Innovation objectives are how you realize the potential for your business. Innovation is how you can create game changers either in the marketplace, your product, or your processes. In The Essential Drucker: The Best of Sixty Years of Peter Drucker's Essential Writings on Management
What Our Business Should Be
According to Drucker, the innovation objective helps transform the business into what it should be:
The innovation objective is the objective through which a company makes operational its definition of “what our business should be.”
Process, Product, and Marketplace Innovation
There's three kinds of innovation. Drucker writes:
There are essentially three kinds of innovation in every business: innovation in products or service; innovation in the marketplace and consumer behavior and values; and innovation in the various skills and activities needed to make the products and services and to bring them to market. They might be called respectively product innovation, social innovation, and managerial innovation.
Measuring Impact and Importance
Drucker points out that the key challenge with innovation objectives is measuring impact and importance:
The problem in setting innovation objectives is measuring the relative impact and importance of various innovations. But how are we to determine what weights more: a hundred minor but immediately applicable improvements in packaging a product, or one fundamental chemical discovery that after ten more years of hard work may change the character of the business altogether? A department store and a pharmaceutical company will answer this question differently; but so may two different pharmaceutical companies.
Key Take Aways
Here's my key take aways:
- There's three kinds of innovation: product, process, and marketplace.
- Innovation is how you transform your business into what it should be.
- The key challenge with innovation objectives is measuring relative impact and importance.
From what I've seen, the people that do best with innovation are the ones that can effectively leverage their intuition. I think the other real key is being able to turn innovation into results, both iteratively and incrementally.
In today's world, I think another key that might not be as obvious is that innovation needs to meet applied use. If the innovation doesn't feel real to the stakeholders, you lose support. Along these lines, it's important to know that sometimes the market isn't ready.
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