The Seven Sources of Innovation - Peter Drucker

Peter Drucker’s Seven Sources of Innovation are listed in order of importance with the first four sources being within in the organization and the last three representing external changes outside the organization. The Seven Sources are listed below.

1.       The Unexpected:

 

The Unexpected describes unexpected successes and failures or events that shift the business. Unexpected failures can lead to other opportunities. My favorite example of the first source of innovation is 3 M’s product Post-It-Notes. This product was created for industrial application but failed.  Ironically, one of the 3 M scientists took some of the material home and found that his daughter was cutting the sheets and using them as reminders on the refrigerator to list items needed at the grocery store. The failure of the product in the industrial market led to the opportunity of post-it-notes which have been used globally for many years.

 

2.       Incongruity:

 

Incongruity identifies areas of missing information in how a customer should use a product. Druker defines the incongruities as discrepancies, dissonance, between what is and what “ought” to be.  An example of incongruity within the rhythm of a process  is the Scott Spreader. The Scotts Company realized its customers did not know how to evenly apply their fertilizer product. As a result, Scotts began to manufacture spreader system which mechanically released a specific amount of fertilizer in the exact location the consumer requested.

 

3.       Innovation Based on Process Needs:

 

This type of innovation is based on a specific task, rather than the overall strategy. Innovation Based on Process Need identifies the missing link in an existing process. A great example of this type of innovation comes from Elijah McCoy. In 1870 McCoy earned his degree in engineering, but as an African American, the only occupation he could obtain was an oiler of the Michigan Central Railroad. The trains he worked on stopped frequently and had to be oiled by hand. McCoy designed a lubricating cup that automatically dripped oil onto the moving parts. His invention became popular and heavy machinery was not considered “complete” unless it had a McCoy lubricator. This is where the question “Is it the real McCoy?” comes from.

 

4.       Changes in Industry and Market Structures:

 

Changes in industry and market structure catch the market industry off-guard in order to inflict a large impact.  This type of innovation describes a shift in marketing toward a specific subgroup of the consumer base. Fuel-efficient cars are an example of this type of innovation. With the cost of fuel rising, automobile companies shift the design of cars to be more fuel efficient for customers concerned about increasing gas prices. This was a smart move because I think I hear a conversation at work at least every week about the prices of gas and how much it cost that co-worker to commute that week.

 

5.       Demographics:

 

Drucker felt that demographics including population size, age, location, education, income, employment, and type of occupation are one of the most reliable predictions of opportunities for innovation in the future.  Now the example I chose to talk about is not exactly a specific company, but is a business and that is education. Boarding schools (and no, not the ones for bad kids), are generally located in New England, more specifically Connecticut and Massachusetts. Although this is not one specific school or company, there is a reason a majority of prep schools/boarding schools are located in New England and this is because of the demographics in New England. Yes, these are boarding schools with students from around the world, but many of the students come from the New England region which consists of some of the highest incomes in the nation. Although these are not companies, these schools are a business and feed off of the wealth in area.

 

6.       Changes in Meaning and Perception:

 

This type of innovation is the example of a changing culture. I think of the biggest perceptions that has changed in the recent years are vacations. The idea of how to vacation has drastically changed (for those who can afford it). Before vacations were about choosing a place to go and arranging the transportation to get to that place, and choosing what to do while you are on that vacation. Now with all-inclusive resorts and timeshares the ideas of vacation have changed. These types of vacations do not attract everyone, but they do attract many. The all-inclusive vacations have created new definitions for relax and spoil. Timeshares typically provide vacationers with a fully-equipped condo with a kitchen area, living space, and laundry facilities within the unit. I think it’s ironic because I look at the pictures of my parents “grand” vacations and now think that’s nothing compared to what is offered now.

 

7.       New Knowledge:

 

Technology and scientific findings are a major source of innovation and ironically is listed as the last source of importance to innovation. I find this interesting. There are so many examples of this type of innovation: Google, iphone, app, social networks etc.; the list goes on and on.

 

While researching the Drucker’s Seven Sources of Innovation, I found some excellent quotes and two of my favorite, happen to be from the company, the 3M Corporation. The quotes are incredible and so applicable. Let me know what you think! Enjoy!

 

“Our company has, indeed, stumbled onto some of its new products. But never forget that you can only stumble if you’re moving.” – Richard P Carlton, CEO 3M, 1950

“You can learn from success but you have to work at it; it’s a lot easier to learn from failure.”