Innovation is the specific function of entrepreneurship, whereby the term "entrepreneurship" not refers to an enterprise's size or age. It refers to the activity to create purposeful, focused change in an enterprise's economic or social potential. Drucker discusses each of the four areas of opportunity with a company or industry (unexpected occurrences, incongruities, process needs, and industry and market changes) and the three sources of opportunity outside a company (demographic changes, changes in perception, and new knowledge). Purposeful, systematic innovation begins with the analysis of the all sources of new opportunities and because innovation is both conceptual and perceptual, would-be innovators must go out and look, ask, and listen. All innovations are simple, focused, and start small. But "above all, innovation is work rather than genius. It requires knowledge. It often requires ingenuity. And it requires focus."

Nice, clear article on innovation by the Grandmaster of Management. Unlike many others, Drucker believes that entrepreneurship can be managed systematically. He uses both large and small organizations to prove his point. As usual, Drucker's style of writing is simple US-English.