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![… this kind of competition is … much
more effective that the other … and [is]
the powerful lever that in the long run
expands output” (End of long quote)
Old and New computer
Performance?
Resources?](https://image.slidesharecdn.com/what-is-creative-destruction-1228380568228721-9/85/What-Is-Creative-Destruction-15-320.jpg)
Uploaded byChris Sandström
What Is Creative Destruction?
Creative Destruction refers to the process by which new innovations destroy the value of older technologies and ways of doing business. Joseph Schumpeter coined the term to describe how capitalism involves constant structural changes to firms, industries, and economies driven by innovations. New technologies, products, services, and organizational methods disrupt existing businesses and markets. While disruptive, this process of "destruction" also creates new economic value and opportunities elsewhere. It poses challenges for firms, industries, and societies to adapt but also drives long-term economic growth through new jobs and industries that replace those made obsolete.
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What Is Creative Destruction?
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- 2. Christian Sandström holdsa PhD from Chalmers University of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
- 3. The value ofthe old is destroyed by the new.
- 4. The value ofold technologies…
- 5. … is destroyedby new technologies
- 6. You know thesong ”Video killed the radio star”? That’s Creative Destruction!
- 7. The term Creative Destruction was used by Joseph Schumpeter, an Austrian economist.
- 8. To Schumpeter capitalismleads to eternal structural changes in firms, industries and economies. And he argued that Innovation is what drives this process…
- 9. Quote Schumpeter: ”In capitalistreality … it is not that kind of competition (price) which counts but the competition from the…
- 10. … the newcommodity…
- 11. … the newtechnology…
- 12. … The newsource of supply…
- 13. …the new typeof organization…
- 14. - Competition which… strikes … existing firm … at their foundations and their very lives…
- 15. … this kindof competition is … much more effective that the other … and [is] the powerful lever that in the long run expands output” (End of long quote) Old and New computer Performance? Resources?
- 16. Quote Schumpeter: ”A railroadthrough new country, i.e., country not yet served by railroads, as soon as it gets into working order upsets all conditions of location, all cost calculations, all production functions within its radius of influence; and hardly any ’ways of doing things’ which have been optimal remain so afterward”.
- 17. Why does itlook like this along a small country road in Alabama?
- 18. If a newhighway (an innovation) is built next to the country road, noone’s going to drive on the old road…
- 19. … The valueof the old is destroyed by the new creation…
- 20.
- 21. Well, actually itis not! The photo is taken in New Orleans after the terrible Hurricane Katrina…
- 22. The views areterrible and strikingly similar! Innovations can create the same kind of views as a hurricane disaster…
- 23. And now alittle game… The next slide contains 4 photos 2 are from Hurricane New Orleans 2 are from old country roads Guess which ones are from New Orleans!
- 24.
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- 27. TENNESSEE NEW ORLEANS COUNTRY ROAD NEW ORLEANS ALABAMA COUNTRY ROAD Amazing how hard it is to tell the difference! Innovation is really about Creative Destruction!
- 28. Yesterday’s and today’scapitalist economy is all about Innovation and Creative Destruction.
- 29. Innovation was whatdrove the 19th century economy… The telegraph Railway and the steam engine Iron and steel New energy (coal)
- 30. … And itdrives today’s global economy as well Oil The container The transistor Plast
- 31. ”From the steamengine to the search engine”
- 32. Surviving Creative Destruction is a challenge for firms…
- 33. … Surviving CreativeDestruction is a challenge for industries…
- 34. …a challenge forsocieties
- 35. It’s a challengefor people… The tractor innovation destroyed the peasant’s job
- 36. Other innovations createnew jobs somewhere else in the economy…
- 37. So, Innovation andCreative Destruction drive structural change in society Share of Swedish population working in agriculture, industry and services over time.
- 38. Summing it up… InnovationsDestroy value at one place, and Create a larger economic value somewhere else.
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