Drucker’s 7 Sources of Innovation

Paper instructions

Pick one of Drucker’s 7 Sources of Innovation, and one of the examples he used to illustrate it. Then address this question: How does the one you chose produce paradigm shift? Carefully define “paradigm shift” and state its relationship with “anomalies.”

Lessons 1 and 2 Readings

The following is a list of your required readings for the first two lessons.  I have written notes on most of these for your information and edification.  The ones marked with two asterisks are essential.  You are expected to read all of them.  Those with one asterisk are important, and you should try to read all of them.  Those without asterisks are optional.

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Lesson 1

**Drucker, Innovation and Entrepreneurship, Introduction, Chapters 1-5


**Video: What Is Innovation?  (Less than 5 minutes long)


DeVry University Keller School of Management Roundtable Discussion.  They focus on the implementation aspect of innovation.  Innovation has to do with a new idea or concept.  Innovation isn’t necessarily an invention.  As Robert Wolcott, panel member and author (Grow From Within) put it, “Innovation is about new combinations… specifically, it’s about market needs and capabilities.”  It isn’t necessarily about new technologies.  Starbuck’s, for example “got people to pay four bucks for a cup of coffee and they didn’t invent anything.”  He sums up: “Anything that changes the way we behave, the processes we use to serve the marketplace or serve each other, the channels we use to go to market, where and how we connect with consumers, customers, partners, etc., all of these things can be results of innovation.  As a business you’re interested in innovation as a way to attain competitive advantage, to differentiate yourself from the competition.”  Differentiation isn’t just about products, it can be about business systems, how a product is brought to market.  Ken Atwater, who also teaches at Keller, adds that all innovations are the operational outputs of project management.  Innovation is about bringing new ideas to market, not specifically about inventing new ideas.  Wolcott appears to specifically focused on how to help big corporations to innovate successfully.

**Video: What Is Corporate Entrepreneurship? (Less than 5 minutes long)


This video is a continuation of the previous one, same panel.  Wolcott continues:  “People tend to either be good at the near-term execution of the business, or else at they’re good at looking at the future, at building strategy, at thinking about things that haven’t happened yet, at going out and dealing with the uncertainty, at trying to winnow things down into the ‘right’ thing.”  Different people are good at each of these different types of activity.  Good organizations may favor one type over the other, but great organizations make room for both types.  Ken Atwater translates this into project management terms:  When you are trying to build something that is very much like something you have done before, it is relatively easy to map out a process and then stick to it.  When you’re doing something new, you don’t just pull out the Gantt chart and start detailing things out.  They are two different things.  You can’t apply the same template to do everything.  Part of an innovation is a process of discovering where you really want to go.  Standard project management assumes that the objectives are clear and fixed.

**Power Point Presentation:  Innovation and Entrepreneurship



Definitions and examples of innovation and entrepreneurship.  Don’t be misled by the spelling errors—this is a comprehensive overview of the different forms that innovation can take.  On Slide 3 a definition of “entrepreneur” is proposed: “Entrepreneurs are people who create new combinations of [the factors of production] and then present [this new combination] to the market for assessment by consumers.”  The factors of production are labor (physical and mental), raw materials and capital.


Slides 11-13(pay special attention to these) treat the important topic of “intrapreneurship,” the design, nurture and launching of businesses from within existing businesses.  After that, the author provides Drucker’s list—you will surely see this one often in the next few weeks—of seven sources of innovation.  Slides 19 and 20 illustrate that innovation is the translation of an idea into an application.


This presentation will be useful for you to review in advance of Lesson 3.


The following links contain information that may be useful for your research papers.


Global Innovation Index, Methodology (at least scan this one)


(From the periodical “Management Today.”)  Input-output model of innovation process, showing which elements of a society’s infrastructure affect the quality and quantity of new innovations.


The World’s Top Innovators (scan this one too)


Addendum to the immediately foregoing article, (in “Management Today”).  Addresses recent trends in national spending levels on R&D.


The World’s Top Innovators—About the Index


Provides a comparison between various countries, as measured by an innovation index developed by INSEAD.  You might be surprised to learn that the US doesn’t come out on top on several of the 8 Pillars Indices. 

Lesson 2

**Drucker, Innovation and Entrepreneurship, Chapters 6-10

*The Three Truths of Innovation


The author, consultant Annie Mueller, argues that there are three basic truths that all innovations must accommodate:

  • Innovation isn’t as much about genius as it is about a system and sweat.
  • Innovation isn’t important unless you want your business to survive.
  • Innovation will die unless you make it live.

Annie says that an innovative business needs to have a portfolio of innovation projects.  Most will fail, some will win, and one has to see the payoffs from the winners as return on the total investment in innovation, including expenses incurred by the ones that don’t “win.”  The idea is that, as in the case of living organisms, genetic variation is a key to evolutionary survival in a changing environment.  If you limit your range of investigation, you are more likely to miss out on opportunities that can contribute to your competitive advantage.  (More confirmation of the value of “diverse perspectives.”

You should be able to read this brief paper in less than 10 minutes.

*Leveraging Innovation for Successful Entrepreneurship (Gopal, Gopinathan and Varma)


This paper, apparently written by students as a research project, focuses on corporate entrepreneurship.  It uses a case study of an Indian company, GME as a vehicle for some pretty interesting insights about corporate innovation.  GME started off in the shrimp business in 1978, and then survived for fifteen years, though it fell short of profit expectations.  GME began to look for other opportunities.  Then they discovered that a couple of fishes common in Indian waters—the Ribbon fist and the Dhoma—were considered “waste” in India but were used as a popular fish paste in Korea called “Surimi.”  If you have ever eaten a California roll in a sushi bar, the imitation crab is made of this substance, which the Japanese call “kamaboko” (the Japanese version isn’t mentioned in the article, since GME initially sold to a Korean market).  The tables in the article are confusing and can safely be ignored—if I can’t make sense of them, you probably won’t be able to either.  The important aspect of this article is the story itself (summarized on page 7) and the summary of key learnings on pp. 9-10.

I should point out that, like most entrepreneurial successes, this one had its share of good luck.  The sushi restaurant business in Europe and the US is a vast consumer of “imitation crab,” especially since (1) it is a lot cheaper than real crab, and (2) many people are allergic to crab and couldn’t eat a real California roll.  Worked out for everybody, didn’t it?

*15 Most Essential Qualities of a Successful Entrepreneur


This is a short but useful review of the attributes of successful entrepreneurs.

*Entrepreneurial Innovation (the link is embedded, just click on the blue text immediately below)


Though it reads like someone’s reading notes, this essay is full of useful insights about how corporations should (and shouldn’t) manage innovation.  There are interesting cross-national comparisons and a discussion of the hazards of measurement.  For example, a corporation’s innovation project portfolio should exhibit lots of variance, unlike the Six Sigma approach to operations management, which aims to minimize variation.  If you do not know what a Kondratiev wave is, feel free to call and ask your professor (or Google it).  It is important to know.

Article in LIRN

*Innovation and Entrepreneurship: Practice and Principle

Dulebohn, James H. HR. Human Resource Planning29.3 (2006): 37-38.  This article may be useful in one or another of your research papers.



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