What is Creative Destruction?

The theory of creative destruction is the most famous view of the great economist Schumpeter, which is the basis of his entrepreneurial theory and business cycle theory. According to Schumpeter (1883 ~ 1950), "creative destruction" is the essential fact of capitalism. The important issue is to study how capitalism creates and then destroys the economic structure. The creation and destruction of this structure is not mainly through Price competition is achieved through innovative competition. Every large-scale innovation has eliminated the old technology and production system, and established a new production system.

Creative destruction theory

American

The theory of creative destruction states: When

Sony's new president, Nakawa Ryoji, stated publicly that "Sony lags behind competitors in many areas. The main reason why Sony's new products fail to attract consumers is that engineers have failed to grasp market trends at some point." Why is your fate so contrasted? What does market trend mean for Sony?

Carl W. Stern, chairman of the global board of directors of Boston Consulting Group (BCG), has his own opinions on these issues. He introduced Schumpeter's "creative destruction" theory to analyze Sony's case, and reminded China's outstanding companies that they must pay attention to the trend of "creative destruction", which has become faster and faster, or they may quit the game at any time.

First, the price of Sony

Can a group of very large large-scale integrated electronics companies such as Sony in the last century encounter the operating difficulties they face today? Can they be regarded as bad results caused by not paying attention to "creative destruction"?

Carl Stern: When it comes to Sony, this is actually a case where the threat posed by change has not been addressed. It used to have the best quality TV in the world (Trinitron), and they (Sony's management) did not think that Sony's TV would be replaced by a "flat" TV, so they did not invest in the technology of this TV (pure Flat TV). To cater to consumer needs, Sony has no choice but to buy technology from South Korea. This is an example of a failure to properly recognize the threat posed by innovation.

An example opposite to Sony, which is also in Japan, is DoCoMo. In this process of change, it is a big winner and a company that correctly recognizes the opportunities brought by the change. It has introduced some new features through some revolutionary changes to mobile phone services, and it is now a leader in this regard.

Therefore, it is difficult to generalize a certain type of industry in a country with a unified reason, whether it is success or failure. It is necessary to analyze specific issues and see whether specific companies are aware of the changes. Whether it can mobilize all employees of the company to cope with such changes.

2. "Destruction" in China

How do Chinese companies "creatively destroy", especially the performance of famous companies, such as Haier, Glanz, including Lenovo?

Karl Stern: From the stage of economic development, Chinese companies do have advantages in transforming business models. At the same time, China is also a good place to reshape the value chain of enterprises.

For some production industries, Chinese companies have been very successful in this regard. For the world, there are many companies that put production in China, and Chinese companies can quickly explore a way to survive in this environment and how to compete in this environment. Prior to this discussion, in fact, a large number of productive companies have been great beneficiaries of "global disruption." Specifically, Haier is a very successful company, and it is doing very well on the outside; as for Lenovo, it may be too early to comment now, and we need time to take a look. But at the same time, there are many other companies in China that need to do more work to better adapt to this new environment. For example, China's banking industry still has a lot of work to do; there are also large industries, such as automobile manufacturing.

Therefore, the analysis of Chinese companies is also different. Some companies are already good, and many companies still have some work to do. Then these enterprises are what we call sleeping lions or dinosaurs. They need to wake up and make timely changes, or they will face the danger of extinction like dinosaurs.