduce risk by taking a systematic approach - especially to innovation. Instead of a muse, they need discipline. Instead of genius, they need a primer on those "elementary" rules. And Drucker delivers.

In Innovation and Entrepreneurship, Drucker lays out a simple, clear - and profoundly effective - set of rules for leaders, dos and don'ts to help them innovate effectively.

Do's of Innovation:

  • Do begin with an analysis of opportunities. Drucker delineated seven avenues that entrepreneurs (and, in fact, leaders of all stripes) can explore for opportunities. He wrote, "purposeful, systematic innovation begins with the regular analysis of opportunities."

    Are there incongruities in your organization or industry? Are there demographic trends that are particularly meaningful for your company? Is there a process that you can improve in order to fill a need? Examine each area; not all are relevant at all times, but they can each hold significant opportunity.

  • Do look, ask, and listen. Innovative leaders understand that innovations have both analytical and human components. It's your job to analyze an opportunity with data and figures, and then check assumptions against the actual expectations, values, and needs of stakeholders. As Drucker writes, "Innovation is conceptual and perceptual."

  • Keep it simple and focused. Innovation must be simple and focused. This is a concept with which Steve Jobs agreed wholeheartedly. The late Apple CEO said, "That's been one of my mantras - simplicity and focus. Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains."

    Drucker advised that an innovation do "one thing" to avoid confusion and over-complication. People should look at the product, improvement, or service and think, "It's so simple; why didn't I think of it?"

  • Do start small. Put away your delusions of grandeur. True innovations aim to do one thing, and do it well. Those that seek to "change the world" in a radical way often fail. Instead it is "small" innovations often yield better returns. In the tech world, for instance, there is an idea that the companies should strive for the MVP - that is the "minimally viable product," or the simplest version of a product.

    Keeping innovation small also keeps your costs small, your risk lower, and your organization tighter. As Rich Kneece writes in Wired, small innovations like "'Bagel Fridays'...may never achieve the notoriety of other employee innovations like Gmail. However, these small impact ideas get the ball rolling." They can create a track record of openness to new ideas and motivate people to contribute ideas - and the "process and methodology used for smaller ideas" can be applied to larger ideas in the future.

  • Do aim at leadership. This is where the target should be, not on translating an innovation into a major business. Whether you want to dominate an industry or create a niche, aim at becoming the leader in that space. Otherwise, you're just making room for competition, which can leverage your ideas and success and catapult past you.

Don'ts of Innovation

  • Don't try to be clever. Drucker may have had a somewhat dim view of the average Joe; he writes, "Innovations are for ordinary human beings and incompetence is in abundant and constant supply." Make it simple (a must-do) because anything clever is almost certain to fail.
  • Don't diversify, don't splinter, and don't try to do too many things at once. Again, do one thing, and do it well. At least to start. Glue your innovative efforts together with concentrated effort.
  • Don't try to innovate for the future. Innovate for now. Unless there is an immediate application, a future-based innovation is nothing more than a great idea.

Is innovation really as simple as a list of dos and don'ts? Give them a try and find out. Your business, and bottom line, will give you the answers you need.


Larry Hart

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