Wednesday, October 28, 2009

Creative Destruction - the wildfire of hope

(This post has a competition, open to all my readers, especially young managers, and management students from any B-school in India or abroad.)

The world is facing dilemmas and challenges no one ever imagined in recent past. Forces of change have been sweeping the world with such pace that no one - nations, companies, families, societies, communities - can escape the consequences. Existing models of behaviour and business are being turned upside down, and everything seems to be tumbling in a morass of uncertainty.

But mankind lives by hope. At times, hoping against hope, and winning even then!

When existing models crash, we become clueless as to what's wrong. Is it our mistake, or is the system itself breaking down? Whose mistake is it? This "collapse" of existing models leads to tremendous confusion, and eventual redemption or death.

Today, the world is facing a crisis in all three main spheres - Economic, Natural, and Political. Let me list the major aspects of these crises
  1. The accepted academic fact that "CAPITALISTIC ECONOMIC MODEL" driven by the West (especially America) is the best model of growth, social happiness and mankind's future has been shattered badly.
  2. The political hegemony of the West has been challenged hugely by many nations. Continuous failure of many big adventures has shattered the myth that anything that the West (led by the US) does will succeed. People now believe that the West can fail politically as well.
  3. Global warming, and the utter failure of nations to do much about it, has brought a sense of agony and helplessness in the minds of right thinking citizens. Many openly say that the world may not have more than a century of safe living conditions for its denizens.
In this context, comes the concept of CREATIVE DESTRUCTION. I personally have found this to be an interesting and correct postulate. So what's it?

Creative Destruction is the process where the existing models get destroyed, and then rebuilt totally into something radically different, by a conscious process. The people who run a system that's broken-down realise that it will no longer serve the purpose, and hence set about redesigning it. So what we saw in the US elections was a small glimpse of this - Obama promising to rebuild a broken system. I call Creative Destruction a "wildfire of hope" because just like a jungle fire, it first destroys everything, then from the nutrients available post-destruction, it rebuilds everything, and often it turns out to be better that the past :-)

The key aspects of Creative Destruction are
  • it's a conscious process - the people in charge know what they are doing
  • it's a result-oriented process - people know what they want at the end of it
  • it's a defining process - entire model gets redefined, restructured, rebuilt
  • it's a painful process - not many agree to it, and not many have the guts to pull it through till the end, till results emerge
  • it's a process of compromise - you have to make compromises to make things work
Where all does Creative Destruction happen?
  • in corproates & workplaces - just recall the Global Crunch of last year
  • in political systems & nations - remember USSR?
  • in religions - challengers can force this to happen
  • in communities - entire communities get uprooted at times
  • in personal lives - yes! you can undertake it at a personal level
One of the best examples of corporate Creative Destruction is Nokia. In early 1990s, it realised that its major lines of business (wood products, footwear etc.) could be dumped in favour of a major promise of tomorrow - mobile telephony. The CEO took a bold step of actually redesigning the entire company around the new promise of the future. It has surely paid off. Similarly, IBM (early 1990s), Microsoft (right now) and Apple (early 2000s) are great examples of visionary leaders' efforts to destroy the company's redundant operations creatively and bring out something new. In all these cases, the leaders imagined a future that was yet-to-be, worked towars it with all their conviction, and bet everything they had on it. Finally, what emerged from the wildfire of uncertainty was a new model, that worked!

So here's the competition!
Suggest two names (of nations, companies, organisations..) that are in big trouble right now, and who/that need to take on a conscious process of Creative Destruction to rebuild themselves, in order to remain relevant in times to come. You must post your answer as a comment to this post, and against each name, must mention the reason you feel they need to do this. Also suggest what you think is the best route ahead for the 2 names you suggest.

Deadline for commenting: 72 hours from this post appearing.

The best anwer (one) as judged by me will win a collection of management books from my personal library worth Rs 2000=00, alongwith a certificate with my signature. Sounds great? Go for it!


Shiv Premani said...
This comment has been removed by the author.
Pankaj Kulkarni said...

Goodevening Sir, I am not answering the question..very inexperienced about all aspirant at present.
I request you to please expalin in one of your posts about these Naxal forces..history..present scenario..and what is the possible solution..please......

Mahesh said...

