Creative Destruction

A fairly good article in Forbes about Google, something called Zillow and economist Joseph Schrumpeter. 

First for Schrumpeter.  Joseph Schrumpeter.  Joe was a Viennese economist born in 1883, dying in 1950.  He got kicked out of Austria by the Nazis and ended up at Harvard.  Don't hold that against him as he invented the concept of "creative destruction."  Creative destruction means that things we think of as institutions or pillars of our economy will actually be replaced by something better.  That replacement will not be painless but in the end will be better for the economy, and us, as a result.  One painful example is outsourcing--if somebody can do it cheaper in India or China, it will happen.  The bad thing is a 'loss' of jobs here but more jobs in China and India which will improve their economies and make them economic allies rather than enemies that want to eliminate us.  The reason 'loss' is in quotes is that with 4.9% unemployment in the US, there cannot be currently a lot of job 'loss' here.  I'm sure I will get objections on this from people that can't find jobs but I will stick with it right now.

The article cites Ebay, Google and Zillow as examples of creative destruction.  Ebay has not eliminated garage sales but it has crushed garages sale ads reducing revenues for newspapers.  Big time.  Why put an ad in the paper to attract some stranger to come to your house when you can attract the whole country to your computer? 

The author says Google and Zillow will soon do the same thing for real estate and crush the real estate ad revenues and probably reduce broker's commissions.  Seems these websites will show aerial pictures of your property and give the value of the property.  I tried Zillow on my house.  Got a fuzzy overhead shot and the tax value.  No comps or market value but I'm sure that is coming.  Not all that impressed but I can see this as another version of 'creative destruction.' 

This is not a hard concept to figure out.  Just think Mapquest vs. Mapsco.  Or cell phones vs. land lines.  Cable vs. satellite.  You get the idea.

One thing the author noted that I hadn't thought of is medical care.  He quotes a book by Andy Kessler called "The End of Medicine."  Haven't read it but the thrust is that doctors are inefficient and drive higher medical costs.  Higher costs lead to people looking for lower costs and the money is going to CT scanners.  Put the patient in the oven and scanner figures out what is wrong.  So long, Doc.

So what does all this mean for you, the career newbie?  Be ready for change.  You will be fired, your company will be taken over, your company will go out of business, your job will be outsourced, you will be a victim of Creative Destruction. 

You will also be rewarded by Creative Destruction.  New jobs and opportunities will be created.  So don't look back, be prepared for change, and embrace it.  You might as well, you can't stop it.  Joe was right.