Tuesday, November 09, 2010

The Positive Effects of Disruptive Change

An illustrative example by George Will of how the process of creative destruction, while often causing short-term pain, yields long-term gain:
In 2001, the iPod arrived. Less than a decade later, the number of employees of music stores has declined from about 80,000 to 20,000. In 2002, there were about 7,500 music stores; by next year there will two thirds fewer. But now that people shop at 35,000 feet in airplanes offering Internet access, former music-store employees can work for FedEx and UPS, delivering what e-shoppers buy.

Weissenstein thinks we focus on the first, disruptive half of social change without noticing the second, creative half. Fixated on job losses in the Great Recession (from December 2007 to June 2009), we miss germane events that began earlier and continue. New “growth drivers” include “teenage tech companies.” Yahoo, Amazon, eBay, and Google, founded in 1994, 1994, 1995, and 1998, respectively, perform functions that did not exist 25 years ago, and employ, cumulatively, 75,000 people. Their existence enables new growth drivers. An entrepreneur with a few thousand dollars can use the Internet to publicize a new product to a target market...

Today, three years is an eternity. In October 2007, 81 percent of Facebook’s 50 million users were younger than 24. Today, 45 percent of its more than 500 million users are 35 or older. What starts in a Harvard dorm room can quickly conquer the world.

Three million iPods were sold in 2.5 years; 3 million Kindles were sold in two years; 3 million iPads were sold in 80 days; 3 million iPhones were sold in three weeks. What exhilarates Weissenstein is the certainty that there will always be a next new thing, and that it will not be new for long.
Read the whole thing.

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