“The most productive innovation is a different product or service creating a new potential satisfaction, rather than an improvement.” – Peter Drucker
2. Don’t diversify or splinter efforts Essentially Drucker advocated being focused in the innovative effort and not chasing too many opportunities at the same time.
3. Don’t innovate for the future Drucker suggested innovating for the present and not the future – the innovation should have immediate application. Here, he tended to talk out of both sides of his mouth when he added, “Innovative opportunities sometimes have long lead times. In pharmaceutical research, ten years of research and development work are by no means uncommon or particularly long. And yet no pharmaceutical company would dream of starting a research project for something which does not, if successful, have immediate application as a drug for health-care needs that already exist.
Getting Rid of Yesterday – Planned Abandonment Peter Drucker had stressed in many of his books that the first step in strategic thinking and planning and developing a Vision for the future of the organisation must start with “getting rid of yesterday.” This also holds true for innovation and should be the first topic in dealing with innovation planning. Too many organisations, Drucker had observed, continue to devote organisational resources in terms of money and people to “preserving the past” when they should be allocated to “creating tomorrow.”
The Concept of Planned Abandonment and Key Questions to Ask In addition to having a Vision for the future, Drucker stressed, “That management needs to make a systematic analysis of its present businesses and products. The old that no longer fit the Purpose and Mission of the business, no longer conveys satisfaction to the customer or customers, and no longer makes a superior contribution.” He argued that these dying products, services, or processes always demand the greatest care and the greatest efforts and tie down the most productive and able people. Drucker recommended that all existing products, services,
processes, markets, end uses, and distribution channels need to be assessed on a regular basis. He also observed that by keeping a declining product, service, market, or process, the new and growing product or market is stunted or neglected.
This was illustrated in the case of General Motors who although they had a bright star in their new Saturn automobile, continued to commit resources to dying product lines, such as the Oldsmobile, at the expense of really growing the Saturn. This is Drucker’s “Concept of Planned Abandonment” that
needs to be implemented as he argued, even if the existing but aging product is still making money as shown in Figure 1. Drucker would suggest that in assessing a product in the decline stage, one should not wait until it is no longer making a profit, but rather consider abandoning it before it reaches that point. The red arrow on Figure 1 suggests the point in this product’s life cycle where consideration should possibly be given to abandoning the product. Obviously if it is to be replaced this creates the need for a replacement and as such, innovation.
Application to Your Organization Key questions that Drucker stressed that need to be asked relative to the abandonment of the old product or service include:
1. “Are they still viable? 2. Are they likely to remain viable? 3. Do they still give value to the customer? 4. Are they likely to do so tomorrow? 5. Do they still fit the realities of population and markets, and of technology and economy?
6. If not, how can we best abandon them – or at least stop pouring in further resources and efforts?” Finally, another important question Drucker suggested
management ask is, “If we did not do this already, would we go into it now?” This last question pertains more to assessing an industry or a market the organization is presently in and whether this should be abandoned as well.
The major sources of innovation as identified by Drucker will be covered in next months’ Drucker Series column.
Copyright © 2011 by Robert W. Swaim, Ph.D. All Rights Reserved.
http://www.processexcellencenetwork.com/innovation/ columns/principles-of-innovation-getting-rid-of-yesterday/
September 2011 | Management Today 67
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