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1-Page Summary of Innovation and Entrepreneurship

Overview

There is not one particular personality trait that makes one an entrepreneur. In fact, anyone can be successful in any field if they have powerful strategies and the key to success which is innovation.

This book will discuss how to find innovative strategies and why IBM profited from their rival’s idea. It will also explain that business strategies are like launching a rocket to the moon.

Big Idea #1: To innovate, you must look for sources of innovation.

How do entrepreneurs become successful? Some say it’s luck, others say hard work. However, the truth is that to be a successful entrepreneur you must always be on the lookout for sources of innovation. That means being aware of events that can inspire innovation and change in your business.

There are many sources of information. Some come from inside the business, industry or market while others originate outside the organization.

Let’s examine an internal source of innovation, the unexpected. Macy’s, New York’s largest department store, saw a sudden increase in sales of appliances. This was a trend that no one predicted or planned for but it happened anyway.

When something unexpected happens, a smart business will take advantage of it. This is what Macy’s didn’t do when they had surprising success with appliances. They tried to suppress the sales because it wasn’t normal, and as a result they lost market share.

In contrast to Macy’s, other department stores such as Bloomingdale’s also experienced the same phenomenon. They invested in marketing their appliance departments and saw increased profits.

Another source of innovation comes from within the industry itself. In the 1960s, there was a sudden shift in the automobile industry. It went from being a local market to an international one led by multinational companies.

Volvo was able to take advantage of the changing market by aggressively marketing themselves globally. As a result, they were more successful than their competitors and could break even. However, Citroen didn’t adapt to the changes in the market and lost out as a result.

Big Idea #2: If you can identify a weak link in a process or a misdiagnosis in a situation, you can innovate.

Innovation can come from two internal sources: process need and incongruities. Process need focuses on finding a weak link in a process, as that is the perfect opportunity for an entrepreneur to innovate. The example of eye surgery illustrates this perfectly. In the 1950s, cataract removal was done by cutting a ligament. This led to bleeding sometimes, which could damage the eye. A pharmaceutical salesman named William Connor spotted this weak link and found a solution: using an enzyme that dissolved the ligament without having to cut it; he also developed ways of storing enzymes for long periods of time so they wouldn’t decay before use.

Connor’s innovation was a breakthrough in the cataract removal process and allowed him to sell his company for a large sum of money. The second source of innovation is incongruities, or gaps between people’s perceptions and reality.

There’s always an opportunity to innovate. For example, before the 1950s, shipping companies tried to make their ships go faster from port to port in order to save time. However, they didn’t realize that it was actually the amount of time spent in a port that mattered—not how fast you could get there and back. The gap between what they thought was important and what really mattered was closed through innovation: the container ship allowed for much more efficient loading and unloading of cargo than traditional methods did. As a result, shipping costs fell by 60 percent.