Creative Destruction Loop

By Andy Manel

Is there beauty and positive outputs in destruction? Let’s explore this idea and see how a “symphony of destruction,” like COVID-19 and technology disruption might offer some illumination at the end of the tunnel.

Creative Destruction is a theory that assumes that long-standing arrangements and assumptions must be destroyed to free up resources and energy for innovation. Creative Destruction is also a mindset and a way to understand how technology evolves and dies, to give space to other new technologies, like an ouroboros.

The ouroboros is an ancient symbol depicting a serpent or dragon eating its tail. It’s often interpreted as a symbol for eternal cyclic renewal or a cycle of life, death, and rebirth.

It is important to say that this article is a personal opinion and is written from the point of view of a radical techno-optimist, who does not ignore the suffering that sometimes disruption does bring to society.

(Left) The last days of horse-cars in Manhattan, c. 1917, public domain archival image. (Right) Delancey Street traffic jam, c. 1920, on the approach to the Williamsburg Bridge, public domain archival image.

“If I had asked people what they wanted, they would have said faster horses.” — Henry Ford

There is enough data confirming that through the process of destruction and creation, we’re creating more wealth, peace, and abundance for everyone as time passes. The world of today is exponentially better than the world of yesterday.

A brief story about destruction and creation: The democratization and demonetization of ice.

Ice is a daily product that we use in several ways. It’s hard to imagine today’s activities without this product. The price of ice, in 1818, was 0.25 USD per pound of ice. The cost back then was 60 times more than now, despite today’s average income. What this means is that buying ice in1818 was a privilege that only a small group of wealthy individuals could afford.

In 1950 the automatic ice maker was deployed. By 1965 this new machine was democratized and spread to the general public. The democratization of this innovation destroyed more than 30 000 job positions and more than 2500 ice companies, only in the states.

Presently, in developed nations, it is difficult to find a family that can’t produce their own ice, literally for free. This is an example of creative destruction, and today it would be hard to find anyone that would oppose its development from scarcity to abundance, due to the technology disruption of the ice-making machine.

The Acceleration of Creative Destruction because of digital technologies: The Kodak Moment.

The Kodak Moment

Creative Destruction has a lot of sexy examples from the past; whether it be from horses to cars by Ford Motor Company, or from telegram to the phone by Bell Telephone Company, the continuous destruction of the old, gives way to new.

Because of electricity, digitalization and the internet are the new fuel for some of the most innovative initiatives of our present day. In the future, AI, in convergence with other exponential technologies, promises to become the new catalyzer of creative destruction. But too many people undervalue the potential of those creative collisions because they can’t see a tangible output right here, and right now.

What is the cost of misunderstanding these “patterns”?

I would like to remind you of Kodak. Kodak was the most important company worldwide, keeping our memories alive through photography. Its business and invention were so strong that they not only sold millions of photographic film but also invented and created digital photography.

Because of Kodak’s lack of understanding of how exponential technologies evolve, they decided not to auto destroy their traditional business model, based on physical photographic film, even though digital photography promised to be a game-changer. Why create a new venture around one’s business when the old models are already giving you millions of dollars in revenue?

Today it is popular to see how new digital ventures around photography destroyed the old models, redefining how we understand photography. Creation Destruction shows itself once again, thanks to a leaner, more agile, and scalable business models, like Instagram, which was sold to Facebook for 1 billion dollars (currently valued at more than $100 billion dollars).

Instagram destroyed business film suppliers for the general public but created a new world where billions of people can create content, share memories, and sell products and services of their own, around the world.

Schumpeter’s Waves of Innovation

Creative Destruction and the 6 Ds of Tech Disruption represent the potential of information technology for destruction and creation. In future articles, we deep in what means the pattern like an “S” on each innovation.

COVID-19 destruction and getting back to normal.

Today we enjoy a higher standard of living because of innovation. Even though losing many jobs has been painful in the face of this crisis, paradigms changed overnight, forcing society to evolve. We can be conservative about social changes, but it’s important to understand the external forces that are assisting in the evolution of our society.

“First we build the tools, then they build us.” ― Marshall McLuhan

Today we see how many businesses are being destroyed from the COVID-19 crisis. Many companies and organizations will die, due to “the acceleration of the acceleration” of digitalization. How many will misunderstand that there is no back to normal? How might we better understand that the COVID-19 disruption is destroying our normal, and there is nothing to fix, but instead, plenty to create.

We should welcome destruction! Destruction of the oil industry gives way to new creations, championing affordable renewable energy; the disruption of traditional agriculture (vertical farming), gives way to new methods, such as holistic agriculture, that positively impact the environment. We need the destruction of many things for a better world to keep emerging. So, let’s celebrate and be optimistic about Creative Destructions!

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