Dear Sir,

Thanks for wonderful competition. Kindly note my suggestions for the same.

1. Air India – Management of AI-IA and Aviation authorities together need to take up decision for creative destruction to rebuild. Reason being “If person like Mr. Vijay Mallya can bring Kingfisher up and succeed in its Vision, then why cant our national carrier AI-IA appoint some people of same caliber, with same kind of imagination, vision and direction skills to bring it up.” They should analyze that how constantly things have been changing and improving around them and they need to fear of being left behind.

2. Government Departments of India – Authorities and Ministers of respective departments need to take up decision to rebuild. Reason being “If all the departments and system restructured in proper way, there is lot which can be achieved fast and will make India a developed country. Will make India most strong, competitive, self sufficient, prosperous and orator. There should be vision to be most powerful country and funds must be utilized properly. As it is said “Money, like time has an opportunity cost associated with it.”

The second one is not in big trouble right now but if things are not developing the way it should be then it gives indications of a troublesome situation.

Akshay Kothari said...

Respected Sir,
Here are my thoughts for the competition:-

1)Suzlon energy-Company looking in serious trouble with huge losses of around 462crores per quater.Though they dont have any problems with internal management as you discussed that Globalization impact on company was very bad.

Solution-Company should accumalate land banks across various villages and start deploying Solar Panels.
Initially it would cost more but it would fetch handsome gains once the panels are deployed.Company would get another source of energy generation and supply till the time Mr.Tulsi tanti comes up with some new fundas to gain with the hottest sector of all times.They can also diversify on large scale.
In solar energy management has not much of the game to play,Sun is performing at his best from million of years.

2)MAYTAS infra-If we start reading name of this company from last alphabet there is no need to explain why this company is in trouble.In last financial year they posted a loss of 489 crores with record downfall of 36% in net profit margins.After being associated with Satyam Scandal their sales and orderbook have been seriously affected.

Solution-As company is in Infrastructure development they should not have much problems coming up with Affordable housing concept,as their is a huge customer base after the bad times Real estate sector has faced.
Invesment in affordable housing is less and so is with the profit margins,but if bussiness is being done in Volumes it can help company to generate good cash flow.And if we consider India, demand for Affordable housing will never end so company can also think on this as Long term source for making business.

Proton Akshay

Shraddha Pareek said...

It was a great learning about 'creative destruction'.
According to me creative destruction is needed the most in
1)North Korea-The country need to accumulate cash and securities for its people.It is unnecessarily spending money on nuclear activities.Rather it should spend cash for the victims of famines and other calamities and it should focus on betterment of its citizens who are suffering till now.And it should make the country a gud place for living.
2)Afganistan-The political system of Afganistan needs creative destruction.The crisis,war and other situations can be cured upto certain extend if the system can be altered.
Proton Shraddha Pareek

Surendra said...

Good morning sir,
The open competition conducted by you is very thought provoking. I would like to participate in this competition. According to me the two name are-
1- China
Reason – as we all know china is a communist country. The people of china have no power, no freedom. People are not saying anything because of government’s power. They are not saying anything but whenever the people of china will ignore to follow the government it will be disastrous condition for china and china can collapse.
Best route – china should adopt democracy. By this action Chinese government can gain the trust of its people and remain superpower.

2- Governmental education system in India
Reason – the demographic dividend (youngest population in the aging world) which we have now is a very positive factor for India this population will come in working class soon. If this population could not get the employment in the right time then this demographic dividend can become a demographic disaster. India is building a name for itself in intellectual capital but a third of its population remains illiterate.
Best route – government should innovate vocational training. It will create employment in the root level. For the first time people saw a direct connection between education and chance for better employment so India needs a good quality education and better infrastructure.

Proton surendra pratap mourya
fall 09

Bhavik Choudhury said...

In future perspective, related companies should give their more focus on few businesses such as:
1. Water harvesting, which later on whole world will need.
2. For designer companies such as Louis Vuitton (monopoly in designer leather bags, & its main main business) should take some step for making eco friendly bags, because wild life destruction would be very soon banned completely.
3. Company like Relience should go for estabilishing charging stations in India(for electric cars) because,they are big enough to take such initiatives.
I know there in very less demand for electric cars in India, because the reason for it is they are less available, Companies are fearing that it will be accepted by market or not. But if they also take initiative to launch some more cars(after REVA), it would be great for them. They should not wait for the market demand to come, because it will come as people are believing on the bad effects of Global Warming. And, to maintain an electric car is cheaper than maintaining a petrol car.

