Jill Lepore’s piece for The New Yorker destroys forever the all-too-pervasive idea of “disruptive innovation.” It’s the idea, particularly convenient if you work in Silicon Valley, that says Uber will replace taxis, Air BnB will replace hotels, Google will replace books and if your ideas don’t disrupt an entire industry, they are not worth backing. But in a detailed takedown of “creative destruction” as its become known, Lepore points out most disruptive start ups either fail or actually never make profit. She says:

“Disruptive innovation is a theory about why businesses fail. It’s not more than that.  It’s not a law of nature. Transfixed by change, it’s blind to continuity. It makes a very poor prophet.”

Paul Krugman has pointed out that one of the most successful economies of recent years has been Germany. How do the Germans do it? Not by constantly coming out with revolutionary new products, but by producing very high quality goods for which people are willing to pay premium prices.

“Maybe we need to do less disruption and put more effort into doing whatever we do well,” concludes Krugman.

Posted in: Big Picture story