Prophet of Innovation - Joseph Schumpeter and Creative Destruction

For anyone seriously interested in innovation, and in particular anyone who has the responsibility of building an innovative enterprise, this magnificent book by Thomas K. McGraw is a must read.  The book was published just last year by Harvard University Press (The Balknap Press).

 

The book is a product of intensive research and is written with almost a novelist’s touch.  Schumpeter has gained ever-increasing prominence and influence in economic thinking and public policy over the past quarter century or more, but this book is more than a history of the development of his influence on business and government thinking.  It goes to some lengths, as did Schumpeter himself, to deal with the weaknesses of capitalism and the difficulties of maintaining in a business or in a country steady flow of innovation that is the root of economic growth.

 

As anyone knows from reading The Eye for Innovation, I have a decided distrust of economics as a foundation for studying and practicing strategic thinking and strategy.  McGraw captures the hub of this problem:  “Today, in the twenty-first century, many economists add entrepreneurship to the three factors of production as traditionally conceived:  land, labor and capital.  That addition owes a very great deal to Schumpeter’s own work.  But large numbers of analysts still downplay the idea.  Entrepreneurship is very difficult to measure, and virtually impossible to express mathematically.  It therefore does not easily fit into formal models.”  [emphasis added]

Comments

[5H497]

The destruction part is apparently easy enough. It's the creation part that still needs a lot of work.

A look at the 1980s through today are a ready illustration.

We had plasma displays courtesy of Don Blitzer in the 1970s.
Cellular phones started to roll out in the 1980s, giving new freedom to stay in touch, but that was adulterated by the imposition of GPS tracking.
We had 60-bit words in the late 1960s, and 64-bit words and 128-bit super-words in mid-1970s both courtesy of Cray; and Intel and ADM are finally getting back to that in their own exceedingly kludgey ways.
Control Data produced micro-computers around 1980 but they were over-engineered and still clunky and too expensive; we had minis by the mid-1980s but price was still a problem.
They produced the "Wren" small format disk drive in the mid-1980s which eventually led to iPods and TiVo.

I've seen a lot of economic destruction since 1986, but little creation, in part due to the destruction of Control Data Corporation and other firms that added to the competitive mix and required all firms to do better.

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