Creating the new

It is a puzzling fact that most of the established firms in most countries have been dominating their industries for as long as one can remember with limited challengers attempting or able to dislodge them. The same holds true for political parties that have failed at rejuvenating their value and story-telling yet at the same time they prevent the emergence of new political groups with fresh and innovative ideas that can bring new perspectives on societies' problems and people's aspirations.

What is the underlying factor for such stagnation & inertia? why do established companies and political parties are slow to change yet block younger & more innovative players & thinkers to emerge & be heard? Simply because their biggest fear is the notion of 'Creative Destruction'.

'Creative Destruction' theorized by the Austrian economist Joseph Schumpeter is a natural process by which new technology, innovations, new mindset and skills emerge to make obsolete & replace the existing jobs & activities of a given Eco-system. Growth comes from the accumulation of knowledge that every innovation & the ones that preceded them produces. It is the driving force behind the 19th and 20th century world developments from the industrial age to the Information & technology one we live in today. For Schumpeter, CD must be allowed & encouraged if societies are to sustain growth.

In his book on the subject, Philippe Aghion demonstrate that the countries with higher rates of job creation & destruction where also the countries that produced the most patents and reflected the highest growth of GDP per capita. He also demonstrate that, to some exceptions, the larger the firm grows the less likely it is to innovate. On the other hand, innovations made by smaller firms tend to be more radical & more significant than those of the larger companies.

Hence since change is perceived by incumbents as the potential destruction of their existing models and their benefits/privileges, politician and old-time manager's natural inclination is to prevent CD from happening in their countries, markets or companies. They resort to many tactics such as obstructing competing firms from entering, political lobbying, creating monopolies, maintaining internal status quo and limiting dissemination of knowledge to keep control.

The implication of such behavior is less/no growth, no innovative solutions to society's challenges, poor public services, limited choice to customers, imposing low quality services at high prices, migration of skilled talents, ageing management practices blocked by incumbents, etc. All too familiar am sure.

The solution: We need a new progressive generation of leaders at all levels. People who embrace & practice innovation, diffusion of knowledge, challenging status quo as elements of the sustained growth toolbox. Our countries have been witness to unreasonable social,economical & political challenges lately. The way out is not by perpetuating and attempting to salvage the old but to allow finally the unobstructed 'creative destruction' to happen so the new emerges. New political vision, new governance reinventing existing firms, allow innovative & agile organization creating new jobs & retaining our brightest talents from beefing other countries' growth and last but not least becoming a center for the region's knowledge economy & power.