Priyank Patel said...

Respected Sir,
What I believe is following two names required most urgent Creative Destruction.
1.India’s burgeoning water crisis:

Today Climate is changing dramatically and this year rain fall in India was scantiest in decade. It has proved urgency of water mismanagement need to be correct as possible as fast. Ground water remains the dominant resource for rural India. Unfortunately wasteful practice of these resources increased a lot. This has created worry about India’s water future.

Storage, treatment, transmission and distribution of water will be central problem need to be solved. First it is required to remove rampant corruption at political level.
Current subsidy system in which water and electricity are provided at highly subsidized rate and unfortunately most of them are taken away by reach farmers and poor farmers are not get benefit. Instead of that there should be a life-line tariff in which below poverty line people should be provided water and electricity at zero prices for limited amount to fulfill basic need above that it should be charge. Ground water rate of withdrawal and recharge required to be balanced. Increase availability of small-scale water management technologies which can help significantly.

2.Education in India:

Someone said really true that the test of a first rate intelligence is the ability to hold two opposite ideas in your mind at the same time and still retain the ability to function. This is hugely relevant for our education reform because it’s a question of balance: Quantity vs. Quality; Repair vs. Prepare; Price vs. Cost; Funding vs. Delivery; and Excellence vs. Inclusion.

As we talking about the reform agenda, it may be useful to remember a story about an exam Albert Einstein gave his students.
Fifteen minutes into the exam, a brave student stood up and asked why the questions in this year’s exams were the same as last year's exam. Prof Einstein replied: "Because the answers are different this year". India in 2009 is younger, confident and rising; the different answers to the same education questions must reflect this boldness.
Any attempt at reforming higher education would prove to be ineffective if the school education was left untouched. In response government has launched the Rashtriya Madhyamik Shiksha Abhiyan to universalise secondary education system. This is good but my other recommendations are
•Schools should teach how the real world works
•Pre-vocational courses should be started from Class 7th to 10th
•Councilors and student advisors at school level
•Private capital from Citizens and NRI’s should be encouraged to set up world class facilities
•A dynamic relationship between Teaching-Research-Industry-Enterprise-Government

Thank you,
Proton Priyank Patel
Spring 09

Er. Rtn. A B said...

Respected Sir,
Thanks for enlightening us on 'creative destruction'.

1) Honduras: Where Prez. Manuel Zelaya has tried to change the constitution and law for the life term of presidentship and faced resistance from army and public. He tried to walk on the same path as of Prez. Hugo Chavez of Venezuela has done, but unfortunately Mr. Zelaya failed.

2) IIT-JEE in India: Ministry of HRD is thinking of changing the eligibility criteria for the admission into the IIT's. They are thinking that students who will secure more than 70% in 12th will be only eligible to sit for IIT-JEE entrance exam. I think, one cant judge you on your 12th class result and decide. May be one can do good in entrance exam and can clear.

Rhishikesh said...

Creative Destruction – The Golden Thought
The Paramatma has created our beloved world for us crores of years ago. From ancient time this cycle of creation and destruction is going on and on….and it has no end!!(Paramatma is a weightless rays of light continuously traveling in this universe and with the help of endless time this power does continuously creates and destroys something) If bramha himself is not spared from this cycle of destruction and creation what is the ability of existing models?? They come and go like a fashion. Creative destruction suggests change. We should get used to it. One of the greatest example of creative destruction- male honey bee. After mating with the queen honey bee the male honey bee dies!!

