ABSTRACT
Markets, according to Joseph Schumpeter, are never stable. Competitive companies are brought to their knees by the sudden appearance of new competitors or products that improve upon existing offerings and can make entire product lines obsolete. Even the most competitive makers of horse carts were doomed once the automobile appeared on the scene and became a fact of life in the early 20th century. Schumpeter’s term for this process of constantly punctuated market equilibria is “creative destruction.” According to Schumpeter, creative destruction is “the essential fact about capitalism,” a “process of industrial mutation … that incessantly revolutionizes the economic structure from within.” 2 Creative destruction has something uncanny about it. Those who fall prey to it do not see it coming: It happens from within, as Schumpeter writes. Survival in a market-driven economy depends on being able to avoid the surprise that comes from within, which means being able to anticipate and proactively initiate the process of creative destruction.
