The business enterprise has two, and only two, basic functions: marketing
and innovation. It is not necessary for a business to grow bigger; but it is
necessary that it constantly grow better. ―Peter F. Drucker
The organization that fails to continually innovate new products and services
will not survive long. As competition becomes tougher and market challenges
increase, innovation is an imperative for business leaders and managers around the world.
A recent survey by Booz Allen Hamilton Inc. found that 90 percent of executives considered innovation to be crucial to growth and planned to improve innovation performance by an average of 30 percent.
But not all innovations produce commercial success. A new business idea must offer customers exceptional utility at an attractive price, while delivering a tidy profit. The uncertainties inherent to innovation are so great that even the most insightful managers have a hard time evaluating commercial readiness and potential.
Innovation and commercially successful new business ideas emerge partly from inspiration, but mostly from hard work. Managers must establish the right roles and processes, set clear goals, require relevant measures and review progress at every step of the way.
Most business opportunities emanate from methodical analysis of seven areas of opportunity, according to Peter Drucker (Harvard Business Review, 2002). Some exist within the companies or industries themselves:
1. Unexpected occurrences
3. Process needs
4. Industry and market changes
Others are based on broader social or demographic trends:
5. Demographic changes
6. Changes in perception
7. New knowledge
Astute managers focus clearly on all seven areas—but even the most seasoned executive may not recognize a good opportunity when it presents itself. What, then, can we learn about sources of innovation from both inside and outside the organization? How do you decide which bright idea to back and identify innovations that will yield commercial success?
The full 2,000-word article covers the following concepts:
7 Sources of Innovation
Outside Sources of Innovation
Changes in Perception
Using New Knowledge
Recognizing a Winning Innovation
Creating Exceptional Utility
When Innovation Leads to Complexity
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