Creative destruction: When new industries rise and replace old ones

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones.

Joseph Schumpeter

In these days we are reading news about Macys is closing stores and eliminating jobs, but at the same time Amazon announces the creation of 100,000 new jobs, is inevitable to notice the contrast between the two scenes which are a real example of “creative destruction,” the inevitable process in which new industries rise and replace old ones.

The original concept was formulated originatelly in 1942 by Schumpeter, and was perfected after 53 years by Clayton Christensen who formulated the theory of the disruptive innovation, intrinsically related with creative destruction.

Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.

Clayton Christensen


Moving away from theory and approaching to our daily life, it is particularly strinking to see companies that 20 years ago did not exist be active and necessaries participants in our life mentioning for example Amazon, Uber, Airbnb

All these changes occur because new industries are created, with thousands of jobs, but at the same time they destroy innumerable companies and jobs.

In general and totally abstract terms, the economy as a whole benefits from creative destruction, because greater productivity is essential for long-term economic growth, where a new business idea displaces other existing but less efficient ones.

In singular terms, it is necessary to analyze what happens both with the companies and  laid-ofemployees.

This is the paradox of progress in an economy: it is to be witnesses of creative destruction and disruptive innovation live.
It is totally unpredictable how innovation will transform the world in the next 50 years and what it means for us.




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