Two organizations which according to me should change their existing models-

1) Pakistan- A country which has troubled India since its creation. It is said in India (Indian subcontinent) u will see both the good and the bad. And here’s the example of extreme notoriety- Pakistan!! Pakistan is in hell these days. The militant’s strategy rebounded on them and now the country is in complete mess. The economy is shattered and there is no proper administration, co-ordination in various government departments. The ISI, Pakistan army, and Mulki Sarkar are fighting amongst each other to control and govern the country. And America is trying hard to have a control and coordination among all three of this to destroy the terrorist network. Here are some of the solutions I would like to mention so that Pakistan can still exist as an independent sovereign state-

a) Its high time Pakistan should understand that secularism is far better then being an Islamic country. Expansive Islamic ambitions will take them to nowhere. The army should be secularized. (change the constitution to be a secular state)!! This will give the army a moral boost to fight against their own subjects.
b) Jealousy is all cause of destruction. Pak should accept not to compare and compete with India. The policy of the ruling people of creating India phobia and there by acquiring the power should be stopped. The Pakistani people hates India. New awareness should be created among them(I have already faced Pakistani hatred on orkut, and I just saw Hilary Clintons discussion in a Pakistani university(a foolish Pakistani student asked why America help India so much then Pakistan). The jealousy which is widespread due to hatred should be reduced.
c) Ban all terrorist organization by law. Give two options to the terrorists – surrender or die. Kill all those who refuse to surrender .
d) Destroy all illegal arms and ammunitions market. Evacuate terrorist affected areas. Use the aid given by USA for this rehabilitation. Destroy the network of drugs supply. Start preaching secularism all where u can reach or else show the peaceful side of islam. Deploy armymen, police men in large quantities in markets and crowded areas to keep a watch out. Wherever u can reach and find destroy illegal arms and ammunitions. Try and disarm the local public and give them every protection they needed. Bring the ISI and army totally in control of the democratic government.

Rhishikesh said...


2) Shivsena BJP alliance- the Shivsena Bjp alliance faced a heavy defeat in maharasthra assembly polls. Here are some of the changes it should make-

BJP should drop the Hinduism card. It will not take it to power at least in a state like Maharasthra. It should focus on regional development. Though nitin gadkari was constantly doing it other people in the party were not giving any strong program to counter attack the congress. Shivsena also was shouting at the top of her voice about terror attacks, farmers suicide, reduction in foreign investments, electricity, water, inflation etc etc. But they were not giving any solutions to these problems and only shouting about the failures of the congress. MNS factor proved effective. Shiv sena will have to decide its basic stand. Is it still there for the rights of marathi people or else it has handed it to the mns(unwillingly). Shivsena this time did a lot to reach local people but it ignored the party men in the process. Its high time for the party to rebuild the army or else risk loosing it to mns. The Munde Gadkari fight should be stopped.

An offbit thought-

It is said history repeats itself. The Shivsena BJP alliance call themselves Shivaji maharajs sena. During maratheshahi when shahu maharaj and rani tarabai were fighting for the throne and which broke maratha kingdom into two parts- satara and kolhapur. Same is happening today (Shiv sena and mns are the two kingdoms- fighting amongst each other for the thakre throne)!! During maratheshahi a peshwa came and rescued the kingdom from this throne fight and gave the kingdom new power. Shivsena needs a bajirao to get rescued from this. It needs a peshwa to take it to new heights. ( Shahu maharaj grew in mughal custody, unaware of politics and all. Uddhav thackrey is interested in photography and lacking all that is needed for a shivsena chief to posess!!)

hemant said...

Good M0rning Sir,
it's great to learn more and more always.
According to me creative destruction is needed more in
because at present,Pakistan is facing a great trouble to maintain the democracy of the country that is security and all,nothing is going on good for Pakistan and this sitution they should go for the creative destruction because Pakistan has nothing to lose ,but by rebuilding or by redesigning they can achieve alot for thier future.
it can also be stated as one of the best examples of creative destruction where the entire country is in a state of mess and divided into three parts as one the government which is having no control over natives,second is somaliland or native people and third is warlord or landlord which is backed by muslim nations like euthopia and all the three comunities are fighting among themselves creating conditions miserable as no food,no education,no shelter,no money so they have to start with a new begining which could also be termed as creative destruction in which a new begining is awaited as "a phoniex takes birth from its own ashes."

pawanpandey said...

