Eight Sources of Innovation

By AccountingCPD

In 1985, Peter Drucker described seven potential sources of innovation, which he suggested should be systematically searched to find opportunities. Four of these are internal to the organisation or industry sector; three are external.

Internal sources of innovation:

1.The unexpected (unexpected failures, successes or external events)

2.The incongruous (the difference between organisational assumptions and reality, or between customer needs and what is delivered)

3.Process needs

4.Changes in industry or market structure

External sources of innovation:

1.Demographic changes

2.Changes in perception, mood and meaning

3.New knowledge

Drucker's list deliberately didn't include the "flash of genius" moments when bright ideas are spontaneously generated. Although people do occasionally come up with brilliant innovations out of the blue, this is the riskiest and least successful approach to creating innovative ideas, and one that can’t really be systematised.

Here are some examples of innovative ideas. See if you can match them to the list above.

Post-its - 3Ms invention of Post-its was derived by the discovery of a new kind of partially sticky glue. It was several years before 3M recognised an opportunity to use the glue in a practical product.

Dyson - James Dyson's reinvention of the vacuum cleaner was driven by the desire to create a more efficient product. It may have been what consumers wanted, but no established manufacturer would take it on, for fear of losing the lucrative vacuum cleaner bag market.

Airspace closure insurance – When the Icelandic volcano Eyjafjallajökull erupted in spring 2010, the resulting ash cloud caused chaos. With many passengers frustrated their travel insurance didn't cover this "act of God", Aviva saw an opportunity. Within a month they introduced a time-limited offer to buy optional add-on cover for airspace closure.