Seven Sources of Innovation

For this post I am going to take a look at the 7 sources of innovation as defined by Peter Drucker. A quick link for the unfamiliar: 7 Sources of Innovation

What is Entrepreneurism?
For me, the purest essence of entrepreneurism is problem solving. A firm that is not solving a problem is probably not one that will blow the doors off the market and thrive. The greatest innovations of recent memory and some of the most successful new companies solved problems, some of which customers did not even know existed. Take the automobile, invented by Ford. While he famously quipped that had he asked customers what they wanted they would have asked for faster horses, his invention solved the problem that was unstated but pervasive and tangible. The problem he tackled was faster travel. Later when the Wright Brothers invented airplanes and gave the world flight, they too tackled the problem of faster travel. Even more recently something as novel and creative as Facebook seems to not solve any problems, right? This is wrong, as Facebook solves the problem of communication between humans. It was a novel way to communicate in the sense that flight was a novel way to get from point A to point B, however, at its more fundamental level, it is communication, and it solved a problem.

Successful entrepreneurism is the application of innovation to problems. This is why Facebook thrived while MySpace died, or why Google dominates Internet search while Yahoo struggles to remain relevant. They innovated successfully, solving the same problem but in a different way. While the actual implementation is the final deciding factor that determines success or failure, the innovations and the implementations all originate with perceiving a problem and attacking it. There is a reason why corporate lingo likes to call challenges and problems "opportunities"; it is because they are the problems that your organization has an opportunity to solve, and it is problem solving that leads to commercial success.

The reason for this tangent is to tie the 7 sources of innovation to entrepreneurism and in distilling entrepreneurism to such a simple definition the connections become obvious immediately, it also facilitates prioritization of the 7 sources for new businesses.

Seven is Five Too Many
If we distill entrepreneurism down to problem-solving, then we should be able to distill "7 Sources of Innovation" as well.

The Unexpected - This is accidentally discovering something useful, for example, the coating placed on automobile glass that makes it pulverize was discovered by a chemist who dropped a beaker. The linked article accidentally discovered that the compound he was working on was sweet. There is an urban legend that one of the greatest medical breakthroughs of all time, penicillin, was also discovered by accident in a garbage can with a moldy sandwich in it. There are myriad scientific breakthroughs that if you dig a little were probably stumbled upon unintentionally or accidentally. While this is not intentionally solving problems, the other major part of innovation, the implementation, is critical here as any of the aforementioned breakthroughs could have been discarded had their discoverers not had the perception and awareness of what they had found. Due to its uniqueness I would leave "The Unexpected" as its own special category where the proverbial cosmos or "fate" decide a discovery's time has come.

Incongruities, Process Needs, Industry and Market Structure, Demographics, Perception, and New Knowledge - These are all ways to rediscover existing fundamental problems or new ways to attack them but at the bottom we come full circle to problem solving. Incongruities, Process Needs, and Demographics pose the challenges and problems to entrepreneurs and innovators, here is something that the market or part of the market wants or needs and how can you satisfy that want or fulfill that need? Tata's CEO noticed that his people were traveling on mopeds built for 1 or 2 as families of 3-4+, he saw an incongruity between what was available (mopeds) and what people truly needed (safe transportation), as a result he launched the Tata Nano. Industry Structure, Perception, and New Knowledge give innovators and entrepreneurs new ways to approach standard problems to lead to new solutions. The new knowledge of the internal combustion engine allowed Ford to tackle the old problem of transportation with a new tool which led to a new solution  that he profited from.

Bottom Line For Entrepreneurs:
According to Drucker there are 7 sources of innovation, however, I would argue that there are really two; serendipity and human ingenuity in the face of problems. The reason we have persevered as a species is because of our ability to solve problems, society rewards problem solvers with praise and financial rewards. The lesson here is that as entrepreneurs we do not have to be transfixed on "innovating" as innovation for the sake of innovation is pointless, however, if we go looking for problems are focus on devising solutions to them, then we are on the path to success. Dividing and labeling problems or sources of solutions is distracting and  takes away time from the most important endeavor, solving the actual problems.