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Creative Destruction

1. For each of the following terms below, please define the concept, explain its significance for the study of innovation, and name an author that is associated with it.

Creative Destruction

Creative destruction is a concept that describes the manner in which capitalism thrives on the obliteration of established economic principles. Many economic scholars who have studied creative destruction content that it comes about when new products or way of doing things lead to removal of older ways. Australian-American economist, Joseph Schumpeter describes creative destruction as an essential fact of capitalism that continually revolutionalizes economic structures from within themselves through destruction of old structures and creation of the new ones.

Creative destruction is important to innovation as it leads to creation of new products which are more efficient. The use of the concept is mainly important in ensuring that innovators are always on the lookout for better products and mechanisms of doing things. For instance, creative destruction is responsible for the evolution of computers from the first mainframes that could occupy a whole room to the current iPads that are palm-sized. The storage and processing speed has also increased tremendously because of the continued need to produce products that are efficient and stylish. Thus, creative destruction is a force that drives innovators to continuously look for ways of improving the products or systems that control their economy. Schumpeter argues that innovation brings the end to capitalism by destroying other industries, jobs, entrepreneurship, and other products through introduction of new products on the market.


The concept of social embeddedness was first expounded by Mark Granovetter through his explanation of how social and economic overlap within and between corporate organizations. The concept of embeddedness arouses the idea of an interactive social and economic environment where people and organizations have a mutual dependence within and among themselves. Through embeddedness, economic activities are embedded in social relationships and this is the reason why friends always start companies together. Whereas there are acknowledgement from sociologists for existence of under-socialized and over-socialized elements in a society with regard to productions and innovation, embeddedness theorizes that ongoing networks of social relations between people discourage them from occupying the two extreme positions in society. Therefore, people make choices according to the past interactions with others. They thus continue to deal with those that show trust. Embeddedness thus means that the availability and development of trust is a vital factor that can lead to either collective productivity or stagnation. As such, the implication of embeddedness is that social networks should not be a deterrent to innovative growth. Embeddedness is significant to innovation because it helps to explain how people in society pull up their knowledge together to come up with an innovative solution to an existing problem. When people are embedded, they can bring together their knowledge and skills in various fields to come up with a common innovative solution to their problem.

Liquid Networks

The concept of liquid network is derived from the liquid state of matter where molecules are free to move from one position to the other while maintaining their larger boundary. In describing this concept, economists liken the free movement of molecules in a liquid state to people who have ideas and move around to the share the same ideas with like-minded people. As such, lone people cannot be as productive as those who move out and mingle with the others who share their vision. The concept recognizes that no idea exists in isolation and thus each idea that someone might be having is connected in a larger network of ideas. Being able to move out and interact with other people will enable a person to connect his or her ideas with the rest of the others and come up with a stronger solution to the challenge at hand. The concept presupposes that the liquid state of a people is always the best for development of specific-oriented skills for a particular function.

The sharing of ideas is significant part of innovation because it enables dissimilar individuals and concepts to share ideas by encouraging what can be described as a chance factor where people get to meet by chance. In this meeting, new ideas and collaborations may be formed to break away from the normal routine of thinking and wishing that something could be done. This brings about the need to have a workplace designed to allow people to mingle and share ideas freely to maximize on the innovation. Liquid network is significant also to innovation because it is a panacea to innovation through serendipity and group encouragement. Liquid network as a concept is credited to Kevin Dunbar and was illustrated by Steven Johnson in the video, “Where Good Ideas come From: A Natural History of Innovation”.

2. Imagine that you were invited to a conference in Abu Dhabi. You are to give a lecture on "The Silicon Valley Edge: An Innovation Success Story." What five points would you emphasize to illustrate the unique innovation system of this region?

  1. i. The close relationship between research institutions and industries that foster innovation. Silicon Valley is surrounded by universities that are willing to support the region to develop innovative products and services
  2. ii. The region has a unique culture that allows for high labor mobility across all the firms. There is special support from lawyers to patent innovative products. The region also has cohesive social networks that are geared toward innovativeness together with a start up culture. This is supported by a unique democratic work organization
  3. iii. The state of California supports the innovative activities through grants and other subsidies to people who engage in innovation. The availability of well-equipped state-of-art research centers and laboratories for innovators in Silicon Valley, such as iHubs that receive special funding from the State to develop research clusters as a way of attracting innovation. The infrastructure for research and development are fully supported by the state.  
  1. iv. The unique cultural practices that allow CEOs and workers to work freely and independently in their workplaces. For instance, CEOs work in jeans and t-shirts with no suits and well as organizational practices that are generous and down to earth. This fosters an enabling working environment.
  2. v. The region has an education system that puts emphasis of science and technology. This ensures that students are grouped into becoming great innovators in their areas of specialization.

