Definition:
Creative Destruction – Schumpeter suggested that new innovations and entrepreneurs that enter the market can render their rivals obsolete – he pointed out that this process of creative destruction is the key driver of economic growth in capitalistic systems.[1] Creative destruction is one of the facilitators of culture of innovation.[2]
New Technologies and Creative Destruction:
Based on creative destruction, products in high-tech environment have a finite shelf-life before being made obsolete by better products. Better products will constantly arrive, if not by the company, by its rivals for sure. To stay relevant, and fearful of obsolescence, some companies cannibalize their own successful products. However, in this model of competition, ongoing leadership in innovation is required.
Positive and Negative Effects:
Andrew Grove, former CEO of Intel said: Business success contains the seeds of its own destruction. [3] Destruction of a business can hurt the economy, work-force and the society, but in truth, nothing lasts forever. The constant impact of introduction of new technology can leave the consumers, companies and the society feeling confused and ill-at-ease. However, the resulting wealth, technology advancement and cross-cultural exchange can contribute to positive global experience. [4]
[1] Zoltan J. Acs, David B. Audretsch, Handbook of Entrepreneurship Research: An Interdisciplinary Survey ad Introduction, Springer, 2010
[2] Jakki J. Mohr, Sanjit Sengupta, Stanley F. Slater, Marketing of High-Technology Products and Innovations, jakki Mohr, 2009
[3] What is Enlightened Leadership, Univeral Constants of Business Leadership, found online at http://www.enlightenedleadershipnow.com/Home/business-leadership/universal-constants-of-leadership
[4] Tyler Cown, Creative Destruction: How Globalization Is Changing the World’s Cultures, Princeton University Press, 2004
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