Sources of innovation

What are the sources of innovation?

Innovation has become the buzzword of the industry in the 21st century. From business to other areas everywhere innovation is being talked of. Several emerging businesses have proved that innovation can be the way to the top. From Amazon to Google and Facebook, all have proved it.  Many times people use the terms innovation and improvement interchangeably.

However, the two terms vary in their meaning and relevance. The difference between improvement and innovation is the same as that between evolution and revolution. Improvement is like making improvements to an existing product or service to help it better respond to the market demand.

However, such improvements are not always revolutionary. Improvement is just a small part of innovation. Innovation is a much bigger term that encompasses several more things. Innovation includes differentiation. It also means superior returns as well as improbability of imitation. While improvements can provide a competitive advantage in the short term, there is the danger of their being imitated by the competitors.

An innovation is a far deeper process than simply improvement and the change it brings is also far long lasting and full of impact. However, several times the question has been asked that  where does innovation emerge from. There can be several answers to the question since there can be several sources of innovation. Peter F Drucker has provided seven sources of innovation which are discussed below:

According to Peter F Drucker, there are seven sources of innovation.

  • Unexpected
  • Incongruity
  • Market Structure
  • Necessity
  • Demographics
  • Changing perception
  • New Knowledge

The unexpected:

Innovations can take place unexpectedly. They can happen by chance. Someone might just stumble upon a new idea or product. There is a long list of unexpected innovations in human history. Even fire is considered an unexpected innovation that humans stumbled upon. Another example is the dynamite. However, an interesting thing to note is that several important innovations in our history have happened unexpectedly. Many times while scientists are looking for something, they stumble upon something else. One might be looking for a solution to one problem and might discover a resolution that solves another bigger problem. So, it is not impossible to come across innovations unexpectedly. Moreover, innovative products can provide unexpected benefits and help people save time and money while also making a major difference in terms of performance.


When the need is incongruent with the supply, innovation might be born. In an attempt to resolve the existing incongruities people might innovate. For example as the number of cars grew there was a shortage of parking area. In an attempt to solve the incongruity between parking area and parking shortage, the smart car was born. Smart car is a small car that can fit in small spaces. Incongruities can be an important source of innovation. It is basically in the human nature to try to fill the incongruities he sees around him. You have a problem but there is no solution in sight which might force you to develop your own solution. When existing solutions are incongruent with the problem, innovations take place. When supply does not match demand, an innovation might help you increase production manifold which will help meet demand and also reduce prices for product or service whose availability otherwise has been scarce.

Market structure:

An existing market structure can also give rise to chances for innovation. This is how Google was born. Google shaped the search engine market. Before Google the search engines were not as perfect and Google brought all of it in order. There was so much information scattered over the World Wide Web. Google made this information searchable. Thus, the World Wide Web gave rise to a market structure where a search engine like Google could flourish. The world wide web paved way for interconnection. Google created a search engine that was linked to all the searchable data. So, if organizing the information available on the web gave birth to an advertising industry worth several billions of dollars, think how market structures can give rise to game changing innovations.


Necessity is the mother of invention but it is also the mother of innovation. Let us say Microscope. It was born out of the need to delve deeper into the microbial world. Needs always set us thinking. Innovation is based upon bright ideas. The human mind thinks of new things that can better fulfill an existing need. In this process, he thinks of filling his needs in new ways and by devising new products and mechanisms. Whenever we need to find some information, we use a search engine. The need for information gave birth to the need for a technology that can help people find the required information in seconds. Similar other needs have also given rise to many small and big innovations. the field of technology has seen several such minor and major innovations that were born of the need of individual customers or small and big businesses. From AI to cloud technology and other new technologies, each of them is fulfilling one or the otehr important need. As the needs of these organizations grow they develop new and more efficient technologies to help them better handle their work.


Our lifestyles can also be a source of innovation. We all have our lifestyle needs. For example we feel the need to smoke. However, since smoking is dangerous, we made e-cigarettes to satisfy the urge. Lifestyle needs are not small needs and their fulfilment and important requirement for us. This is where innovators sometimes find major opportunities. Consumers’ lifestyles around the world have changes a lot since the pandemic and now people are more health conscious and environmentally aware. With growing health awareness people, the fitness needs of people have also grown. They are spending on athleisure products and other fitness devices. Several companies making athletic products and apparel like Nike, Lululemon athletica have brought innovative products which help people remain fit and monitor their health. It also applies to the world of fashion where Athleisure products are growing in demand.

Changing perception:

Changing perception regarding things can also give birth to innovation. Earlier, the overweight people were seen as healthier than the leaner ones. However, the social perception of healthy has undergone a big change where fat people are seen as obese and unhealthy. People feel the need to remain leaner and healthier. Based upon this changed perception, a flood of healthy and low calorie foods came to the market.
With time people’s perception towards various things have changed a lot. Their perception towards the use of technology in various spheres of life has also changed. People are no more skeptical to using technology to fulfill their personal and professional needs. As they have grown aware of the benefits technology can provide in various areas of life and business, they are using it to satisfy their needs including personal and professional needs. Soem decades ago, technology was seen as mainly a distraction but now it has acquired a core position in education and advancement of knowledge into various corners of the globe. People’s perceptions also change as new innovations come to the market. Some of them may have the potential to revolutionize the society’s perception regarding a particular thing or topic.

New knowledge:

New knowledge can also be a source of innovation. Whether it is nano-technology, biotechnology or even artificial intelligence, new knowledge in any area is a source of innovation. the science keeps progressing. Every year new areas are discovered and much gets added to the existing base of human knowledge. This new knowledge paves way for innovations that can sometimes be life changing. Healthcare is an area that has overtime been heavily affected by such innovations whether they emerge from the fields of biotechnology or nanotechnology. The fields of AI and Machine learning are constantly advancing. The human urge to acquire more knowedge can never be satisfied. It is why these technologies are being used to create more effiecient new tools that can support people and businesses. However, one can find many more such examples in his daily life. There can be some other sources of innovation also apart from the ones Drucker discussed. Innovation can be born out of passion or adventure or even of a hobby. Another key thing to note is that innovations would not have been possible if people were not interested in risk taking. So, risk taking is also a crucial source of innovation