Innovation and Entrepreneurship

Rating:
Summary: Companies must be greedy for new products.
Review: Drucker encourages company managers to drive their products into obsolecance through pricing reduction and get rebirth by driving new product innovation, in their place. The power of innovation is the survival force of a company. A company should not wait for his competitors to drive him out of business. The proactive nature of innovation keeps him ahead of his competition.

Companies must give innovative individuals freedom and time to innovate new products. R&D creates a brain trust of bright ideas that solve problems. So, systematic innovation identifies gaps in economic niches. Innovation must occur before the service or products breaks or competitor for the company out of business.

Companies must be greedy for new products. Greed is essential to drive product and service development. Entrepreneurship favors medium sized companys that make at least 500 million dollars. The Medium size company is the most likely to innovate and become successful at developing the marketing and research for the product. 1 in 100 Bright ideas patent every develop into a product or service that pays for development costs, marketing, and management of the product. Profitability becomes a function of marketing and management. The Entreprenueur is a manager.

Entrepreneurship is about hard work, reducing risk, and promoting a simple solution. Entrepreneur ares risk reducers and leave nothing to chance. Entrepreneurs take a prove it attitude and gain strong understandings of how the product works. Little is left to chance or guess work.

Drucker warns about complicating a new product, instead, it encourages to offer a simple solution and focus on developing this solution. Furthermore, quality is measured in terms of what people are willing to pay for. Companies can not afford to be non-profit. The economy depends on cash generating business and they have no time to consider non-profit. Marketing and management understand "what customers" will pay for, technology quality does not guarantee customer demand. Technology may product the product but it can not claim its own quality rating, only the consumer defines quality. Customer demand and their williness to pay for a product or service is the only measure of quality. Drucker illustrates this concept by telling about the migration for the vacuum tubes to transistors. RCA built the transister, but a Japanese firm licensed the technology, built a transistor radio for a 1/3 of the cost and 1/5 of the size, and market domination in five years. The second case was the photocopier. Xerox recognized that companies, schools, and individuals would want to replicate print media.

Lets examine the inconsistency in Company A, a telecommunication business. Suppose, the biggest inconsistency that Company A has is not resolving it customer service breakdowns. Company A's customer service is difficult to deal with: long waits, disputes over billing, service availablity, and lack of loyalty incentatives.

Suppose company B realizes these inconsistencies exploiting the weakness by offering a better telecommunication business model and attempts too remedy customer disatification research by providing 24x7 customer service which is accessible within 30 seconds, the customer experiences no significant delays, and company B resolves the problems relating to billing and service within the hour.

Also giving that Company A does reward customer adovacacy by rewards for loyalty and promotion there is establish not incentitive to help Company A. Even if, the customer tells a hundred people about Company A and the people he talks with to sign up with Company A, there is absolutely zero reward from Company A. In this scenerio one would think Company A would reward the individual for advocacy and promoting their business. Instead, Company A believes that large dollars spent marketing their service is causing their growth. Company A further knows a chasm has been forming being the company and its consumer basis because of the increasing number of complaints, so it changes its brand logo and enforces heavy penalities on its cusotmer service department to improve performance. Company A debates the cost of customer service against customer retention and new signons. Company A agressively follows a policy of 1 year contracts to secure its customer base from abandonment.

Lets look at Company B. Company B offers competitive rates and superior customer service. Company realizes that international calling services are an important service. Company B offers international services for a cheap fee and creates customers seem pleased with the service. Company B members talk free between each other and most important any customer referral generates for the advocate.

Company B growth is a result of the customer labeling the company has having quality. Company B effective markets Company A service inconsistencies by promoting better products and services. Company B recruites top management, manages its cash flow, and provides cash incentitives to keep its sales force motivated.

Company B realizes if the sales force is not receiving a strong cash flow, they will become discouraged. Company B realizes that the sale force must be financially rewarded and the stars will immediately rise to the top management. Top management helps the new venture survive. External wisdom is sought to help guide Company B into sectors of strong customer demand.



Rating:
Summary: Deflates Knowledge-Based Innovation, Very Practical
Review: Drucker has a remarkable ability to deflate any self-styled entrepreneur and "innovator." His book discusses the sources of innovation, concluding rather significantly that knowledge-based innovation is rarely successful-that innovation generally works best when all the factors are known and put into new combinations that work exceedingly well-and that successful innovations start small, focus on the simplest element that can be understood by any half-wit, don't cost a lot, and are never grandiose.

Rating:
Summary: Deflates Knowledge-Based Innovation, Very Practical
Review: Drucker has a remarkable ability to deflate any self-styled entrepreneur and "innovator." His book discusses the sources of innovation, concluding rather significantly that knowledge-based innovation is rarely successful-that innovation generally works best when all the factors are known and put into new combinations that work exceedingly well-and that successful innovations start small, focus on the simplest element that can be understood by any half-wit, don't cost a lot, and are never grandiose.

Rating:
Summary: Great book for guidance on trying to identify opportunities
Review: Drucker's recurring theme is that good entrepreneurship is usually market-focused and market-driven.

Drucker gives us guidelines for identifying innovative opportunity. For example, unexpected successes or unexpected failures within an industry often point to opportunity. Drucker also suggests that innovative opportunity exists where there is "an internal incongruity within the rhythm or the logic of a process" or a process need.

As a great example, Drucker tells us the story of William Conner, a salesman to the medical industry who decided he wanted to start his own company. Conner went out and spoke with surgeons about the problems and difficulties the surgeons faced.

