T h e D i s c i p l i n e o f I n n o v a t i o n ( D r u c ke r , 2 0 0 2 )

In the authors point of view, innovation rarely springs from a flash of inspiration. It
arises from a cold-eyed analysis of seven kinds of opportunities.
1. Unexpected Occurences: IBM, for example, recognized an unexpected
success when it realized there was demand of simplified computers, which
were only used in science, for companies as well.
2. Incongruities: realizing incongruities can help in being innovative. For
example, managers of shipping companies realized that the problem of high
costs was not doing work (being at sea) but it was not doing work (sitting at
the port, waiting to be reloaded). Therefore, they reduced costs by
implementing containers for fast (un)loading.
3. Process Needs: For example, modern newspapers resulted from the
invention of Linotype ( quicker printing) and advertising ( lower sales cost)
4. Industry and Market Changes: technological advances, customer changes,
environmental changes
5. Demographic Changes: The Japanese are ahead in robotics because they
recognized that their population is aging. Important factors: age, education,
income, geographic location
6. Changes in Perception
7. New Knowledge: the super stars of innovation. Examples: computer,
internet, medical knowledge
In principle, innovations should be simple and focused. They start small and are not
grandiose. They are based on work and not always on genius.

Some innovations spring from a flash of genius. But as Peter Drucker points out in this HBR Classic, most
result from a conscious, purposeful search for opportunities. For managers seeking innovation, engaging
in disciplined work is more important than having an entrepreneurial personality. Writing originally in the
May-June 1985 issue, Drucker describes the major sources of opportunities for innovation. Within a
company or industry, opportunities can be found in unexpected occurrences, incongruities of various
kinds, process needs, or changes in an industry or market. Outside a company, opportunities arise from
demographic changes, changes in perception, or new knowledge. These seven sources overlap, and the
potential for innovation may well lie in more than one area at a time. Innovations based on new
knowledge, of course, tend to have the greatest effect on the marketplace. But it often takes decades
before the ideas are translated into actual products, processes, or services. The other sources of
innovation are easier and simpler to handle, yet they still require managers to look beyond established
practices. Drucker emphasizes that in seeking opportunities, innovators need to look for simple, focused
solutions to real problems. The greatest praise an innovation can receive is for people to say, "This is
obvious!" Grandiose ideas designed to revolutionize an industry rarely work. Innovation, like any other
endeavor, takes talent, ingenuity, and knowledge. But Drucker cautions that if diligence, persistence, and
commitment are lacking, companies are unlikely to succeed at the business of innovation.