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 It may be time to
reconsider your business model
In
1942 Joseph Schumpeter in his work entitled
“Capitalism, Socialism and Democracy” coined the
phrase “Creative Destruction” defined as a “process
of industrial mutation that incessantly
revolutionizes the economic structure from within,
incessantly destroying the old one, incessantly
creating a new one.” Once again this concept is
gaining popularity and being quoted by economist as
they try to explain economic volatility. This
resurrection is not due to a belief that innovation
or creativity has increased but rather that the rate
of destruction has accelerated. Historically,
creative destruction involved marginal improvements
occurring over many decades. Armed with a time
advantage, businesses could adapt to the new
methodologies. More importantly, the elapsed time
frame allowed generational adaptation, whereas the
originators of the obsolete technology where
surpassed by the next generation of new inventors.
It is a known fact that change occurs more freely
when the innovator was not the originator of the
first idea.
However, today changes are occur ring rapidly; sand
castles built in the morning are being washed away
by the afternoons’ tide. Such expediency requires
the originator to recognize and respond to creative
destruction prior to a comfortable mental release of
the old methodologies. Especially hard hit are the
small to medium businesses (SME’s) with the founders
nearing retirement. At an awkward point in their
business life they are learning that their company
asset (and once perceived safe nest egg) is
yesterday’s business model and losing value daily.
Unfortunately many business owners do not recognize
or more accurately refuse to accept this inherent
threat until it is too late.
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