Author: Peter F. Drucker

Publisher: Collins

Pub. in: May, 2006

ISBN: 0060851139

Pages: 288

Measurements: 7.8 x 5.3 x 0.7 inches

Origin of product: USA

Order code: BA01044

Other information: ISBN-13: 978-0060851132

Language: American English

Drucker's best on the topic of innovation and entrepreneurship.

Drucker encourages company managers to drive their products into obsolecance through pricing reduction and get rebirth by driving new product innovation, in their place. The power of innovation is the survival force of a company. A company should not wait for his competitors to drive him out of business. The proactive nature of innovation keeps him ahead of his competition.

Companies must give innovative individuals freedom and time to innovate new products. R&D creates a brain trust of bright ideas that solve problems. So, systematic innovation identifies gaps in economic niches. Innovation must occur before the service or products breaks or competitor for the company out of business.

Companies must be greedy for new products. Greed is essential to drive product and service development. Entrepreneurship favors medium sized companys that make at least 500 million dollars. The Medium size company is the most likely to innovate and become successful at developing the marketing and research for the product. 1 in 100 Bright ideas patent every develop into a product or service that pays for development costs, marketing, and management of the product. Profitability becomes a function of marketing and management. The Entreprenueur is a manager.

Entrepreneurship is about hard work, reducing risk, and promoting a simple solution. Entrepreneur ares risk reducers and leave nothing to chance. Entrepreneurs take a prove it attitude and gain strong understandings of how the product works. Little is left to chance or guess work.

Drucker warns about complicating a new product, instead, it encourages to offer a simple solution and focus on developing this solution. Furthermore, quality is measured in terms of what people are willing to pay for. Companies can not afford to be non-profit. The economy depends on cash generating business and they have no time to consider non-profit. Marketing and management understand "what customers" will pay for, technology quality does not guarantee customer demand. Technology may product the product but it can not claim its own quality rating, only the consumer defines quality. Customer demand and their williness to pay for a product or service is the only measure of quality. Drucker illustrates this concept by telling about the migration for the vacuum tubes to transistors. RCA built the transister, but a Japanese firm licensed the technology, built a transistor radio for a 1/3 of the cost and 1/5 of the size, and market domination in five years. The second case was the photocopier. Xerox recognized that companies, schools, and individuals would want to replicate print media.

Lets examine the inconsistency in Company A, a telecommunication business. Suppose, the biggest inconsistency that Company A has is not resolving it customer service breakdowns. Company A's customer service is difficult to deal with: long waits, disputes over billing, service availablity, and lack of loyalty incentatives.

Suppose company B realizes these inconsistencies exploiting the weakness by offering a better telecommunication business model and attempts too remedy customer disatification research by providing 24x7 customer service which is accessible within 30 seconds, the customer experiences no significant delays, and company B resolves the problems relating to billing and service within the hour.

Also giving that Company A does reward customer adovacacy by rewards for loyalty and promotion there is establish not incentitive to help Company A. Even if, the customer tells a hundred people about Company A and the people he talks with to sign up with Company A, there is absolutely zero reward from Company A. In this scenerio one would think Company A would reward the individual for advocacy and promoting their business. Instead, Company A believes that large dollars spent marketing their service is causing their growth. Company A further knows a chasm has been forming being the company and its consumer basis because of the increasing number of complaints, so it changes its brand logo and enforces heavy penalities on its cusotmer service department to improve performance. Company A debates the cost of customer service against customer retention and new signons. Company A agressively follows a policy of 1 year contracts to secure its customer base from abandonment.

Lets look at Company B. Company B offers competitive rates and superior customer service. Company realizes that international calling services are an important service. Company B offers international services for a cheap fee and creates customers seem pleased with the service. Company B members talk free between each other and most important any customer referral generates for the advocate.

Company B growth is a result of the customer labeling the company has having quality. Company B effective markets Company A service inconsistencies by promoting better products and services. Company B recruites top management, manages its cash flow, and provides cash incentitives to keep its sales force motivated.

Company B realizes if the sales force is not receiving a strong cash flow, they will become discouraged. Company B realizes that the sale force must be financially rewarded and the stars will immediately rise to the top management. Top management helps the new venture survive. External wisdom is sought to help guide Company B into sectors of strong customer demand.

(From quoting an American reader)

Target readers: Entrepreneurs, managers, professionals, management and small business consultants and MBAs.

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