The traditional decision-making model, rooted in the ideal of the rational actor calculating the best decision with perfect information, is increasingly inadequate in our complex, uncertain world. When information is scarce or inadequate, judgment and imagination must be used instead.(more…)
The entrepreneurial landscape is often focused on the pursuit of exceptional ideas. This translates into a process in which the creation of a business requires a great idea, which is then implemented in a so-called execution phase. This is followed by corporate idea contests, “ideation” seminars, and other pointless but fun activities. But if you look at successful companies throughout history, you’ll find that their initial idea wasn’t all that important, and often not all that original. So how does one go about initiating an innovative venture that will thrive?(more…)
To respond to the disruptions in their business environment, organizations often establish dedicated innovation units. These units, though named differently, often face a common hurdle: their promising ideas fail to translate into impactful market outcomes. This predicament stems from the approach itself and the underlying model.(more…)
We commonly refer to our society as “capitalist”. But that term misdescribes its nature. It’s not capitalist, it’s entrepreneurial, and that’s an important distinction.(more…)
Innovation, the driving force behind progress, often faces a formidable adversary: entrenched mental models. These cognitive frameworks shape our understanding of the world and can become barriers to the acceptance of breakthrough ideas. Managing the dynamic between innovation and prevailing mental models is the innovator’s challenge. Thomas Edison’s promotion of electric lighting over gas provides an example of how this challenge was successfully met.(more…)
Meta, the parent company of Facebook, is doing badly. The weakness of Facebook, its legacy business, and doubts about the relevance of the colossal investment made in the metaverse, a system for creating a virtual world, call into question the company’s strategy. The combination of the weakness of the legacy business and the difficulty of launching a new business is not unlike that of Kodak twenty years ago. A look at the history of major bets made by companies to launch or renew themselves is useful to better understand the issues facing meta and to avoid rash judgments.(more…)
In the field of innovation, the distinction between exploration and exploitation is universal. It is clear, it seems obvious, and it has become gospel in the world of innovation. Yet it is counter-productive, as it rests on questionable assumptions. It illustrates how the way we formulate a problem, i.e. our mental model, determines our ability to solve it. The wrong mental model locks us in, while the right one opens up possibilities. It’s time to let go the exploration/exploitation distinction.(more…)
Business performance is often perceived as having no societal impact. It seems to be a strictly financial matter and to concern only its shareholders, and nobody else, and as such is even morally suspect for some. We are happy for the company that has good results, and we may suspect that is at done at the expense of society. Yet, the performance of businesses, and more generally that of organizations, is a major societal issue, an observation made by Peter Drucker, and still relevant today.
Read the rest of the piece on the Global Peter Drucker Forum’s blog here.
How does great innovation truly happen? This question often kicks off discussions on innovation, with many expecting the classic tale of a visionary entrepreneur sparking a revolution. However, this idealized notion of a sudden “big bang” innovation can be problematic, leading to either a sense of resignation or a rush into monumental projects that often yield little. In reality, even disruptive innovation typically progresses incrementally, building upon past efforts and grounded in existing conditions.(more…)
Saras Sarasvathy, the originator of the entrepreneurial theory of effectuation, has just received the prestigious Swedish Global Award for Entrepreneurship Research. Organized since 1996 by the Swedish Foundation for Small Business Research (FSF) and the Swedish Agency for Economic and Regional Growth, the award recognizes researchers who made major contributions to entrepreneurship research. She joins such great researchers as Sidney Winter, Shaker Zahra, Kathleen Eisenhardt, Scott Shane, Israel Kirzner, William Gartner, William Beaumol or Zoltan Acs and David Audretsch. The prize is the recognition of more than twenty years of efforts to promote a radically different approach to entrepreneurship. But its significance goes far beyond that, as effectuation is above all a vision of human action and freedom.(more…)