One of the more important quotes about effective innovation comes from the great management thinker Peter Drucker.
He challenged companies to ask themselves if they were spending their effort and resources on the right things.
In so many cases, companies try to continually improve the efficiency of their processes, instead of asking the harder question of whether the outcome of the processes is still worthwhile at all.
When starting out an innovation process, you can ask yourself if it is better to focus on:
- Efficiency: By improving your processes and structures to achieve more with less (usually as a cost cutting measure, and often to the detriment of innovation)
- Effectiveness: By doing the things which will provide your current and future customers with more value, even if they are different from your current offering.
Peter Drucker – There is nothing so useless as doing efficiently something that should not have been done at all
Instead of asking yourself if you are doing things in the right way, ask if you are doing the right things at all.
There is nothing so useless as doing efficiently something that should not have been done at all – Peter Drucker
You can look at any number of companies which had their industries disrupted who may have been incredibly efficient in their processes, but could not compete when those processes became outdated:
- Kodak had very efficient processes to produce film for cameras, but this was not effective when faced with digital technology
- Digital Equipment Corporation could efficiently produce mainframe computers, but these became less effective compared to the value proposition of Personal Computers
- McDonalds has extremely efficient processes to produce cheap, fast food, but these are proving less effective when the average consumer now demands healthier, more eco-concious options.
Additionally, over time it becomes more and more challenging to get additional improvement through better processes, and it becomes less of a differentiator compared to what the competition can offer as they have been becoming more efficient as well.
Successful innovators show time and time again that they are able to pivot their entire business model if they find a more effective one.
So instead of focusing on doing what you currently do more efficiently, you can innovate by figuring out what is more effective.
Do you agree with Peter Drucker’s quote? Let me know in the comments below.
Nick Skillicorn
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I do agree and the challenge you address in your article, is for leaders is to establish the principles and methodology by which they guide innovation and pivoting to a new business model. That is the key to benefiting from the insight of the Drucker quote.