Defining Innovation as Creative Destruction
James05
ENES663_CreativeDestructionandInnovation.pptxHow Does Innovation Trigger Creative Destruction?
What is Creative Destruction?
Economically speaking, Creative Destruction occurs…when something new kills something older
A great example of this is personal computers. The industry, led by Microsoft and Intel, destroyed many mainframe computer companies, but in doing so, many entrepreneurs created new businesses based on the PC – one of the most important innovations of this century
Innovation as Creative Destruction
Image Sources: wikipedia.org & start-up book.com
Who was Schumpeter?
Joseph Alois Schumpeter (1883 – 1950)
Among the first to identify a clear relationship between innovation & entrepreneurship
Innovations trigger creative destruction of old ideas, technologies, skills, and equipment and make them obsolete
Entrepreneurs introduce new means of production, new products, and new forms of organization
Innovation Activities That Trigger Creative Destruction
Schumpeter saw innovations as any of these:
Introduction of a new good
Introduction of a new method of production
Opening of a new market
Discovery of a new supply of raw materials or partially finished products
A new form of organization
Creative Destruction & the Law of Innovation in Large Firms
Source: https://www.youtube.com/watch?v=uosKhQGewoE
Creative Destruction Cycles Enable Further Innovation
Source: leduc989.wordpress.com
Waves of Creative Destruction
Image Source: visioninnovation313.wordpress.com
Takeaways
Creative Destruction is the result of a new innovation
It destroys old and obsolete segments of the marketplace
It makes possible entry of new entrepreneurial firms in the market
Creative Destruction occurs every day with advances in new technologies and creative solutions of innovators
