26. The Law of Innovation

The Laws of Business Success

Under the Laws of Business

All breakthroughs in business come from innovation, from offering something better, cheaper, faster, newer, or more efficient in the current marketplace.

In Peter Drucker’s book Innovation and Entrepreneurship, he discusses the seven major sources of innovation in business. He explains several ideas you can use to make innovation a way of life, both for yourself and for your business.

The two major sources of innovation, according to Drucker, are unexpected success and unexpected failure. In the case of either, you must carefully analyze what happened to determine if a potential breakthrough has occurred.

The"tip of the iceberg" theory of critical thinking is especially helpful in examining successes, failures, or any unexpected events. Whenever something out of the ordinary happens, stop and ask, Is this a single event, or is it the tip of an iceberg? Could this be the beginning of a trend, indicating a major shift in the marketplace? Many great business breakthroughs occur as the result of recognizing a trend in the market and then moving before anyone else to take advantage of it or, conversely, recognizing a trend away from your product or service and moving to minimize your exposure and develop other products or services while you still have time.

Perhaps the most significant trend of our age is the movement toward personal computers and the Internet. When the first personal computer was developed, IBM did its own research on the future of this product. IBM consultants came to the conclusion that the total world market for personal computers was only 300 or 400 units per year. The company decided to stick to main- frames. Today, more than 50 million personal computers are sold each year, and mainframes have become secondary to the computer revolution. IBM ignored the tip of the iceberg!

How you can apply this law immediately:

1. Identify and analyze the trends in your business. Where are sales growing or declining? What are your customers telling you they want more of? Less of? What should you be getting
into or out of?

2. Admire your successful competitors! Where and how are your most successful competitors achieving the greatest sales and profitability? What are they doing that you could learn from
and improve upon?

3. Analyze your biggest successes and failures of the previous year. What valuable lessons do they contain that you can use to your best advantage in the months and years ahead? Remember that all great success is preceded by failure, and every failure contains valuable lessons you can learn from. What are yours?

Source: Brian Tracy, The 100 Absolutely Unbreakable Laws of Business Success, Berrett-Koehler Publishers, Inc, (San Francisco, 2000).