Part 1 of “The Entrepreneur in Time”: Creative Destruction
This article is the first in the series “The Entrepreneur in Time” which explores some of the basic assumptions about entrepreneurs from the emergence of entrepreneurship in capitalist business writings up until the present day. I embarked on this topic to discover if the character of the entrepreneur has always been the same, or if the idea has developed over time. One hundred years ago it was said that entrepreneurship was the only way to escape your class. I’d say this still holds true today. I hope readers find some pearls of wisdom from these stuffy old tomes!
Joseph Schumpeter (1911)
This book was written during a very exciting time for inventors – the world saw teabags, disposable razors and windscreen wipers for the first time (amongst many great conveniences that we still know and love today). So what were these people like? How were they viewed? Are we as modern entrepreneurs so different? Let’s take a look at what this writer had to say about them.
“First of all, there is a dream and the will to found a private kingdom, usually, though not necessarily, also a dynasty… Then there is the will to conquer: the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself…Finally, there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity.”
The entrepreneurial character: desirable or diabolical?
Schumpeter describes the character of the entrepreneur as someone who is strong, who is not averse to grasping opportunities at the expense of others, and who destroys the old with his/her new invention. This character is a great influencer of politics, society and economy. Schumpeter argues that if entrepreneurs over-plan their idea will lose its value in the process by getting weighed down by the planning process. Because an entrepreneur is a charismatic personality, it doesn’t matter how unimportant, useless or insignificant the product being sold is. This person can make it work.
We can and we can’t all be entrepreneurs.
“A minority of people with a sharper intelligence and with a more agile imagination perceive countless new combinations. They look at everyday events with more open eyes and a wealth of ideas suggests themselves on their own.”
Entrepreneurialism was believed by Schumpeter as the only way to transcend your class and become socially mobile; you became part of the class of capitalists. He equated entrepreneurialism and innovating with capitalism. There will always be space for more entrepreneurs and innovations because no matter what the current state of affairs are, there will be infinite interpretations of what is the “best”. Most people will not be innovators or entrepreneurs, however, because they will simply be trying to overcome everyday problems. Schumpeter also believed that more knowledge about the world (in all its aspects) leads to better entrepreneurial prediction and intuition. So, without a well-rounded education, there would be less entrepreneurial prospects.
Modern success story: Amancio Ortega Gaona
The founder of Zara is the third richest man in the world, yet you could not imagine a more reclusive and withdrawn person. Starting out in a quiet village in northern Spain as a shop assistant in his teenage years, he is now valued at $57 billion. His success was based on two simple principles: give customers what they want, and give it to them fast. He changed the business model for the fashion industry forever. However, he has faced some controversy with employees.
Power and responsibility: if we cause change, what do we destroy in the process?
Schumpeter’s term “creative destruction” holds strong as the best simple explanation of what an entrepreneur does. The economy is never still. Even if we do not actively push to advance it from the inside, it continues due to external influences. Every time a person or group decides to create or change something within the economy, no matter how small, it is still something new. But new things typically replace something (for example, making someone’s trade redundant ).
To Schumpeter, entrepreneurs must be leaders. That is their character and role. Because the entrepreneur presents such an impressive figure, as one who is able to navigate and control the economy, he gains influence and therefore respect and power. He himself knows this because he also rose to this position of power on his own merit, and not by inheritance or title. Society follows entrepreneurs and their behaviour like idols or celebrities. Whether the entrepreneur chooses certain styles, foods etc. or not, what society perceives he/she would do becomes fashionable and thus affects culture. Does the entrepreneur then need to assume a role of social responsibility?
Relevance for today…
Just over one hundred years ago, this material was published. Reading through it, I found some parts were timeless. It was particularly interesting to ponder his discussion that entrepreneurs are powerful, therefore they probably have some duty to guide the people that idolize them. How would you react to such a statement? Do you think about what you are destroying when you create a new business? Do you realize how much influence you have on your admirers, now that being a business starter is fashionable?
Andrea Francis is the PR and research evangelist for Twoodo, the ultimate “one box to rule them all” online productivity tool. She is into events, marketing and PR with tech startups in Europe. Andy likes getting things done and makes an awesome homemade hamburger.
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