Rediscovering Drucker's Innovation Approach to Endowing Existing Resources With New Wealth-Producing Capacity

Editor's Note

"Technology" does not necessarily mean spinoffs from science and engineering. Techne, the Greek word from which "technology" derives, means, "useful knowledge," or "organized skill," rather than a collection of inventions spun-off from new scientific knowledge.

True, some technologythe glamorous partdirectly relates to scientific and engineering breakthroughs, but technology is far more than this.

In the Definitive History of Technology (Vol. 5: Oxford) produced in the UK under the editorship of Charles Singer, chronicles what technologies really are: "bodies of skills, [specific/distinctive] knowledges, and procedures for making, using and doing useful things."

This article discusses two examples of Singer's broader meaning of technology-driven innovation by applying one of Peter F. Drucker's least known (rarely discussed) but most powerful definitions of innovation.

The first example related to Drucker's broader definition of technology-driven innovation illustrates how a consortium of colleges and universities was successfully created to enable schools to enter the rapidly growing field of continuing professional education.

The second example (gleaned from the pioneering work of Jim Champy, Chairman Emeritus, Consulting, for Dell Services & former Head of Strategy for Perot Systems) applies the same Singer/ Drucker definition to producing needed innovations in organizational design to successfully assimilate today's groundbreaking competing on analytics technologies such as AI, IA, data analytics, machine learning and more.


It was only two short paragraphs in one of Peter F. Drucker's many management books.

"Innovation is the design and development of something new, as yet unknown and not in existence, which will establish a new economic configuration out of the old, known, existing elements…

…It will give these elements an entirely new economic dimension. It is the missing link between having a number of disconnected elements, each marginally effective, and an integrated system of great productive power."

Capitalizing on the Growth of Continuing Professional Education/Training Using Drucker's Definition of Innovation

In the 1970s, the publishers of Industry Week magazine co-founded a company called Penton Learning Systems (PLS is the owner of this the Corporate Learning Network, IQPC, World Business Research and other benchmarking against-the-best conference/event organizations).

PLS's mission and purpose was to "supply the missing link between a number of disconnected colleges and universities, each marginally effective in designing and developing short courses for managerial, technical and professional workers in their specific geographic area and an integrated system of great productive power."

The Concept Was Simple

Let's say Michigan State University (MSU) offered the best short course, defined as outstanding faculty and learning program content on, say, Developing the Annual Marketing Plan... and California Institute of Technology (CIT) offered the best short course on Conserving Energy in Buildings and Plants.

MSU could "import" CIT's Energy Management course and "export" its marketing planning seminar to CIT.

If 100 schools entered the consortium, and each provided just one outstanding two or three day seminar/short course and expert faculty member, then every institution would have access to 100 outstanding seminars and faculty members.

The concept proved valid: 105 colleges and universities joined the consortium.

Schools, such as Southern Methodist University, University of California-Berkeley, University of Cincinnati, California Institute of Technology, University of Pittsburgh, Northwestern University, Michigan State University, University of Minnesota and the like became active "importers and exporters" of timely/timeless seminars/short courses that could be offered to their local professional, managerial & technical worker markets.

For 15 years, Penton Learning Systems managed this consortium with great success.

It assisted in the design and development of over 30,000 short courses in the fields of quality management, project management, manufacturing management, finance and accounting, marketing management, strategic planning, EEOC compliance and the like.

Further, many schools significantly increased enrollments in their advanced degree granting/certification programs because of satisfactory experiences of attendees at relevant short courses that were, in essence, offered by a given school. Indeed, some schools offered college credits to attendees.

The Point?

Schools could not by themselves continuously define and staff salable short courses that met a wide variety of training needs of organizations in their market area.

In reality, universities and colleges (until very recently) knew only how to produce degree-granting/certification programs.

But most knew very little—or did not have the appropriate market intimacy knowledge or diversity of faculty skills—to design and develop a continuing series of timely/timeless short courses that solve very specific problems the varied target audiences in their local markets needed, wanted, valued, expected and were willing to pay for.

What Was PLS's Innovation?

Again, PLS's innovation was to supply the missing link between a vast number of disconnected colleges and universities and combine them into an integrated system capable of meeting the learning needs of the geographical markets they served.

All the elements were there. What was lacking was the simple element of a dedicated entity designed to organize a disorganized industry.

Other value-added services were required: the disciplined selection of a faculty that could face an adult audience; the design/selection of the right/salable learning programs; direct marketing expertise; negotiation with faculty to keep their fees realistic and sensible; and a logistical support system to facilitate/manage the exporting/importing of quality faculty.

These were the essential "knowledges" or skill sets required to realize this economic opportunity. These skill sets endowed existing resources with a new wealth-producing capacity.

As this example illustrates, innovation does not necessarily require new knowledge(s), new science or new technology.

However, in order to make the consortium of schools work required assembling all the essential knowledges/core competencies and competently direct them towards specific performance and results.

PLS's systems approach enabled schools, really for the first time ever, to tap into the rapidly growing continuing professional education market. Simply put, colleges and universities were provided with a market-entry strategy.

New Organizational Structures to Assimilate Today's Groundbreaking New Technologies is ‘The Missing Link' to Effectively use Competing on Analytics

What kind of organizational structure(s) will your organization need tomorrow (if not today) in order to achieve its competing on analytics objectives… and effectively assimilate today's new wave of groundbreaking technologies & methodologies including data analytics, AI, IA, machine learning and more?

Once again, Drucker's definition of a systems approach to innovation provides us with a helping hand to describe what's needed.

What's the missing link between a number of disconnected technologies, each marginally effective unto themselves, and an integrated system that enables an organization to truly compete on analytics?

Jim Champy – Chairman Emeritus of Consulting Dell Services, former Chairman at Perot systems, & co-author of the 2 million copy bestseller Reengineering the Corporation begins a much-needed dialogue (at our CLW 2020 conference) about a problem that has been too big for too long to just sweep under the rug.

The Problem?

Organizations will lose millions (if not billions) in failed attempts to optimally adopt today's new technologies including AI, IA, machine learning, and data analytics because of failure to rethink their organizational structures to avoid being bogged down with cross-functional confusion, internal political maneuvering & bureaucratic rules that impede successful assimilation.

To reiterate: the missing link between all of today's breakthrough technologies, each marginally effective, and an integrated system of great productive power is/will be innovations in organizational design.

In Conclusion

"For want of a nail, the kingdom was lost," says an old proverb.

As you will discover (hopefully before it's too late), the "nail" in becoming an effective competitor through the use of analytics depends on how the organization is structurally organized for meeting the challenges and opportunities of assimilating today's groundbreaking technologies.