The following is clipped directly from Wikipedia:
Schumpeter, The Man
Born in Triesch, Moravia (then part of Austria-Hungary, now Třešť in the Czech Republic), Schumpeter was always a brilliant student and praised by his teachers. He began his career studying Law at the University of Vienna under the great Austrian capital theorist Eugen von Böhm-Bawerk, taking his PhD in 1906. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz (a German-language university in Austria, now in Ukraine), in 1911, at the University of Graz, where he remained until World War I. In 1919-1920, he served as the Austrian Minister of Finance, with some success, and in 1920-1924, as President of the private Biederman Bank. That bank collapsed in 1924 and left Schumpeter in bankruptcy. From 1925-1932, he held a chair at the University of Bonn, Germany. Having to leave central Europe because of the rise of the Nazis, he moved to Harvard (where he had already lectured in 1927-1928 and 1930), where he taught from 1932 to 1950.
Schumpter and Creative Destruction
Creative destruction, introduced in 1942 by the economist Joseph Schumpeter, describes the process of transformation that accompanies radical innovation. In Schumpeter’s vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.
Schumpter and the Types of Innovation
There are numerous types of innovation-generating creative destruction in an industry:
-New markets or products
-New equipment
-New sources of labor and raw materials
-New methods of organization or management
-New methods of inventory management
-New methods of transportation
-New methods of communication (e.g., the Internet)
-New methods of advertising and marketing
-New financial instruments
-New ways to lobby politicians or new legal strategies (though many economists would argue that this last is not a genuine example of creative destruction, so much as an example of using force of government to prevent more innovative or lower cost competitors from selling to one’s customers)
October 11, 2007 at 7:40 pm |
I think this is an interesting blog…good luck. Ever try to invent something? I have invented something that I am in process of sparing over with a company, if you want to understand the impact of innovation and the process of creation try to take a raw idea and bring it to life–quite interesting.
Patrick
October 12, 2007 at 6:32 pm |
Hello Patrick,
Thank you for your comment. As a matter of fact, I am involved in a course requiring innovation in virtual teams. My team was formed at my university in Boston, and we are required to invent a product and bring it to market while we are all off in different places (and countries). Group dynamics are always interesting. But doing it alone has its own special challenges, for sure!
There has been a lot of discussion, here in Copenhagen, about the different stages of the process.
For the ‘idea person’ to take it all the way to market is a HUGE challenge. Many times, the inventor is the creative and ends up not reaping the benefits in the end because the process of taking the product to the market is so long, arduous and frusterating that they give up or go broke. The inventor, many times, would like to (and quite possibly, should) sell the idea and get back to inventing, leaving the business end to the startup folks. That’s the argument, anyway.
My hat is off to anyone taking it to the finish line, though. There are not many things in life more statisfying than successfully bringing a new product to the market. Particularly one that you have invented. I wish you the best of everything and hope to hear great news from you very soon!!! Exciting times. Forge on!
Nina