An innovation equilibrium informed by creative destruction

5 Minutes with Aric Dromi on deconstructing your core earning model

Aric Dromi

Value beyond the circle of identity

The perspective of value is subjective; it is changing with time and often being impacted by the reciprocal relationships of the "ecology-of-the-self." The concept of value during the industrial revolution was circular and therefore evolved around the efficiency of resource usage throughout the entire supply chain.

It was a model dedicated to minimizing waste while keeping interactions and transactions bound to familiar business models - the ones that we felt comfortable with and did not force us to change our mindset. This circular flow is unfortunately still driving our innovation economy today. It is placing 99% of management power to maximize the current earning model while ignoring the nature of the new generation of additive-consumers who operate outside the "single brand circle of identity."

Transformation out of the locked endless loop

Many organizations today fall into the trap of "thought fixation" in regards to their view of their input-output models. The harsh truth is that when outputs only cover the cost of production rather than creating new input opportunities, there is no progress or change to the core-earning model. If you keep all of your resources focused on the current business, your organization is locked in an endless loop. Therefore your enterprise has no incentive to rethink itself when facing societal and economic changes. 

Creative destruction as the dissolution of thought fixation

Maybe a good example is a difference between a socialistic and capitalistic employee development program. When the "socialistic" company is employing a student fresh out of school, 20 years of the same repetitive tasks set up front. In the "capitalistic" company the student career and professional focus is unclear and therefore forces the student to continually evolve and reinvent her or his impact on the output of the company and thus becoming a creative destructive force.

Joseph Schumpeter’s ‘creative destruction’ is the dissolution of "thought fixation" around old practices in favor of innovation that can drive new revenue streams. Instead of using resources to improve the past, leaders should pave the path to establish new routines of economic behaviors. You do so by continuously seeking out new ways to divert organizational resources to capture and harness the data generated from consumer interactions with your outputs within the consumer ecosystem to rethink your input model. This is how you create innovation equilibrium - the managerial accumulation of creativity and invention in a competitive market that produces coherent results.

I call this DIE - Disruptive Innovation Environment.