Respected sir,
It was a wonderful bolg, which taught us the importance and need of creative destruction.Accoding to me two system where creative destruction is needed are-
1) Indian education system- I feel Indian education system focess more on theoratical aspect of education than on practical aspect.There were discussion on grading system implimentation for evaluation.I feel grading is better than marks.It should follow grading syatem and focess on practical implimetarion after teaching theories.This apporach would solve the problem of unemployment to some extent.There should be focess on the physical fitness and it should be a part of curriculum as it is in PROTON business school.
2)Indian judiciary system- Indian judiciary system is very time taking. It takes years in the decision process of cases. More fast track court should be started aiming at fast and quick decision.Just because of time consuming process people loss their faith in judiciary system.Fast judiciary system would reduce crime.

Sanjay said...

Good morning Sir,
Thanks for enlightening and humorous session.
"Creative destruction is all about kill your own product by new innovation".
Two examples I want to put are:
1)General Motor:GM is known for luxury Cars(SUV),which are very costly.There demand started falling and will fall in future also, due to following three reasons:
a)Financial meltdown.
b)Demographic change
C)Rising demand of fuel efficient cars.
GM should adopt process of creative destruction and work on following points:
a)Manufacture economical car, which can attract large number of middle class all over the world.
b)Small car are need of the time with changing demography.
c)Fuel efficient and electric car will work in near future, which also reduce global warming.

2) Russia: Russia is oil dependent economy (majorly focused on crude oil based product), due to fall in oil price, economy is ailing. Any country in uncertain world economy doesn't dare to rely on single industry.

Russia should diversify (slide) its economy to other segment and leave dependency on crude oil based product, which are non-renewable and limited.If Russia continue its dependency,it will fall hardly. So I suggest they should creatively destroy their single industry economy and should decentralized their economy.
Sanjay lulla
Fall '09'

Unknown said...

From this post, I actually got good examples to quote for the creative destruction and some new insights about the same.
The 2 probablistic areas where this creative destruction is possible are-

1. BJP Government:
As there is no known youth leader in the party; so, in my perspective, the party should go for the creative destruction.

2. Middle-east:
As we know that almost all the middle-east countries are facing the problem of autocracy and dictatorship; therefore a new democratic government is required for the stabilizing these countries. This is also an example of creative destruction. The aim of this creative destruction is to form a stablized government and to establish peace world-wide.

With Regards
Robin Singh Vasu (Fall'09)

Bhupendra said...

1) IET DAVV INDORE : I choose my alma mater, reason because i love it and want to see it at helm.(Well there are types of alumni 1) those who are proud of there alma mater and care for it 2) those who are proud of it but doesn't care for it and 3) those who are not proud of and do not care for it :)))))

So carefully considering aspects of creative destruction(defining,compromising,conscious,result oriented,painful ) in mind .. i suggest following ....

Infrastructure , faculties and students :

1) Recruit Excellant faculties with PHD preferable and at all cost avoid inexperienced teachers or just-passed-out engineers
2) Having talented student always helps a school. Have a tough entrance test. My experience: places which are tough to enter are often great.
3) Adopt an erp/information management system. Deliver of course content online. it is also eco friendly ways.:) we can learn here from foreign universities
like standford/mit etc word of caution though,it is not good to just copy what they are doing .. rather first understand what they are doing , why they are
doing and then select the appropriate one.
4) Provide excellant infrastructure : labs/computers/foundaries/libraries etc . they should match the hefty fee you are taking.
5) Strict displinary policy against ragging, Mass Absentism, cheating , copying of assignment and projects(must be treated as mortal sins).
6) Providing a minimal set of text books/course reader/class notes for each term by college itself.
7) Scholarship programs
8) Summer internship programs.
9) Having 1 or 2 Alumini in management.

Pedagogical :

a) How lecture are delivered needs to be revamped: what is taught should not at the whim of teacher(sometime it is important too though).
There should be standardised pattern of each lecture. Each lecture should be like a mcdonlad burger .. no matter where you eats it .. taste is same.
similarly no matter who teaches it .. overall it should be same.
b) Teach right thing and Teaching things rightly: Stress on important and basic concepts Also Jobs doesnt end by telling students that :
formula for differentiation of sinx is cosx. tell them how/why it is

c) Help Under performer/lagging students: Good one can take care of themselves but challening task is to help lagging students perform

d) Revamping examinaiton system : We still have a examination system where stress is on craming answers and omitting it on answer sheet on the examination
day. Though this pattern might be good for certain displines but i believe not for all.

e) Donot compromise on important courses : There is tradeoff which a college might always face regarding teaching subject
market oriented or teaching important subject that teach basic concepts

for example cs student can be directly be taught a programming language like java which make a guy more skillful from a job perspective
but if this should bot be at compromise of a important subject or language which build the concept in programming area.

