The Seven Sources of Innovation

Published by Grahame Cox on

My last post about problem hunting prompted someone to point me in the direction of Peter Drucker’s classic article on ‘The Discipline of Innovation’ – suggesting that analysis first was the way forward.  Whilst Mr. Drucker contends that “most innovative business ideas come from methodically analysing seven areas of opportunity”,  I still contend, if you look carefully, he was problem hunting without knowing it……

I’ve listed Drucker’s seven sources of innovation below, along with my ‘problem-solving’ interpretation……………

  1. Unexpected occurrences –  Find the unexpected users of your product or service. Who is using the product in an unexpected way? Where are sales higher than you thought they would be? Then understand why. Observing these users can often provide useful insights into ways to develop, or perhaps adapt, products and services into new markets and new audiences.
  2. Incongruities – take a look at the differences that exists between what products and services are, compared to what they should be, or promise to be. Take a look at your company’s complaints letters to find areas for improvement and innovation.  Look at your competitors product reviews and ratings. Follow chat room discussions. Understand the problems that exist and find ways to solve them.
  3. Process Needs – take a look at ‘how things are done’ and find better ways to do them. On-line check-in at airports is a classic example. Biometric passports and eye scans that reduce waiting times at immigration another. It’s also worth looking at your own internal processes to find improvements. Some of these small ‘innovations’ can deliver big results.
  4. Industry and Market Changes – where is customer demand moving away from the norm. Study early adopters in your industry. Look out for the companies who are trying to ‘disrupt’. Uber is transforming the way we book taxis – ‘fast followers’ in this industry have the opportunity to benefit from Uber’s hard work in convincing us there is another way. In the face of disruption, the tendency for incumbents is to ‘defend’ rather than ‘attack’. History suggests this is rarely the right strategy for survival
  5. Demographic Changes – changing demographics is the most reliable of all forecasting techniques. All of the people who will be young adults in 2025 are already out there. What are they doing differently? You only have to look at how children consume TV to know that the future of broadcasting will change. Growing rates of obesity will open up all sorts of ‘opportunities’.
  6. Changes in Perception – it is no longer acceptable to drink and drive. Recycling is a ‘social responsibility’. Sunbathing without sunscreen is ‘irresponsible’. Look for the changes in perception and build in new or additional features into your product or service, or create new products and services, to match these perceptions. If you are in the confectionery industry, is sugar going to be the next social taboo and if so, how are you going to deal with it?
  7. New Knowledge – advances in technology bring about opportunities for all sorts of new products and services. Drucker describes this area as the arena of the ‘superstars of innovation’. But it’s also one of the most challenging. Frequently these innovations have the longest lead times since there is often a protracted period of time between the emergence of the new ‘knowledge’ and it’s transfer into a usable technology. That’s not to say we shouldn’t go there – but we shouldn’t ignore the other six sources of innovation.