Looking for inspiration on innovation and entrepreneurship? Here’s the source!

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innovation and entrepreneurship

One of the most enjoyable parts of my job is spending time with people looking to follow their dream and start new businesses. And time after time, I refer to what I learned in one single book: Innovation and Entrepreneurship by Peter Drucker.

peter_druckerPeter Drucker may be the most revered business leader and author in history. He has written some of the most inspirational and influential books in the field and while Innovation and Entrepreneurship is not his best-known book, it is a resource I have re-read many times in my career.

The book is also special to me because I took classes from Dr. Drucker when I was in graduate school in Los Angeles. At the peak of his intellectual powers even in his 80s, he would sit on the front edge of his desk every Saturday morning and lecture for three hours on his books, including this one. Over three years, I learned a lifetime of lessons from him that I use each day.

If you are passionate about innovation and entrepreneurship, here are three major lessons you can take away from this seminal book:

The mechanics of the entrepreneurial economy

Although this book was written in 1985, Dr. Drucker correctly predicted the rise of an entrepreneurial economy based on technological shifts and rapid innovation. While the world was still transitioning to a service economy, Drucker was already thinking ahead to an economy fueled by entrepreneurs.

An interesting insight is that technology doesn’t just change a marketplace — it also changes attitudes, behaviors, and organizations. An idea provokes much greater ripples than just a new product.

He said that companies that are not in a constant state of renewal — and prepared to continuously jettison out-moded products — are vulnerable.

Drucker adds that starting a business isn’t entrepreneurship if you are simply a “me too” copying something that already exists. He proposes many now famous ideas for discovering and occupying a niche.

Innovation is purposeful

Drucker explains that innovation isn’t a function of a wild-haired scientist yelling “eureka!” in his basement. Innovation is iterative, and that some of the world’s greatest products were simply better versions of something that existed before. He points out that the first versions usually fail and that the companies that iterate on those failures are most likely to succeed. Innovation is WORK!

He defines the seven source of entrepreneurial opportunity:

  1. The unexpected — An insight that occurs by an accidental discovery.
  2. Incongruity — When there is a gap between what you expect and what really is. Data can be a source of inspiration in this category.
  3. Filling a process need — Finding the “weak link” and finding a better way.
  4. Changes in industry structure — Epic changes like the Internet, globalization, and the collaborative economy are opportunities for innovation.
  5. Demographics — For example, shifts in age, education, and location are seeds for change.
  6. Changes in perception and mood — Lifestyles and attitudes toward products change over time. Today, wearing sneakers to a business meeting happens all the time. This never would have occurred in 1980. The sales of athletic wear grew simply because of a change in attitude.
  7. Scientific breakthroughs  – Like air travel, new materials, faster computers.

A framework for innovation

Perhaps Dr. Drucker’s greatest contribution through this iconic book is his idea on establishing a process for continuous innovation in every company. His approach makes so much sense that it has always amazed me why this formula hasn’t been adopted by every company in the world.

Even large companies can innovate if they weave it into their culture. There needs to be a PLAN to innovate, not just an expectation. Large companies may even have an advantage when it comes to innovation because done well, they have the resources and expert experiences to bring an idea to life.

Drucker says that one of the most important functions in a company is to continuously and systematically look for change that can be leveraged in the firm. He also preaches simplicity in all of his books — keep your approach uncomplicated. Don’t be afraid to start small and iterate.

Don’t splinter into so many ideas that you can’t keep up. Focus. Ideas that take a business completely out of its core business rarely succeed.

He once famously said a company is marketing and innovation — everything else is overhead. Without customers, and without a continuous stream of ideas to keep a company ahead in the race, you will fail. Through this little book. Peter Drucker left a lasting gift to the world to do just that.

Are you interested in promoting entrepreneurship? The United Nations Goal 8 initiative is looking for your help. Learn more on how you can be a supporter economic growth.

This post was written as part of the Dell Insight Partners program, which provides news and analysis about the evolving world of tech. For more on these topics, visit Dell’s thought leadership site PowerMoreDell sponsored this article, but the opinions are my own and don’t necessarily represent Dell’s positions or strategies.

Top illustration courtesy Flickr CC and Camera Eye Photography.

Illustration of Peter Drucker courtesy Claremont Graduate University.

Book link is an affiliate link.

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3 Most Dangerous Half Truths In Entrepreneurship

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Have you noticed how annoying small business clichés seem to generate instant experts? It’s as if repeating the same half true clichés that appear everywhere validates a voice.

Small Business Trends pointed out these three clichés below.  Pointing out what’s wrong with them, why they are only half true, and why they are also dangerous. So here we go.

1. Do What You Love

What business to start? Supposedly – you should just do what you love.

However, just imagine how many business failures came from people who loved, say…cooking, graphic design, fashion, music, cars, travel, etc. but still failed. Doing what they loved did not make these millions of failures successful. It takes more than that.

I can guarantee you that the cliché “do what you love and you’ll never work a day in your life” was not floated by somebody running a business.

The truth is that doing what you love isn’t enough at all. Doing something that people will pay for is way more important. Do not what you love, but what your customers love. Give value. Focus strategically on a realistic market and offer that market benefits that are worth enough money to cover your costs. Then you have sufficient resources to do it right, and — way more important — you execute properly.

The half truth here is that if you have everything else right, doing what you love is a significant advantage. It can help you get through long days and tough times. But you’ll also have to deal with sales, marketing, production, administration, and running a business.

2. Passion, Persistence, and Perseverance

“Just keep trying and you’ll succeed” is terrible business advice, and, unfortunately, way too common as well. I shudder to think how often some aging entrepreneur stands up in front of hopefuls, microphone in hand, suggesting that all it takes is sticking to it.

That’s terrible advice. Every one of those hackneyed presentations from successful entrepreneurs should be matched with equal time from some might-have-been entrepreneur who stuck with it, following the worn and tired advice, until stubbornly losing business, home, relationships and dreams.

The half truth here is that in some cases, every so often, a business that seems to be failing just needs more time, some adjustments, or a pivot. And when that happens, it can lead to a successful entrepreneur who is right, not lying, when she tells others that sticking to it was essential.

The hard part is figuring out which story you’re in. There is no virtue in sticking to a plan that isn’t working. And there’s no success in sticking to a bad business that isn’t working. And sticking to it can be equivalent to running your head into a brick wall, over and over.

3. The Cult of the Business Idea

Most of us seriously overvalue the role of the business idea, as if a good idea guarantees success (it doesn’t) and a mediocre idea, or old idea, or copying somebody else’s idea guarantees failure (they don’t).

Apple wasn’t the first personal computer manufacturer, Google wasn’t the first Internet search engine, and Starbucks wasn’t the first upscale coffee place. Excel wasn’t the first spreadsheet. The new Mini-cooper, a new version of a cool car from the sixties,  followed the Volkswagen idea of five years earlier, a new version of a cool car from the forties. And Fiat did the same thing seven years later, with a new version of the Fiat 500. Good ideas get copied all the time.

The half truth here is that mediocre ideas are worse than good ideas and bad business ideas are disastrous. The good idea is an advantage, for sure.

What really matters in all the cases above and millions of others is not the idea, but the execution. The vast majority of new businesses rest not on a new idea but a new spin, new angle, new variation, or simply doing something better. Is that new restaurant you like a new business idea, or just good execution? Most businesses displace other businesses, instead of creating something new.

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