As focus should be on "educating" the student not only "training" them.

f) Complete revamp of syllablus. Rethinking upon why we need to teach a subject to student.

Bhupendra said...


Culture of Innovation, Creativeness and New Ideas:

a) Adopt first name culture. Lets make things less formal.
b) Making it mandatory for students to produce a original research paper during there engineering term.
c) provide excellent overall education but there should be atleast one field/aspect/subject/displince you must be known,no one matches you in this area.
d) promoting cross disciplinary projects.
e) Promote free thinking, New Ideas and provide environment/help for people to work on those ideas

Alumini interaction : Develop channels to interact with alumni

2)Any industry whose product can be
delivered digitally
. : Be it movies,books, music or magazines companies are losing huge prospective customers and there by revenue due to piracy. Yet law enforcement is not the only solution as it turned out to be. Reason being piracy has changed behavior of consumer itself: "If its free it is for me" They even some time do not consider product as companies property remember napster and metallica battle. so i suggest companies to sail with the flow and adopt indirect selling model which delivers content free of cost to end consumer but covers it cost thru indirect means like ads,etc .

Prasad Nehete said...
This comment has been removed by the author.
Prasad Nehete said...

Dear Sir,
I always find your blog post very interesting, thought provoking and inspiring. I would like to thank you for writing this post.
In my opinion, There are 2 areas where creative destruction is possible are:

1) Paper/Publication Industry:

Our basic medium of learning is paper in almost 70%of the cases. But due to technological advancements popularity of digital paper is rising. There are few reasons for that.

a) We can carry 2 paper books at a time in bag but we can carry hundreds
of digital books in 1 pen drive.

b) They are relatively cheap to publish and distribute.

c) As future lies in mobile communication devices which will be flexible,
expandable and wearable Information carrying medium will change and
That is why it creates threat to existing paper.

d) Already some of them are feeling heat of this change because of
heavy investment in new digital paper technologies. (Global paper industry report 09)

2) Memory chip/Hard Disk manufacturers:

Due to current market dynamics of market and new technology
business model of Memory chip/Hard Disk manufacturers will change.

a) As we know that most of the big firms like Microsoft, Google etc are
using and shifting their model in cloud computing. Cloud computing needs
big server farms and eventually memory chips of higher capacity which
takes less space. So hard disk makers will change their target from
users / manufacturers of computers to manufacturers of servers.

b) Netbooks will gain popularity because of their cost and they don't
have hard disk.


Microsoft 2019 vision

Nokia MORPH concept

Warm Regards,
Prasad Nehete
Fall -09

Prasad Nehete said...


Furthermore, I would like to say that whenever change takes place top leader is the last person to know about
that change which is affecting his organization so to always be on the top of the game it is very essential for the leader to take feedback from the system. He may take that feedback from outside or from inside of the organization.
Because creative destruction depends on the leaders vision e.g Intel, Microsoft , Apple

Regards ,
Prasad Nehete
Fall 09

Anonymous said...

good morning sir,
two companies are facing yhis problem 1)link
2)videocon is now also dealing in oil and gas .

Bhupendra said...

Results :))) !!!

Prasad Nehete said...
This comment has been removed by the author.
Unknown said...

Dear Participants,

first of all... GREAT SHOW! Your comments are so refined, so emotionally made out, and so interesting to read that it's almost a full case study now on 'Creative Destruction', ready for use in a B-school.

After a close scrutiny of all contributions, and having taken my time to do so, here are the top 5 contributors for this competition (in no particular order) -

Prasad Nehte,
Shraddha Pareek,
Rhishikesh and

It was a VERY CLOSE competition. You all contributed immensely!

The winner is the one who made out the most direct case(s) for two of the most interesting examples that a large number of people will relate to, and which have been a big source of trouble for millions.

The winner is : Shraddha Pareek


I liked your terse, straight style. Now please send by email (to your details (mobile number and address) so we can communicate regarding the prize!

Congrats again, and to all the contributors to this competition!

Anonymous said...
