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Applied Social EcologyInnovation & Change<br />From Drucker’s Lost Art of Management<br />Joseph A. Maciariello and Karen E. Linkletter<br />
A Functioning Society through Continuous Innovation<br />It was Drucker’s master project to create a blueprint for a moral society of well managed institutions that could fulfill human needs for belonging and status.<br />Drucker saw change and continuity as a continuum and believed that society needs both in an appropriate balance.<br />The role of conserving and destabilizing institutions is to maintain the balance through stability, innovation and entrepreneurship.<br />
Systematic Innovation / Peaceful Continuity<br />Drucker disagreed with Thomas Jefferson that “every generation needs a new revolution” to rid itself of tyrannical abuses of power.<br />He preferred systematic innovation by every institution of society and peaceful continuity with past as alternatives to revolution. <br />His primary focus was on ensuring that private sector institutions were well managed.<br />Drucker turned Schumpeter’s process of “creative destruction” into an explanation for the moral value of profit.<br />
Peter Drucker’s <br />7Sources of Innovation<br />
1: The Unexpected Event<br /><ul><li>An unexpected success, an unexpected failure, or an unexpected change in the environment.</li></ul>Example: 1950s Ford T-Bird<br />Example: 3M’s Post-It Note<br />Ford realized US car buyers no longer made purchasing decisions along socioeconomic lines.<br />Instead, lifestyle considerations drove buying patterns. <br />The four-seater Thunderbird was named “Motor Trend Car of the Year” in 1958.<br /><ul><li>3M’s unexpected creation of a weak adhesive would, years later, be reintroduced for a new unexpected purpose. </li></li></ul><li>2: Incongruities<br />Incongruities are products, processes, or services that are not what they ought to be.<br />Example: US Steel & Furnace Technology<br /><ul><li>Electric-arc furnace technology developed by steel mini-mills allowed US steel mills to regain competitiveness after many years of industry decline. </li></li></ul><li>3. Process Need<br />A process need arises out of a “missing link” in an existing process.<br />The innovation is supplying the missing link and need becomes the mother of invention.<br />Example: Implantable Cardiac Pacemaker<br /><ul><li>The implantable pacemaker was a successful invention based upon new knowledge but it created a need for a longer-life battery to extend the working life of the pacemaker– the Lithium Iodine battery was developed to meet the need and is an example of a process innovation.</li></li></ul><li>4. Changes in Industry Structure<br />As an industry expands rapidly it is difficult for the leader to serve all segments of the market. <br />This leads to opportunities for competitors.<br />Example: Overnight Shipping<br /><ul><li>The United States Postal Service reacted slowly to the growth in volume of time-sensitive letters and packages .
This structural change created market openings and opportunities for FedEx, UPS, and DHL. </li></li></ul><li>5. Demographics<br />Demographic trends defined by Drucker are “changes in population, its size, age structure, composition, employment, educational status, and income”. <br />Example: Baby Boomers & Pensions<br /><ul><li>Knowledge workers own their human capital and together with production and service workers have become owners of tangible capital.
The needs of pension beneficiaries in defined-benefit and defined-contribution plans are long term, so the goals of the firm must reflect that timeframe.
How can the problem of aging “baby boomers” and the pending Social Security crisis be solved?
How can our society capitalize on the growth of the Hispanic population?</li></li></ul><li>6. Changes in Perception, Meaning, or Mood<br />According to Drucker, when there is a change in perception, “the facts do not change…their meaning does”. <br />Example: American Healthcare<br /><ul><li>Healthcare has shifted to a central debate position in American politics over the past years.
The debate over health care is forcing the American people to address the question of medical treatment and its costs.
The “half-full” and “half-empty” folks.</li></li></ul><li>7. New Knowledge<br />Innovation based upon new knowledge requires the innovator to build upon foundations already provided by others; to synthesize existing knowledge and add missing pieces.<br />Example: The Management Field<br /><ul><li>In developing his concept of the practice of management, he began with the “configuration term” of management, and in 1973 defined this term.
This definition is; “a system, the parts of which are human beings contributing voluntarily of their knowledge, skill, and dedication to a joint venture”.
Drucker’s innovation in the discipline and practice of management is an example of the need for several kinds of knowledge to converge if there is to be a successful innovation based upon new knowledge</li></li></ul><li>Technology: The Great Destabilizer of Society <br /><ul><li>New technological change itself brings forth the need for additional social change and innovation.</li></ul>Example: Irrigation<br />Example: Internet Acccess<br />Irrigation technology resulted in agricultural communities, and thus the need for government, property rights, and rule of law.<br />As a result, socio-economic classes of farmers, soldiers, and government officials developed.<br />Currency was also born out of this technological impact.<br />This technology has not just reduced the impact of distance on commerce, it has eliminated it.<br />Web access has allowed for outsourcing, changed strategies, enabled innovative business models, and altered social relationships.<br />
Chapter 8 Take Aways<br />Drucker, the social ecologist, recognized that change and discontinuity were a given part of existence and that individuals, organizations and nations must recognize this fact in order to survive and prosper. <br />The social ecologist seeks to extrapolate these great changes into the future, and uncover opportunities.<br />Against all this change comes the increased need to be vigilant.<br />