Some of you may be feeling some negative thoughts around this term. Believe me-I certainly did when I first heard it! Before you write this off as some newfangled management prose, let me share the history of creative destruction, and how it helped me personally.Over 70 years ago, the "perennial gale of creative destruction" was a phrase coined by economist Joseph Schumpeter. Creative destruction is intended to deliberately destroy and replace perfectly good revenue streams with income from new or newly reinvented products and services within today's less hierarchical information economy.



Instead of just waiting for competition, an edict from the Board, price erosion, or other market pressures, creative destruction forces innovation from the very top, thus acting as a catalyst for research and experimentation. This automatically challenges a leadership team to continually drive the marketplace, instead of reacting to it. Authors Foster and Kaplan propose that corporations can outperform capital markets and maintain their leadership positions only if they creatively and continuously reconstruct themselves-and have studied over 1,000 corporations to support their argument.

Why should I care about “creative destruction”?

In my experience, I found that the principles work. When I launched my coaching practice 4 months ago, I expected my 19 years of business experience, planning, and my "graduate degree" in sales methodologies to make me successful. What actually happened was that they worked against me. These were historically my aces in the hole, my rock solid selling methods...what went wrong?

Thanks to the support of my coach, Greg Clowminzer, I discovered the reasons why my old communications and selling tools no longer served me. I finally decided to temporarily put my old selling approaches on the shelf, and to make room for a whole new way of attracting clients. That process was called the Enrollment Process. What started as an experiment soon allowed me to rapidly expand my coaching practice and attract many great clients in a short period of time!

I used the enrollment process a few more times and, within months, I had "destroyed" some of my old models for influencing and supporting others.

What are the benefits in larger companies?

General Electric sets an internal target of 50% of revenue from products and services which are less than 5 years old. This puts managers in much closer touch with current customers and the marketplace in order to come up with new ideas ahead of their competitors. This results in a driven culture of creativity and innovation instead of a culture that is complacent with the cash cows and the status quo.

According to authors Richard Nolan and David Croson, other large companies such as ADP, AT&T, FedEx, GE, General Mills, Intel, Microsoft, Motorola, Morgan Stanley, and PepsiCo have successfully completed "The Six Stages of Creative Destruction", transforming themselves to become viable information economy competitors.

Entrepreneurs (and you know who you are!) constantly engage in a process of creative destruction. They challenge and dismantle the old order of economic activity (technological, cultural, organizational, and managerial) and simultaneously invent and build a new one. One of my entrepreneurial clients has completely turned the perception of financial services professionals upside down-and succeeded.

How can I use Creative Destruction in my business?

The next time you hear your teams talking about how well their current revenue streams/products are selling, or how "this new tool will never work," introduce the concept of creative destruction to them. Challenge them to keep inventing new business partnerships, products and services, even though they clearly don't have to. Some key questions to explore are:

• As a leader, what percentage of my time am I personally taking risks and experimenting with new models? If it is less than 10-20%, why? How will I give others the confidence to apply “creative destruction” without modeling it myself?

• To what degree have we started to feel like we've gotten too comfortable with our current product mix and business models?

• How many of our clients want more from us-but have to go elsewhere to get it?

• How many of our competitors are using the exact same approaches, tools, and models as we are? How long can we sustain our “edge?”

• What can we do as a leadership team to create and reward networks of independent thinkers held together by the need to innovate?

Resources I've listed below are great guidebooks to help you formally implement creative destruction principles in your company.

How do I learn more about Creative Destruction?

Here are some resources for you (with special thanks to Thomas Leonard, President of CoachVille for his efforts):

1. Creative Destruction: Why Companies That Are Built to Last Underperform the Market--And How to Successfully Transform Them -- by Richard Foster, Sarah Kaplan; Hardcover

2. Creative Destruction : Business Survival Strategies in the Global Internet Economy -- by Lee W. McKnight

3. Creative Destruction: A Six-Stage Process for Transforming the Organization -- Richard L. Nolan, David C. Croson (Contributor to this article)

4. The Innovator's Dilemma: The Revolutionary National Bestseller That Changed The Way We Do Business-- by Clayton M. Christensen