Today a meandering musing around Creative Destruction and then three questions I’d love for you to consider for yourself to enrich your life after lockdown.
Why focus on Creative Destruction?
My professional focus is as a Sounding Board for Leaders. Leadership is about People. End of story.
You may find it odd that this quote from one of the greats of economics, Joseph Schumpeter, comes to mind for me at this time. Perhaps, perhaps not. Economics is about Numbers and People.
Economics is about Numbers and about People.
I’m a “recovering” Chartered Accountant with decades of investing in and growing businesses, so I know “Numbers”.
However, it is the “People” side that endlessly energises and fascinates me, hence my curiosity about Economics and what it means for People.
Economics is about Numbers, sure. It is also at least equally about People and Behaviour. This is why if you ask 50 Economists a question, you’ll get 50 different answers. Business (and the “Numbers” side of Economics) is simple, but People are complex.
For those not as geeky about Economics about me, consider how excited I am to see the sudden realisation among governments around their economic response to the pandemic that there are PEOPLE in the world, not just big corporations. Not only that, but if you make sure people have money in their pockets for their basic needs, they will spend it in the economy and so support and stimulate demand. Funny, that!
Anyway, I digress (as I am wont to do!), but stay with me please, I’ll get to the point of the headline of today’s post.
Schumpeter was very theoretical and about the numbers in the abstract. To such theoretical and academic economists, they could look at businesses “perishing” coldly and analytically, without considering the people.
This is, however, valuable in the long run and I totally agree with Schumpeter about his concept of creative destruction. Innovation is at the heart of humanity, our societies, our economies, and storms and disasters do create space for the innovators, the entrepreneurs.
Using nature as an analogy, Hurricane Ivan in 2004 in Cayman stripped almost every leaf from every tree on Grand Cayman. The devastation cannot be described or even shown in any one picture. Yet, through all of this, this literally created space for new growth, from mangroves to other plant, bird, animal life.
The pandemic is also creating space for some things we do and some ideas we have “to perish” and new ones to emerge. To go back to Economics and numbers, one thing that will happen is that “zombie” businesses must be allowed to “perish”. Businesses fall into this category if a) they did not put enough money aside on their Balance Sheet to “weather” the “storm”, and/or b) if their business model no longer fits the world they are in. Many businesses will perish, many should be allowed to perish but “crony capitalism” will keep them alive (eg US major airlines), but I digress. Let me get back on track!
Here I think of two quotes after the Russian civil war and Bolshevik revolution in 1917:
“There are decades where nothing happens; and there are weeks where decades happen”Lenin
“War is the locomotive of history”Trotsky
So, the Covid-19 Pandemic has seen so much change in how we live, how governments think and operate, how businesses operate. In a radical crisis, we strip away anything that slows down change and, when things gradually emerge, much will be different.
Let’s look at that now for us today on a personal level. Yes, as a Sounding Board for leaders I am already talking to clients and many others about what could be possible for them and their businesses and organisations (and would love to share thoughts on a call with any reader!).
For today, though, let’s use ourselves as a point of focus and start with an anchor.
What is Innovation?
“Innovation is doing things differently and doing different things”me 🙂
Each of us in this lockdown period is doing different things and doing things differently.
Creative Destruction – Questions to ask yourself
So, on a personal level (and yes, they can be considered for your leadership, those you lead, the business you lead, but stick to the personal here!), a few questions for you as we emerge out of lockdown and back to something resembling what we used to call “normal life”:
- What have you done new or differently that you will choose to keep?
- What have you not been able to do since lockdown that you will choose to permanently stop doing?
- Given what you’ve learned, what will you choose to do differently after lockdown even if you could go back to how you did it before?
Enjoy your own thought experiment on “Creative Destruction!”
Also published on Medium.