It’s 1942 and Joseph A. Schumpeter an Austrian economist teaching at Harvard pens a book, Capitalism, Socialism, and Democracy, that looks at the economics of capitalism. In his view at that time, capitalism is doomed to fail from the inside out because of the inherent creative destruction process employed by every true entrepreneur. Well, what is creative destruction and how should we apply the concept to our everyday operating lives?

      Schumpeter went on to differentiate the inventor from the innovator and saw the innovator as the true driver of economic growth and prosperity. To him, it was the innovator who made continual process and quality improvements and thereby caused existing processes, procedures and systems to become obsolete. While the inventor was looking for that single breakthrough concept, the innovator was changing and perfecting each and every phase of his or her production process. It was the innovator who was constantly looking for improvement even in situations where he or she had a virtual monopoly. It was the entrepreneur who could not be satisfied with the status quo. It was the innovative entrepreneur who made the economy grow.

      It seems that the single most unique attribute of the real innovator is an almost fanatical fear of being overtaken by the competition. It appears that this fear can be so great that even though the innovator may enjoy a monopoly position he or she is still compelled to continually improve their product, quality, value, process, or system. Does this mean we must become fanatics to succeed? I don’t think so, but I do believe it means that we should seriously consider continual change if we want to become, or better yet remain, the leader in our business or industry.

      To become complacent is to risk the loss of sales, market share, or market position, and ultimately profits. If this is the case, then creative destruction appears to make a lot of sense.

      How do we define creative destruction? Basically, as the relentless process of making each and every existing part of our business process obsolete by developing new and better ways of doing business. By not waiting for the next generation of software to work on improving our order processing systems but rather by looking for ways to tweak and fine tune the existing system to work better, faster, smarter, and therefore more profitably.

...Continued in the pages of Twin Plant News, Subscribe Today!