- The document discusses Joseph Schumpeter's theory of "creative destruction" where entrepreneurs innovate by creating new products and services that displace older ones, causing short-term job losses but long-term economic growth. - It examines how creative destruction relates to government spending/investments, monetary policy, the rise of unicorn startups, competitive advantage, and its historical role in India and China. - The core competence of firms and nations allows them to shape internal forces and withstand external technological and economic changes fueled by the process of creative destruction.

1. Schumpeter and the strategy
of Creative Destruction
Dr. Sreenivas Rajan
Strategist and Research

2. The legitimacy of creative
destruction
 Is it ok for entrepreneurs to change
the world.
 Schumpeter was first to organize the
theory and legitimize
entrepreneurship
 Entrepreneurs might cause loss to
existing jobs and Marx of the opinion
to take side of workers

3. Ideas are like Balloons

4. Creative Destruction Through
Govt Spending or Investments
 Governments have switched to
Sovereign wealth fund
 Government investment in education
ineffective when knowledge is out of
date or lacking employable skills.
 Government investment in
infrastructure has to be updated to be
sustainable
 Creative destruction of Government
role

5. Govt Creative and Destructive

6. Monetary Policy and Creative
Destruction
 Monetary policy enables Continuous
Innovation and improvement.
 A stable and efficient policy provides a
fertile ground for entrepreneurs
 Friedman initiated econometrics and
came up with the GDP system
 GDP growth requires creative
destruction which requires even more
entreprenuers

7. The original economic engine

8. Creative Destruction and
Unicorns
 Creative destruction has come into
focus because of Unicorns
 While monetary policy encourages
private sector and govt investments
educates us and provides
infrastructure, entrepreneurs are
required for creative destruction and
genuine GDP growth, quality of life
and delivery of innovation.

9. Unicorn birth rate

10. Competitive Advantage of CD
 Connects CD in one generation of
family to CD in the next generation of
family.
 CD allows the firm to switch positions
over generations
 CD increases the scale of innovation
 Shared Values, Five force analysis
and Porter’s Diamond accelerate the
innovation as entrepreneurs focus on
value creation across value chain.

11. Why we can’t predict
everything

12. Core Competence and CD
 While we can’t predict the outside, we
can atleast shape the inside ie. Our
core competence.
 Creative destruction ensure that there
is uncertainty across generation
 Core competence gives us the
strength to face technological and
global forces.

13. Relying on inner competence

14. Schumpeter and India
 India has always been an imperial
country. Democracy is a creative
destruction of India’s ruling policy.
 India has traditionally aligned interests
across seven generations
 Creative destruction was permitted
and Lord Shiva for instance started
Ganga and the beginning of
civilization in India.

15. Trimurti regulated CD

16. Schumpeter and China
 The great wall of China represents the
reliability and Yin and Yang way of
dealing with creation and destruction
of older ideas.
 China has jumped across various
ages and always relied on the Tao
 Structural excellence as in Shangri La
is seen to regulate the energies of
Change.

17. Yin and Yang forces of CD