SUMMARY PETER F.

DRUCKER INNOVATION AND ENTREPRENEURSHIP CHAPTER II

THE PRACTICE OF ENTREPRENEURSHIP

This chapter starts with Drucker making it clear that entrepreneurship and innovation can be
achieved by any business if it is a priority and consciously strived for. Both disciplines can be
learned through effort and commitment.

When it comes to business operations of any size, there will always be conflicting priorities or a
daily crisis that must be dealt with right away and cannot be postponed. This is why it is
pertinent for the disciplines of innovation and entrepreneurship to be deeply rooted and baked
into the organization and set as a priority.

The art of entrepreneurial management requires policies and practices in four major areas: The
decades has changed and this is one is totally different business have now a social
responsibility comparing with the last decade, Today’s businesses, especially the large ones,
simply will not survive in this period of rapid change and innovation unless they acquire
entrepreneurial competence they have to change and make a big one, they have to learn how to
prosper.

The fair-sized and the medium-sized business has the best capability for entrepreneurial
leadership because it is necessary resources, managerial competence rather than the small-
sized business, this is true for all kind of organizations, public-service institutions, owned by
government and volunteer organizations, churches and also professional and trade
associations, a change creates opportunities for tackling new tasks, experimentation and social
innovation

The author says that a large and old business can innovate and be entrepreneurs too it’s a myth
that they don’t have the ability and just new and smalls business can do it so he adds the
example of Johnson & Johnson in hygiene and health care, The Citibank, well over a century
old, has been a major innovator in many areas of banking and finance, he also says that
entrepreneurship is not natural and creative it is about work and it must be treat as a duty, this
requires policies and practices in four major areas. First may be receptive and perceive changes
as an opportunity policies and practices to create the environment, second a systematic
measurement, third an organization structure and give rewards and the last one there are some
“don’ts”.

Let’s start with first one, the polices in which he adds that Innovation must be made attractive
and beneficial to managers besides the Importance of the need for innovation and dimensions
of its time. The frame must be both defined and spelled out, he also mention the needs to create
an innovation plan in and the goal is to make it attractive to managers, There is only one: a
systematic policy of abandoning what is outworn, obsolete, no longer productive. Every few
years, the enterprise must put its businesses on trial for their lives another one is that All
existing products, services, markets, etc. Another one is the limited health and life expectancies
and the last one he talks about is the business X-ray (analysis and diagnosis of current
businesses) this furnishes the information needed to define how much innovation a given
business requires
Then we have the entrepreneurial Practices, in this part the author remarks that the existing
business also requires managerial practices. First we Must focus on a managerial vision of
opportunity, a monthly performance report should include opportunities as well as problems,
secondly we should generate entrepreneurial spirit throughout its entire management group, in
the Top he ads that we should sit down with junior people from research, engineering,
manufacturing, marketing to ‘listen’.
Talking about Measuring Innovative Performance Druker suggest that the first step builds into
each innovative project feedback from results to expectations. This indicates the quality and
reliability of innovative plans and efforts. Also, a Develop systematic review of innovative efforts
all together and an Entrepreneurial management entails judging the company’s total innovative
performance against the company’s innovative objectives, against its performance and standing
in the market, and against its performance as a business Innovation and Entrepreneurship
When he refers to the structures he mention that The new has to be organized separately from
the old and existing second, There has to be a special focus for the new venture within the
organization and it has to be pretty high up, third There is another reason why a new innovative
effort is best set up separately; to keep away from it the burdens it cannot yet carry, fourth The
returns on innovation will be quite different from those existing business and it have to be
measured differently, the managers compensated differently, fifth a person or a component
group of a new venture should be held clearly accountable.

In staffing, he mentions that entrepreneurship is a question of behavior, policies, and practices

rather than personality, the result is the growing number of older large company. When he refers
to choose Staffing, he adds that what is need is willingness to learn, work hard and persistently,
exercise self-discipline and to adapt, it’s not about personality.

When it comes to The Don’ts, the first one is to Do not mix managerial units and entrepreneurial
ones, the second one is to Innovative efforts that take the existing business out of its own field
are rarely successful and the third one is that there is Hard and rarely successful to ‘buy in’ to
entrepreneurial culture and spirit.

Talking about service institutions, Druckers thinks that all organizations must be innovative and
entrepreneurial a rapid change is more a threat than an opportunity for them, it is even more
difficult for public-service institutions. The “success” in the public-service institution is defined by
getting a larger budget rather than obtaining results, also a public-service institution has to
satisfy everyone; certainly, it cannot afford to alienate anyone. For him the most important
reason, is that public-service institutions exist after all to “do good.” They don’t run to make
money just for moral and they don’t try to do it better defining their objectives, it’s just an absurd
term the. All institutions needs polices, their needs are a clear definition of its mission, a realistic
statements of goals, and a Failure to achieve objectives should be considered an indication that
the objective is wrong, and finally they need to build into their policies and practices the constant
search for innovative opportunity, there is also a need to innovate and this is because they have
become too important in developed countries, and too big. But they will have to learn to be
entrepreneurial and to innovate, so they need learn how to look upon social, technological,
economic, and demographic shifts as opportunities in a period of rapid change in all these areas
because this century is going to be very different, and the need for social innovation may be
even greater.

The last one is about the new venture, four requirements are stated: market focus, financial
foresight, top management team and entrepreneur deciding on her own role for the future. The
new wisdom about Management is that every new venture should plan for future early on. The
Planning should include financing (how to grow sustainably) and management, creating a top
management team to share the key decision-making responsibility according to capability and
interest.

He needs cash flow analysis, cash flow forecasts and cash management. With cash income and
cash outlays he assumes that bills will have to be paid 60 days earlier than expected and
receivables 60 days later. A new venture should know 12 months ahead of time how much cash
it will need, when and for what purposes, The successful of a new venture will outgrow its
capital structure, he needs to plan the financial system it requires to manage growth Innovation
and Entrepreneurship.