We come across the term " innovation" in business and many times people have asked me its exact meaning and what it represents. Innovation is the specific instrument of Entrepreneurship. According to Drucker, just starting a new business alone is not entrepreneurship. Drucker goes on to give number of examples and it would be impossible to cover all of them in this page. However to quote one example of McDonalds chain of restaurants is a classical example of managerial innovation. They did not invent anything new. In fact some mom and pop eateries give much tastier burgers. But by applying management concepts and techniques, standardizing the product, process and tools, McDonalds created new markets and new customers. This is a classical example of Entrepreneurship.
According to Drucker, Innovation adds value to an existing, unidentified or underutilized, resource leading to creation of wealth. The purpose of any business is to create wealth. Innovation is the art of identifying a resource and adding economic value. The penicillin mold was well known to bacteriologists and they considered it a pest and went at great lengths to prevent it from infecting their bacterial culture. It was Alexander Fleming who identified it as a valuable resource and exploited it. This is one of the greatest innovation of 20th century in the field of medicine and millions of lives were and are saved.
Many of us think that innovation is normally applicable in hi-tech areas which is erroneous. Innovation can be in any field ranging from managerial, financial ,social, technical or economic activities. In fact social innovations have transformed societies and nations into economic powerhouses. Japan is a typical example of social innovation. Technological leadership ,no doubt, is an advantage but Japan never had it. They were imitators and copiers and just after World War II , their products were considered cheap and flimsy. By mass manufacturing, improving their quality levels consistently and with their work culture they are an economic superpower of whom even the mighty USA is afraid of. The best part of it is that Japan does not have any natural resources and they import practically all raw materials. They import iron ore at cheap prices but ship out high quality steel products after adding value.
Successful entrepreneurs always try to create value which is different from what is existing by either improving upon it or modifying it. A product, material, service or an idea is converted into a resource of economic value.
© Copyright, Aug 03-08 . Without prejudice. All rights reserved
What is Innovation ? - To learn more about this author, visit Madhavan T Gopalachary's Website.
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Madhavan T Gopalachary
(Visit Madhavan's Website)
Madhavan Gopalachary, nick name "madgopes"
(g pronounced as in go) given by IIT
classmates, is a Mechanical Engineer and
an alumnus of Indian Institute of
Technology, Madras having passed out
specializing in IC Engines &
Thermodynamics.
He has nearly 35 years of experience in
the Corporate World. He started off as a
trainee and handled sales, marketing,
manufacturing, product management, profit
center management, strategic planning and
corporate development including R & D in
various organizations and at various
levels before becoming a CEO. His last two
professional assignments were at CEO level
before embarking to start management
consultancy business on January 01, 1998.
He has worked for British, Swedish MNCs as
well as very large Indian business houses.
He has spent a large portion of his time
from June 1998 till date in East African
Countries practicing as an independent
Management Consultant.
More details can be obtained at the
following web sites:
mmg.name
/mtg.html;
mmgconsu
lting.biz/
Madhavan's articles can be accessed at www.madgopes.com
.
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