Humans like things tidy. They cherish order and stability. It’s little wonder then that so many of us are anxious in an ever-changing world. To become less anxious, we need to embrace change. The nineteenth century English poet John Keats was accurate when he wrote, “There is nothing stable in the world; uproar’s your only music.” It’s a tune we should learn to love. If you are looking for stability, then perhaps you should adopt American author Tom Robbins’ description. He writes, “True stability results when presumed order and presumed disorder are balanced. A truly stable system expects the unexpected, is prepared to be disrupted, waits to be transformed.”
Robbins could have been describing the world through the eyes of an innovator or an entrepreneur. These individuals look to disrupt the current order of things and to transform the world around them. The late economist Joseph Alois Schumpeter certainly saw the world the way Robbins describes it. As author and speaker Frank Rose explains, “Schumpeter argued that capitalism exists in the state of ferment he dubbed ‘creative destruction,’ with spurts of innovation destroying established enterprises and yielding new ones.”[1] If you have never heard of Joseph Schumpeter, Wikipedia describes him as “one of the most influential economists of the early 20th century.” Born in Austria, he eventually emigrated to America and became a professor at Harvard University.
Progress and Creative Destruction
Rose reports, “[During Schumpeter’s tenure at Harvard,] he argued that it’s entrepreneurs who drive economies, generating growth and, through successes and failures, setting business cycles in motion — a provocative claim in the ’30s, when capitalism seemed bankrupt. Even after publishing his landmark Capitalism, Socialism, and Democracy in 1942, Schumpeter was overshadowed by John Maynard Keynes, who preached government spending as a way out of the Depression. ‘Schumpeter probably was right all along,’ says Michael Powell, ‘but it’s only now, at Moore’s law speed, that you can actually observe it.'” Rose reports there was a bleaker side to Schumpeter’s economic viewpoint. He writes, “Far less in vogue is his projection that entrepreneurs will disappear as innovation becomes mechanized in corporate labs.”
In the four score years since Schumpeter made that prediction, neither American innovation nor American entrepreneurs have disappeared as large tech companies have developed corporate labs. As the late Harvard Business School professor Clayton Christensen told Rose, “[In America, innovators and entrepreneurs] just leave — they pick up venture capital on the way out, and they start new disruptive corporations.” Rose concludes, “So as long as Washington encourages an infrastructure that supports entrepreneurship, creative destruction can continue after all.” Sounds easy; but it’s not. Centuries ago, Niccolo Machiavelli, in his classic The Prince, wrote, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.”
Innovators and entrepreneurs face numerous roadblocks in their efforts to change the world around them. According to entrepreneur and venture capitalist Luke Johnson, sometimes entrepreneurs and innovators are themselves the roadblock. He explains, “Entrepreneurs must learn to manage the conflict between constant experimentation — which means lots of painful mistakes — and a fear of failure, which can lead to paralysis. Likewise, past glory can be a killer. … By all means treasure experience, and learn from your blunders. But don’t wallow in nostalgia, pining for what might have been. Rather, go ahead and seize the day no matter what. I have little time for those who say: I wish I had started my own business. My only response is: so do it now.”[2]
Destruction versus Disruption
Schumpeter’s concept of “creative destruction” is a close relative of Clayton Christensen’s “disruptive innovation.” Mark McClain, CEO and Founder at SailPoint Technologies, explains, “Disruptive innovation … was first described by Clayton Christensen in 1995 and thoroughly explained in his groundbreaking 1997 book, The Innovator’s Dilemma.”[3] McClain acknowledges that not every innovation need be disruptive; however, when innovations are disruptive they should be beneficially disruptive. He explains, “As you shape the future of the technology or service you provide, think about the kind of innovation for which you want to be known. Are you aiming for iterative innovation or true disruption?” He asserts, “[You should] want to disrupt, but not leave a path of dysfunction in [your] wake. It’s the old, ‘leave it better than you found it,’ idea, which means finding better ways to deliver solutions to [your] customers, without, ideally, leaving a mess in [your] wake. … Strive to be the kind of partner whose customers constantly look to [you] to solve their problems before they know it’s even a problem for them.”
Many people misunderstand how Christensen defined disruptive innovation. Unlike McClain, Christensen didn’t see a stark line between iterative and disruptive innovation. In one of his last interviews before passing, Christensen noted, “Disruptive innovations are not breakthrough innovations or ‘ambitious upstarts’ that dramatically alter how business is done but, rather, consist of products and services that are simple, accessible, and affordable. These products and services often appear modest at their outset but over time have the potential to transform an industry. Robert Merton talked about the idea of ‘obliteration by incorporation,’ where a concept becomes so popularized that its origins are forgotten. I fear that has happened to the core idea of the theory of disruption, which is important to understand because it is a tool that people can use to predict behavior. That’s its value — not just to predict what your competitor will do but also to predict what your own company might do. It can help you avoid choosing the wrong strategy.”[4]
Schumpeter, on the other hand, envisioned entire industries rising and falling — not just from the invention of new technologies but as a result of economic conditions as well. New technologies, however, do play an important role. Author Joe McKendrick writes, “Christensen said that disruption is a principle that is steadfast, but ‘recent technological and business model innovations present unique opportunities and challenges for both incumbents and entrants.’ Think about how Airbnb leveraged technology to disrupt the hotel industry. ‘The internet, combined with near-ubiquitous mobile access, is continually creating very creative entry points for companies to target non-consumers with more affordable offerings.’ At the same time, digital transformation does not change the disruption equation.”[5]
Concluding Thoughts
The most successful entrepreneurs and innovators, according to Christensen, still ask fundamental questions about the world around them. He said, “The fundamental questions we’ve been asking for decades now apply just as much in a digital context as they do in an analog one. Who are your best customers? What is your organization capable or incapable of doing? What jobs are you trying to help customers get done in their lives? In what circumstances should you integrate, and in what circumstances should you modularize your firm’s and product’s architecture? Who are the non-consumers, and what is limiting their access? These strategic questions are universal.” Faced with long odds and challenges, innovators and entrepreneurs keep the American economy moving forward. As op-ed columnist Thomas Friedman once wrote, “We still have risk-takers who are not paying attention to any of this nonsense, who know what world they’re living in and are just doing it. Thank goodness!”[6]
Footnotes
[1] Frank Rose, “The Father of Creative Destruction,” Wired, 1 March 2002.
[2] Luke Johnson, “The past is paralysing, face the future,” Financial Times, 19 April 2011.
[3] Mark McClain, “Disruption Vs. Innovation,” Forbes, 21 October 2020.
[4] Karen Dillon, “Disruption 2020: An Interview With Clayton M. Christensen,” MIT Sloan Management Review, 4 February 2020.
[5] Joe McKendrick, “Timeless Truths About Disruptive Innovation,” Forbes, 4 February 2020.
[6] Thomas Friedman, “Just Doing It,” The New York Times, 18 April 2010.
