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Ideation and Proactive Creative Destruction


It seems so counter intuitive. Actively destroy something that is producing revenue and adding to both the top and bottom line. That is the premise behind Creative Destruction. The term was coined almost a hundred years ago in 1942 by Joseph Schumpeter who was political economist. He used it to explain the cyclic nature of economics, both macro and micro, and it was based on the fact that there is a constant process in which new production units replace outdated ones. Over the long run, the process of creative destruction accounts for over 50 percent of productivity growth.


Creative Destruction still has tremendous application today and you can see it happening in industries all around you. Think film and digital or phone cameras, cassettes/compact discs and streamed music, video stores and streamed entertainment like Netflix, Disney+. In each case, and thousands of other examples, a well-established product was displaced and made outdated by a new product or service. While some of these transitions took years to complete, the rate of change has rapidly increased as technological changes have accelerated. In the past, a company could milk the legacy cash cow to pay for the research and development necessary to make an incremental improvement in the product. That model has rapidly becoming obsolete.


The rate of innovation has increased dramatically with the increased data processing speeds, AI, IoT, smart devices and immerse technologies like VR/AR. As a result, there needs to be changes in the ideation and innovation processes within companies. At a minimum, a company must face the question of how to accelerate their own processes in these critical areas. The results could be devastating if they do not. If a company chooses not to, there will be a competitor that will choose for them with an innovation that will lead to the destruction of their revenue generating outdated products or services.


The answer lies in Proactive Creative Destruction. Having the ideation and innovation process as part of the company culture and DNA. Getting minimum viable products produced quickly to learn, process and iterate on the fly. Focus on different time horizons but the pipeline must remain full and deliver a steady flow of new products and services that proactively replace existing offerings. It is never easy to cut or destroy a revenue stream but it is a lot less painful to do it to yourself than to have a competitor do it for you.


The process becomes even more critical in times of dramatic change or economic upheaval like we are seeing during the Covid-19 pandemic. Evidence of this can be seen thru the explosion of companies like Zoom or the telehealth providers like Hippo Health. Bottom line, disruption opens doors for innovation that will be leveraged to shift the market dynamics even faster then during stable times. At the AND group, we have the tools, methods and experience to help you accelerate your ideation and innovation process.


Reach out to Brad at brad.gay@theandgroup.com if you would like to learn more about and create an approach to Proactive Creative Destruction.

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