The Destruction of Creation

Alabama Shakes is a southern blues band led by Brittany Howard that I recently discovered on Spotify. Ms. Howard’s otherworldly vocals on songs like “Gimme All Your Love” fall somewhere between the immortals Otis Redding and Janis Joplin. On top of that, she shreds a mean guitar on tunes like “The Greatest”. I want more, but the problem is that in the Shakes’ six-plus years of existence they have only produced two albums.

By contrast, Led Zeppelin’s albums I, II, III and IV were produced in less than three years. The Doors released six albums in five years. And even Madonna put out her first three albums in less than three years.

It is much less profitable today for bands to produce albums. According to one measure, the average American purchased five albums per year in 1993. Today it is down to two. Bands both old and new are making a lot more money on tour than they are producing new songs in the studio. They are following the short-term money. Video didn’t kill the radio star, the internet did.

“Creative destruction” is a well-known phrase in technology circles and was coined by Harvard economist Joseph Schumpeter in his 1942 book “Capitalism, Socialism and Democracy.” Schumpeter posited that while new technologies may destroy old ways of doing things, they often lead to better ways that, rather than displacing workers, allow them to be more productive. This has been true for the past 200 years or more since the Industrial Revolution. In the early 1970s, however, the pace of innovation began to slow. While technology companies continued to innovate, they did so at a decreasing rate, and productivity gains began to slow as well.

There is a lot of finger-pointing about why we aren’t more productive, which I’ve addressed in many of my prior blogs, including “Fuddy Duddy” But there is a growing school of thought on another recent cause: Maybe we are less productive because we don’t know how to appropriately tap the talents of a new breed of workers—the millennial generation. Our recent study, “Millennials: Myths and Realities” makes clear that many of the myths about millennials are flat out wrong, and that failure to recognize this may be detrimental to our productivity as a nation.

One key myth debunked by this study is that millennials prefer short-term work in what has become known as the “gig economy.” The reality is that millennials don’t like short-term gigs. They only take them because many can’t get good stable long-term jobs. A staggering 65% of respondents to our global millennial survey felt “lucky to have a job at all”. Many of them accepted short-term work because that’s all that was available in the post-2008 recession era. Many entry-level positions have been automated by new technology. The No. 1 factor in choosing a job cited by millennials in our survey was salary (71%). Flexibility came in at a distant 41%. The elimination of entry-level training positions at big companies is an enormous long-term productivity killer. We aren’t doing our millennials or our future any favors by increasing short-term positions at the expense of long-term, entry-level training.

The broader point is that the dominance of short-term investment is the productivity killer. This is true well beyond our hiring practices; it includes a reduction in R&D and infrastructure spending. Saddled with massive government debt loads and pension fund obligations, we have lost our long-term investment mojo and are avoiding big short-term loss leaders like training.

Among the most profitable band tours of the past few years were those of The Rolling Stones, The Eagles and Fleetwood Mac—bands that last produced hits while I was listening to an 8-track tape in the back seat of my dad’s 1977 Ford Gran Torino. They can do this because they have deep libraries of hits, which gives them a long-term durable fan base.

If I were to advise Alabama Shakes, I would tell them to postpone a few of their gigs and get back in the studio to produce another album or two. In other words, invest in their long-term viability like The Rolling Stones. As employers, let’s also invest in the next great band of employees by creating more long-term training programs.

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