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August 2002 Issue

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How much of innovation is inspiration, and how much is hard work? If it’s mainly the former, then management’s role is limited: Hire the right people, and get out of their way. If it’s largely the latter, management must play a more vigorous role: Establish the right roles and processes, set clear goals and relevant measures, and review progress at every step. Peter Drucker, with the masterly subtlety that is his trademark, comes down somewhere in the middle. Yes, he writes in this article, innovation is real work, and it can and should be managed like any other corporate function. But that doesn’t mean it’s the same as other business activities. Indeed, innovation is the work of knowing rather than doing.
Drucker argues that most innovative business ideas come from methodically analyzing seven areas of opportunity, some of which lie within particular companies or industries and some of which lie in broader social or demographic trends. Astute managers will ensure that their organizations maintain a clear focus on all seven. But analysis will take you only so far. Once you’ve identified an attractive opportunity, you still need a leap of imagination to arrive at the right response—call it “functional inspiration.”
Despite much discussion these days of the “entrepreneurial personality,” few of the entrepreneurs with whom I have worked during the past 30 years had such personalities. But I have known many people—salespeople, surgeons, journalists, scholars, even musicians—who did have them without being the least bit entrepreneurial. What all the successful entrepreneurs I have met have in common is not a certain kind of personality but a commitment to the systematic practice of innovation.
Innovation is the specific function of entrepreneurship, whether in an existing business, a public service