Drucker - Innovation and Entrepreneurship

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Peter F.

Drucker

Innovation and Entrepreneurship

Practice and Principles

With a foreword by Joseph Maciariello

First published by Butterworth-Heinemann 1985

First published in Routledge Classics 2015
by Routledge
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1985 Peter. F. Drucker
2015 Foreword, Joseph Maciariello

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

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ISBN 13: 978-1-138-01919-5 (pbk)
ISBN 13: 978-1-315-74745-3 (ebk)

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This Book is Dedicated
With All My love
To
Doris
The Innovator and Entrepreneur

Peter Druckers book Innovation and Entrepreneurship followed naturally from his long-term search for mechanisms to create a stable society and a stable polity that would preserve traditions of the past and yet make possible change, indeed very rapid change in anticipation of and in response to rapid changes in the environment (Drucker, 1992, p. 58). This was the subject of his very first monograph, Friedrich Julius Stahl: His Conservative Theory of the State published in 1933. His long-term goal was to do for a society of organizations what Julius Stahl, and two other statesmen, Wilhelm von Humboldt, and Joseph von Radowitz did for Germany during the nineteenth century (Drucker, 1992, pp. 5859).

We see, for example, Drucker pointing to the founding of the University of Berlin by Humboldt in 1810 as a major innovation because Humboldt was able to use the university to help bring about

the Rechtsstaat (the Lawful State), in which an autonomous and self-governing elite of civil servants and general staff officers was in full control of the political and military sphere; an autonomous and self-governing elite of educated people organized around self-governing universities provided a liberal cultural sphere; and in which there was an autonomous and largely unrestricted economy. (p. 194)

The Rechtsstaat consisted of two conserving institutionsa professionally trained military and civil service balanced by two innovating institutions, a university, based upon academic freedom in research and teaching, and an economy founded on Adam Smiths free market principles. These four institutions were presided over by a strong executive, a monarch, along the lines of the presider or president provided for in the American Constitution.

The work of the three political philosophers and statesmen, Stahl, Humboldt and Radowitz, succeeded superbly in establishing a political philosophy that through the Rechtsstaat provided stability in Germany in which both continuity and change were achieved. This stability lasted until World War I when total discontinuity erupted.

Druckers professional mission was thus established: build a political and social theory that allows society to avoid major discontinuities like those which occurred in Europe from 1914 until after World War II. The social theory would have to be appropriate to the realities faced by a society yet consistent with fundamental values and beliefs that served society well in the past.

The book thus emerged from his lifelong ambition to manage the change required by the discontinuities faced by society in order to produce continuity. And as Drucker mentions in the preface to the first UK edition, while he discussed the subject of innovation and entrepreneurship in virtually all of his management books for decades, this book was the first attempt to present the subject in a systematic form and in its entirety. It is his only book in which he expresses the desire that it be accepted as a seminal work. The book has achieved that status; it is a seminal work on systematic innovation and entrepreneurship.

Drucker almost always worked with a methodology yet only in this book is his methodology described. Drucker intended but never wrote the book The Future that Has Already Happened (Drucker, 1992, p. 61) detailing his overall methodology, although , something very close to the methodology Drucker actually used in all of his work as a Social Ecologist, as he systematically looked for changes that had already happened but were not yet widely perceived. These changes present opportunities for innovation. As he describes opportunities for innovation he is also describing the methodology he used to discern opportunities for his own innovations in management and entrepreneurship.

Drucker does describe his methodology for this book in the ). He led a seminar in the mid-1950s at New York University for a small group of people interested in new ventures. Participants included people who had already introduced a new venture. These were people from mostly large, for-profit and non-profit organizations. The ideas developed in the seminar were tested during the two-year period in which the seminar was held. Drucker further tested and refined the ideas in his own consulting work over approximately a 20-year period of time in all sectors of the economy. The book is the result of this process of developing a theory of innovation, testing the theory, and then distilling a systematic process of innovation and entrepreneurship from practice.

Systematic innovation must be integral to the process of management in all organizations. Each of societys institutions must be capable of innovation and change if a society of organizations is to maintain its stability even during normal times because, paraphrasing Schumpeter, dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the norm of a healthy economy and the central reality for economic theory and economic practice (). What is true during normal times is especially true during extraordinary times of turbulence and discontinuous change.

Drucker defines innovation as the act that endows resources with a new capacity to create wealth (

The book is subdivided into three major parts: Purposeful innovation, Entrepreneurial management, and Entrepreneurial strategies.