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How Peter Drucker Sets Goals for Innovation

by JD Meier

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“Innovation distinguishes between a leader and a follower.” — Steve Jobs

Innovation objectives are how you realize the potential for your business.  Innovation is how you change the gam either in the marketplace, your product, or your processes.  From what I’ve seen, the people that do best with innovation are the ones that can effectively leverage their intuition in conjunction with data-driven insights. 

I think the other real key is being able to turn innovation into results, both iteratively and incrementally.  In today’s world, I think another key that might not be as obvious is that innovation needs to meet applied use.  If the innovation doesn’t feel real to the stakeholders, you lose support.  Along these lines, it’s important to know that sometimes the market isn’t ready.

In The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management, Peter Drucker writes about innovation objectives.

The Big Picture of Innovation Objectives

Here are my key take aways from Drucker’s insights:

  • Your innovation objective is to create the business you need to become.  Innovation is how you transform your business into what it should be.
  • You can innovate in your product, process, or marketplace. There’s three kinds of innovation: product, process, and marketplace.
  • The toughest part is measuring the impact. The key challenge with innovation objectives is measuring relative impact and importance.

The value is in the change, and innovation is the key to enabling change.

What Should Your Business Become? (That’s Your Innovation Objective)

Your innovation objective helps turn your business into what it should be.

Via The Essential Drucker:

“The innovation objective is the objective through which a company makes operational its definition of ‘what our business should be.’”

You Can Innovate in Your Product, the Marketplace, and Your Management

There are three kinds of innovation: product innovation, social innovation, and managerial innovation.

Via The Essential Drucker:

“There are essentially three kinds of innovation in every business: innovation in products or service; innovation in the marketplace and consumer behavior and values; and innovation in the various skills and activities needed to make the products and services and to bring them to market.

They might be called respectively product innovation, social innovation, and managerial innovation.”

The Challenge is How To Measure the Potential Impact of Innovation

When you set innovation objectives, the challenge is how do you measure the impact and the importance of innovation.

Via The Essential Drucker:

“The problem in setting innovation objectives is measuring the relative impact and importance of various innovations.

But how are we to determine what weights more: a hundred minor but immediately applicable improvements in packaging a product, or one fundamental chemical discovery that after ten more years of hard work may change the character of the business altogether? A department store and a pharmaceutical company will answer this question differently; but so may two different pharmaceutical companies.”

At the end of the day, your metrics should help create a culture that supports strategic innovation, builds capabilities that supports the evolving business landscape, and drives growth. 

To put it another way, the pitfall is to use old metrics in a new environment.

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Category: Business, Innovation, Leadership

About JD Meier

I help leaders change the world.

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  1. Sarah Mocke

    February 14, 2020 at 7:37 pm

    Excellent post. Just bought “The Essential Drucker” as a result of it. Thank you J.D.

    Reply

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