Tag: creation

Artistic Essence

“This very essence of a man, his soul, which the artist puts into his work and which is represented by it, is found again in the work by the enjoyer, just as the believer finds his soul in religion or in God, with whom he feels himself to be one. It is on this identity of the spiritual, which underlies the concept of collective religion, and not on a psychological identification with the artist, that the pleasurable effect of the work of art ultimately depends, and the effect is, in this sense, one of deliverance….But both [artist and enjoyer], in the simultaneous dissolution of their individuality in a greater whole, enjoy, as a high pleasure, the personal enrichment of that individuality through this feeling of oneness. They have yielded up their mortal ego for a moment, fearlessly and even joyfully, to receive it back in the next, the richer for this universal feeling. “

–Otto Rank,  Art and Artist, 1932, p. 109-110.

 

Schumpeter and Creative Destruction: The Process of Market Innovation in Capitalist Societies

Schumpeter and Creative Destruction:
The Process of Market Innovation in Capitalist Societies

Joseph Schumpeter was a 20th century Austrian economist who taught at Harvard for several years upon coming to the US. While much of his work was overshadowed by his contemporary Keynes, he made important contributions to macroeconomic theory by developing dynamic models of market change. His work described the nature of market innovation within capitalist societies and emphasized the role of less quantitative measures such as sociology as a major factor for economic development. Much of his inspiration was drawn from the economists Marx and Weber who favored dynamic sociological backgrounds, as well as Walrus from whom he borrowed the concept of the entrepreneur. Despite his emphasis on social factors, however, Schumpeter was one of the leading econometric economists of his day.

In 1942 Schumpeter published Capitalism, Socialism, and Democracy. In this work lies the theory of creative destruction, one of his most notable contributions. Originally a term coined by Marx, Schumpeter employed the “creative destruction” to mean the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. He wrote that the concerns of capitalism were less about how existing structures were administered and maintained and more about how these structures are destroyed and created. Entrepreneurs, he says, are the sole facilitators of innovation and invention that bring about these structural and market changes in economic systems.

Schumpeter placed much focus on equilibrium and the role of entrepreneurs to facilitate change within an economy. According to Schumpeter, an economy in equilibrium produces products for future consumers who are consuming their present products, and consumers consume products of past producers in a circular flow based on past experience. The expectations and cycles are essentially contained with no new production functions allowing for changes. The entrepreneur operates outside the system and introduces changes to the production function that allow for the creation of new wealth and destruction of the old- hence the term, creative destruction.

In Schumpeter’s analysis, entrepreneurs are the sole agents of change and responsible for the destruction and construction of new markets and wealth within a society. It is the sheer acts of will and leadership, rather than intellect, which characterize the entrepreneur and secure economic progress through successful innovation.

According to Schumpeter, capitalist societies did not operate in a the static circular flow, or equilibrium, proposed by Weber where the production function is invariant and preexisting factors of production are combined according to the technology at hand mechanically. Market activity is much more dynamic and changing. It is the Entrepreneurs who operate as a nonentity outside of this equilibrium and force new combinations of factors that disturb the circular flow as a means of innovative development. Rather than changing the quantity of factors to change the quantity of products produced, this disturbance creates market disequilibrium as their innovative contributions change the form of the production function. This change in production function form introduces new and higher quality commodities which destroys old wealth and creates new wealth.

Thinking about the next big thing

To make significant headway towards a legitimate start-up idea, I need to think about the next big, up-and-coming demands of future industries.

To distill the gyst of this post, I want to consider business ideas that leverage and cater to:
1) the creation of social capital
2) the redesign of necessary goods that could use a great emotional appeal
3)  increasing the userability of products and technology that are currently too difficult to use, but would only improve the lives if it weren’t so complicated.

So,
I was giving some thought to the progression of past big-industry booms in an effort to project future industry needs and demands.

If we just look at the past twenty five years or so, and just off the top of my mind, a couple booms come to mind:
Late 70’s airline industry
Early 80’s the computer industry
Mid 80’s financial industry and investment banking
Mid-late 90’s internet and *.com boom
Mid 90’s early 00’s health and wellness industry
Early 00’s web 2.0 and social networking platforms
Early 00’s Genetic engineering and GMO’s
Early 00’s nano-technology
Early 00’s Green technology
Early 00’s- Current Microfinancing and Social entrepreneurship
Currently- Healthcare

And I’m sure we can find plenty of other booms within specific industries.
So,I was online digging around and doing some research and this article struck me, particularly because I did an independent research project last spring: Social Capital

It deals with this elusive term “social capital’ which was recently coined, and still being understood and defined, as a type of capital that forms as a result of trust between individuals. The definition I recall that most accurately describes social capital is: An instantiated informal norm that promotes cooperation between two or more individuals; or the good-will/ trust between individuals that fosters cooperative exchanges. Some examples of social entrepreneurs actively leveraging social capital include companies such as Tom’s shoes, socialvibe.com, and other businesses that emphasize the fostering of social relations within communities, be it local or oversees.

For his marketing class, a friend visited a social entrepreneurial startup called the Nashville Entrepreneur Center that provides a location for fledgling entrepreneurs to share and develop ideas for a small price. This business provides a location in the community where entrepreneurs can get their start-ups off the ground. They make money off a premium they charge for the use of their facilities and resources, and by taking a percentage of ownership in the company. This is a perfect example of businesses leveraging social capital as a means to generate profit because it is a win-win for everyone involved.

Another possible emerging market is the design and userability industry.
I’ve read a few books that discuss a trend towards connecting people emotionally to the vast quantities of information generated the past two dozen years as a result of the information age. Most notable, “A Whole New Mind: Why Right-Brainers Will Rule the Future”  by Daniel Pink and “The 8th Habit” by Stephen Covey. They discuss the various technological ages and industry revolutions throughout the past two hundred years, mentioning the scientific revolution, the industrial, the green (Advances in agriculture which eliminated food shortages), the current information age. The trend points to connecting people with the most recent information age which has left people overwhelmed and detached from the enormous amount of technology and information it generated. They argue what we need more of is not necessarily more lawyers, accountants, engineers and the like, but people who create meaning from the mass of information they generate. What we need are Artists and designers: innovative people with vision.

They highlight a current trend that points to connecting people with this technology.  It means making sense of the new technology and information by making it easy to use and understand, and creating an emotional component that people can identify and relate to. Web 2.0 and social networking is an example of satisfying that demand. Apple has does this geniusly with its products that are designed to emotionally appeal to people and are easy to use, not just in their design (Apple’s product designs are hypnotically beautiful), but in their products. What appeals more to the emotions than music? IPod? Target has also recognized this demand by innovating even the simplest products with designs that appeal to people (just look at their toilet scrubbers. They scream sensuality).

Anyway. To recap on the gyst of all this:
Lets consider business ideas that leverage and cater to:
1) the creation of social capital
2) the redesign of necessary goods that could use a great emotional appeal
3)  increasing the userability of products and technology that are currently too difficult to use, but would only improve the lives if it weren’t so complicated.