While talking with surgeons, Conner learned that the process for cataract surgery was generally routine and easy, except there was one incongruity making the surgery difficult and unpleasant for physicians. During the surgery, surgeons had to cut one ligament which involved some risk.

With research Conner learned that there was an enzyme that dissolved this ligament. Conner also learned that new methods of storage could preserve this enzyme allowing it to be used in surgery. After patenting his compound, Conner quickly captured a niche market providing his compound to surgeons performing cataract surgery. No longer did they need to cut the ligament. They could dissolve it. With process need, the market already exists for the innovation. Drucker notes this is a relatively low-risk type of entrepreneurship.

While process need is a great area of entrepreneurial innovation, Drucker also suggests demographics may provide opportunities. I'm more dubious of this. Even though we may know how the population will change in ten years, capitalizing on this change isn't easy. Further, most entrepreneurs already tend to be focused on a particular industry or market and large-scale demographic changes wouldn't induce them to change their company's focus. Plus, there are entrepreneurial opportunities even in declining industries.

Sometimes, there is a dissonance between reality and the perception of reality in an industry. This may offer innovative opportunities, according to Drucker.

For example, Drucker mentions the evolution of the ship container industry. While established shipping companies focused on cutting transit time and cost by making ocean-going ships faster and more cost effective, this really wasn't the key. Ships were already very efficient in transit.

Rather, the real problem with the shipping industry was the loading and unloading of cargo, which kept ships in port and tied up valuable harbor space. When the shipping container was developed, it could be pre-loaded on land before the ship arrived. The pre-loaded container could then quickly be loaded onto the ship when the ship arrived in port. This made ocean transit much more cost effective and efficient. Drucker notes that the big cost of ocean transit was having ships held up in port, effectively tying up a capital asset without being able to utilize its full earnings capability.

Drucker discusses entrepreneurial management, claiming three keys to building a successful new organization are:
--having a market focus
--financial foresight, i.e., cash flow budgeting and planning for capital needs
--assembling a top management team

Other topics covered in "Innovation and Entrepreneurship" include creative imitation, entrepreneurial judo, and filling a specialized, ecological niche. "Innovation and Entrepreneurship" provides great insight into seeking entrepreneurial opportunities.

Peter Hupalo, author of "Thinking Like An Entrepreneur."

Rating:
Summary: How to discover and implement innovation.
Review: Drucker's thesis: "Systematic innovation consists in the purposeful and organized search for changes, and in the systematic analysis of the opportunities such changes might offer for economic or social innovation."

The book is divided into three sections: The practice of innovation (where to look to find indicators of opportunity for innovative change); The practice of entrepreneurship (managing so to foster innovation); and Entrepreneurial strategies (competitive strategies).

Drucker provides a detailed analysis of the sources of innovation and strategies for the implementation of innovation-based changes. He shows, with many real-world examples, how systematic innovation can be applied to business, government, politics, non-profit and service organizations.

The analysis is thorough, well structured and easy to understand. He finishes with an interesting discussion of why innovation is so necessary today, and gives some good examples of areas of society operating on dated assumptions and suggests some insightful innovations.

Even though the book was written some years ago, his methodology remains applicable. In terms of contribution to strategy development I rank Innovation and Entrepreneurship up there with Michael Porter's Competitive Strategy.

My only criticism of Drucker is his sometimes awkward writing style and his tendency to wordiness. However, I give the book full marks for being a well-researched and logically presented work.

Rating:
Summary: Enjoyable, but with missing pieces
Review: I enjoyed reading this book, especially because it focuses so much on anecdotes. I definitely understood Drucker's point that innovation and entrepreneurship come out of changes in the environment.

However, I believe Drucker missed the most important point, which is: What makes someone more able to exploit an opportunity than someone else? For example, he tells a story about how Ray Krok found out about McDonalds, bought it, and made it great. However, I thought he should have focused on why it was Ray Krok, and no one else, who saw the opportunity, rather than how he bought and made McDonalds. It is an entertaining read, but do not expect any lessons on how to be an entrepreneur.

Rating:
Summary: Enjoyable, but with missing pieces
Review: I enjoyed reading this book, especially because it focuses so much on anecdotes. I definitely understood Drucker's point that innovation and entrepreneurship come out of changes in the environment.

However, I believe Drucker missed the most important point, which is: What makes someone more able to exploit an opportunity than someone else? For example, he tells a story about how Ray Krok found out about McDonalds, bought it, and made it great. However, I thought he should have focused on why it was Ray Krok, and no one else, who saw the opportunity, rather than how he bought and made McDonalds. It is an entertaining read, but do not expect any lessons on how to be an entrepreneur.

Rating:
Summary: This book is must reading for every entrepeneur
Review: Implementing one of the ideas from this book caused my business to grow 700% in 4 year

Rating:
Summary: The best book for am entrepeneur. Buy it. NOW !
Review: It is difficult to find a book that guides you so clearly on what business really is. You know you have a great book when to said: It is evident. Why didn't think of it before. Do it before your competitors do.

Rating:
Summary: A masterpiece on innovation and entrepreneurship!!!
Review: Out of the many books I have read on Entrepreneurship, this book is the best. It is a single source of all the relevant information for the entrepreneur. The pioneering book which has differentiated between the small business owner and the entrepreneur, will go a long way before it can be surpassed. An absolute 'must-read' for anyone in business