0 saved
8.8K views
Whether applied to economies, ideas, systems, or politics — this model describes how something new and transformative can both be born from, ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Philosophi autem in suis lectulis plerumque moriuntur. Huic ego, si negaret quicquam interesse ad beate vivendum quali uteretur victu, concederem, laudarem etiam; Certe, nisi voluptatem tanti aestimaretis. Duo Reges: constructio interrete.
Amicitiam autem adhibendam esse censent, quia sit ex eo genere, quae prosunt. Verum tamen cum de rebus grandioribus dicas, ipsae res verba rapiunt; Mihi enim satis est, ipsis non satis. Si quicquam extra virtutem habeatur in bonis. Utilitatis causa amicitia est quaesita. Non est igitur voluptas bonum. Quis tibi ergo istud dabit praeter Pyrrhonem, Aristonem eorumve similes, quos tu non probas? Qui-vere falsone, quaerere mittimus-dicitur oculis se privasse;
Beatus autem esse in maximarum rerum timore nemo potest. Nam quibus rebus efficiuntur voluptates, eae non sunt in potestate sapientis. Et hunc idem dico, inquieta sed ad virtutes et ad vitia nihil interesse. Et harum quidem rerum facilis est et expedita distinctio.
- Work with the impact of digital disruption accelerating creative destruction.
The accelerated rate of cr ...
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tanti autem aderant vesicae et torminum morbi, ut nihil ad eorum magnitudinem posset accedere. An vero displicuit ea, quae tributa est animi virtutibus tanta praestantia? Non igitur bene. Qui ita affectus, beatum esse numquam probabis; Si qua in iis corrigere voluit, deteriora fecit. Duo Reges: constructio interrete.
Illa argumenta propria videamus, cur omnia sint paria peccata. Tibi hoc incredibile, quod beatissimum. Huius ego nunc auctoritatem sequens idem faciam. Hoc Hieronymus summum bonum esse dixit. Non quam nostram quidem, inquit Pomponius iocans; Ut aliquid scire se gaudeant? Atque ita re simpliciter primo collocata reliqua subtilius persequentes corporis bona facilem quandam rationem habere censebant; Bonum negas esse divitias, praeposìtum esse dicis? Non autem hoc: igitur ne illud quidem.
Consequatur summas voluptates non modo parvo, sed per me nihilo, si potest; Invidiosum nomen est, infame, suspectum. Illo enim addito iuste fit recte factum, per se autem hoc ipsum reddere in officio ponitur. Quamquam in hac divisione rem ipsam prorsus probo, elegantiam desidero. At multis se probavit. Laboro autem non sine causa; Qua ex cognitione facilior facta est investigatio rerum occultissimarum. Hoc est non dividere, sed frangere.
Creative Destruction in a free market context assumes that the market drives great practice solutions. Some critics might argue that instead, it drives better sales and profits, which is not always associated with high-quality products and services, or people’s needs being met more effectively.
Another criticism of this model is the contrast with models such as compounding, and the power of marginal gains as opposed to complete destruction and reinvention.
And finally, the model is sometimes used to justify the existence of global tech monopolies. Schumpeter argued that organisations grow to monopolies because they do what they do well - so a true embrace of more purist free-market ideas which I would argue is problematic.
Illinois Railroads.
Joseph Schumpeter, the originator of the term, cited the development of railroads in Illinois as an example of creative destruction. He explained: “The Illinois Central not only meant very good business whilst it was built and whilst new cities were built around it and land was cultivated, but it spelt the death sentence for the [old] agriculture of the West."
The rise of Silicon Valley
This New York Times article notes the popularity of this model to explain current economic trends impacted by digital disruption: “Schumpeter's theory and phraseology have become mainstream today for describing the current era, in which new-economy companies are being created at an astounding rate. No less an establishment figure as Alan Greenspan, chairman of the U.S. Federal Reserve Board and a Harvard-trained economist, has been using Schumpeterian economics to explain the remarkable noninflationary expansion in the United States over the past eight years.”
Greenspan went on to outline the impact of key innovations, from the microprocessor, lasers, fibre optics and particularly the role of information technology.
The creative destruction mental model is similar to the concept of disruptive innovation, in the way new approaches can replace and make previous ones obsolete.
Use the following examples of connected and complementary models to weave creative destruction into your broader latticework of mental models. Alternatively, discover your own connections by exploring the category list above.
Connected models:
- Red queen effect: in understanding the perpetual drive to be smart and disrupt.
- Disruptive innovation: in changing the game.
Complementary models:
- Compounding: contrasting, in many ways opposite mental models, that benefit from being contrasted with one another.
- Design thinking and agile methodology: methods to seek out those new disruptive ideas.
- Scientific method: as a methodology to strive towards a greater understanding of the truth, relying on creative destruction of theories in some instances.
- Munger’s latticework: when applied to the development and unlearning of mental models.
Creative Disruption was coined by Austrian economist Joseph Schumpeter in 1942, deriving it from the work of Karl Marx, who pointed to the destructive nature of progressive social systems which he argued would eventually lead to socialism replacing capitalism.
In his 1942 book, Capitalism, Socialism and Democracy, Schumpeter explained: “the process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”
It is ironic that this term, now associated with pointing to the benefits and resilience of free-market systems, was originally described as an inherent contradiction within capitalism, that would lead to its downfall.
My Notes
Oops, That’s Members’ Only!
Fortunately, it only costs US$5/month to Join ModelThinkers and access everything so that you can rapidly discover, learn, and apply the world’s most powerful ideas.
ModelThinkers membership at a glance:
“Yeah, we hate pop ups too. But we wanted to let you know that, with ModelThinkers, we’re making it easier for you to adapt, innovate and create value. We hope you’ll join us and the growing community of ModelThinkers today.”
You Might Also Like:
- Actionable summaries of the world's most powerful ideas.
Subscribe now and download this practical guide to transform your thinking, plus recieve one short, powerful and actionable idea in your inbox each month.