Principles and Strategies of Innovation – You must Know

The great researcher and professor in the field of management and entrepreneurship, Peter F. Drucker, in his book Innovation and Entrepreneurship(1) lists several principles which should be respected by innovators. He has grouped these principles in ―Do ‘s and ―Don’ts in the process of innovation.

Do ‘s are listed as below:

  • Innovation starts with analysis of opportunities. It starts with the seven opportunities for innovation. They are: unexpected events, disagreements in the process, requirements of the process (the need for a new process), and unexpected changes in industry or market structure, demographic changes, changes in perception, importance and new knowledge.
  • Innovation is a conceptual and perceptual activity. The second imperative of the innovation is to go out and see, ask and hear. Successful innovators work analytically on the question what should the innovation be like in order to satisfy an opportunity. Afterwards, they go out and see the customers/users and they find out what are their expectations, their values and their needs.
  • Innovation, in order to be successful, should be simple and focused. If the innovation is not simple, it will not succeed. Everything new gets into trouble: if it‘s complicated, it cannot be corrected or solved. All the successful innovations are surprisingly simple. In fact, the greatest acknowledgment for an innovation is when people say: This is so obvious. Why didn‘t I think of this?
  • Innovation should start as “small”. Innovation should not be grandiose. It should hold up to something specific, concrete. In the beginning, it requires a little money, some people and a small limited market.
  • A successful innovation aims towards leadership. If an innovation at the very beginning does not aim towards leadership, its highly probable that it will not be innovative enough.

Don’ts are listed as follow:

  • Innovations should not be very “smart”. Innovations should be led by simple people. Everything that is done in a very smart way, either for the designing or the completion, is set to failure by high probability.
  • Many things should not be done at a time. Innovations have a need for concentrated energy and common effort. It also requires that people who effectuate the innovation should have mutual understanding.
  • Don’t innovate for the future, but for the present. One innovation can have a long-term impact, but it demands a longer time to reach its maturity. It should be a solution for the problems in the present.

Also we can count and these principles that give life to the process of innovation(2):

  1. Innovation starts when people convert problems to ideas. New ideas are born through questions, problems and obstacles. The process of innovation is indebted to the trouble that comes about when we are surrounded by that which is not solved, not smooth and not simple. Therefore, in order for the innovation process to flourish, it needs a climate that encourages inquiry and welcomes problems.
  2. Innovation needs a system. All organizations have innovation systems. Some are formal, designed by the leadership, and some are informal, taking place outside established channels. Informal channels are untidy and inefficient, yet innovation is always associated with them.
  3. Passion is the fuel and pain is the hidden ingredient. Ideas do not propel themselves; passion makes them go. Passion, in addition to talent and skill, is a valuable company asset. Passion is what transforms other resources into profits, but it never shows up on a balance sheet. Unfortunately, there seems to be some universal law that says when pursuing a passion or following a dream, pain is part of the process. Innovation leaders need to take the pain with the passion and learn to manage both effectively.
  4. Co-locating drives effective exchange. Co-location refers to physical proximity between people. It is a key for building the trust that is essential to the innovation process. It also increases the possibility for greater exchange of information, cross-fertilization of ideas, and stimulation of creative thinking in one another and critique of ideas during their formative stage.
  5. Differences should be leveraged. The differences that normally divide people — such as language, culture, race, gender and thinking and problem solving styles can be a boon to innovation. When differences are used constructively and people move beyond fear, suspicion, mistrust and prejudice, differences can be leveraged to enhance and sustain the innovation process.

The 2007 Booz Allen Hamilton report on Global Innovation 1000 argues that statistical analysis of a representative sample of global innovation 1000 companies divided them into three distinct categories of innovation strategy: Need Seekers, Market Readers, and Technology Drivers (3).

  1. Need Seekers companies focus on being first to bring new products to markets and base their R&D efforts on getting direct, proactive input from customers. They engage actively current and potential customers to shape new products, services, and processes.
  2. Market Readers distinguished themselves through their preferences for incremental change and being fast followers into markets. They watch markets carefully and maintain a more cautious approach focusing on creating values through incremental change.
  3. Technology Drivers focus on a technology forward approach to innovation, while remaining less concerned with direct customer input into the process. They follow the direction suggested by their technological capabilities, leveraging their investment in research and technology to drive breakthrough innovation or incremental change.

There were significant performance differences between the three categories: R&D spending was 40% greater in the Need Seekers group. Each group showed a similar mean values for return on assets, but the standard deviation for Technology Drivers was 40% higher, indicating that this group pursue a riskier innovation strategy than the two other categories.

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