May 7, 2007


Rediscovering Schumpeter: The Power of Capitalism: Q&A with: Thomas McCraw (Sean Silverthorne, 5/07/07, HBS Working Knowledge)

Q: Schumpeter introduced the term “creative destruction” and championed the role of the entrepreneur in both start-ups and in established companies. What can business leaders take away from his development of these ideas?

A: The main takeaway is the absolute relentlessness of creative destruction and entrepreneurship. In a free economy, they never stop—never. Schumpeter wrote that all firms must try, all the time, "to keep on their feet, on ground that is slipping away from under them." So, no serious businessperson can ever completely relax. Someone, somewhere, is always trying to think of a way to do the job better, at every point along the value chain. Whatever has been built is going to be destroyed by a better product or a better method or a better organization or a better strategy.

This is an extremely hard lesson to accept, particularly by successful people. But business is a Darwinian process, and Schumpeter often likened it to evolution.

Indeed, Darwin just borrowed his ideas from the early capitalist theorists. They work in economics, where intelligent design is obviously in play, just not in Nature.

Posted by Orrin Judd at May 7, 2007 12:00 AM
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