3. Why are some countries better innovators than others? What steps could we take to close the global innovation divide?

Innovation is a venture that takes place in an enabling environment. As such, most of the countries that have excelled in innovation do have environments that foster the activities of innovation both social, economically, and culturally. The following are the reasons behind glaring levels of disparities between countries across the world. Some countries such as Singapore and Germany have clustered the activities for instance in Baden Wurttemberg, that foster innovation in one region for easier and efficient management. Singapore has managed to rise from a fishing village in 1960s to a global leader in innovation currently, thanks to visionary and educated leaders and support from the government. These factors include economic research, financial, and legal support and incentives for creativity and innovation.

In addition, innovative like UK have high concentration of technical skills, for instance in Cambridge Science Park, among its populace, specialized input in supplies and service, enabling infrastructures and high concentration of knowledge because of the proximity of research institutions and universities. These countries also support the collaboration of universities and research institutions and industries that produce goods. Such countries recognize the role of innovation in ensuring that industries continue to produce great products. The governments of those countries give subsidies to programs that are aimed at supporting innovation. They also provide flexible working environment for both the companies and research institutions so that they can engage fully in the activities of innovation.

Successful countries also invest in young innovators and entrepreneurs who offer their young minds for innovative work through insightful consultation and support from the government departments. The countries have built educational systems that explicitly support science and technology with emphasis on innovation. Even leaders in those countries are educationists who have acquired degrees from the university and therefore know the value of research and innovation to their countries. These systems are panacea for development of national policies for innovation while building high concentration of talent. Research and development is given the first priority in the allocation of support funds to ensure that people have access to institutions that will enable them to be innovative and creative in their creation of products and services. Some countries have also addicted to innovation to the point that it has become part of their culture. In such countries, the government allocates large percentage of their annual budgets to the activities that are related to research and development and thus innovation becomes a highly supported venture to the people especially those who are coming from universities and colleges.

In some countries such as Zimbabwe, which is ranked as the least innovative by 2011, Global Innovation Index have also failed to promote innovation because of their policies and cultural practices that, do not support people to engage in innovation. Such countries like Mongolia have cultural norms, values, and ideas that hinder the incubation on innovation centers. The differences in social and cultural practices do not allow people to engage in innovative activities. For instance, in some countries like, women are not allowed to attend the courses in science and technology even if they have the capacity to become great innovators.

In order to help non-innovative countries to start innovating, countries need to invest in research and extension by offering incentives to research institutions and support universities and institutions that engage in innovation. Emphasis should be put on science and technology education in colleges and universities to stimulate growth in innovation. The government should also allocate venture capitals in areas where innovation is needed through budgeting.

Less innovative countries should also concentrate on integrating their national economies into global economy by ensuring that they create modern technological advancements through importation of skills from those countries that are highly innovative. Similarly, the countries can formulate policies that are supportive of immigrants who want to come and bring their skills in managing the innovation of products in those countries.

4. Too much innovation is a bad thing. Discuss.

It is true that innovation is an important element to any society. However, too much innovation is known to lead to reduced and dwindling productivity among employees. For instance, most of the employees who spent most of their work time on social media like Twitter and Facebook cannot produce as much as they could have done if they were no social media. Companies are therefore forced to come up with policies that control how people interact with innovative services like social media and many others.

In addition, too much innovation complicated life in such a manner that people are presented with many options where they are supposed to make a choice. For instance, going to a supermarket can be agonizing because of the variety of options that people are presented with in simple product like soaps. This may make people to spend more money on products that are not necessarily important for their needs. It can become a business ideology where it becomes an end itself. Additionally, too much innovation has led to extinction of excellent products and services as people turn to new products that may not be as good as the ones being phased out. In essence, most of the innovators are thinking about a new product, in what Dan Staffer describes in BusinesWeek as “false innovation”.  The needs of the customers are relegated to a secondary level as to why the company is innovating. This implies that products that are innovated for the sake of innovation and the consumer have to continuously adjust to be able to use those products since the ones that worked for them are removed from the market.

Furthermore, too much innovation is responsible for the environmental destruction that is causing global warming. For instance, the invention of a power saw is regarded as one of the most dangerous innovations that humanity has ever come across besides the atomic bombs. The power saw is responsible for the wiping out of rainforests in most parts of the world. The need of innovation has also caused people to stop thinking in what can be described as end of civilization and start engaging in senseless actions like terrorism and environmental destruction. People who engage in these heinous activities use devices that have been innovated in research labs. The society’s behavior is changed of much that people are always at the vulnerability of failing or even threatened with imminent dangers like atomic wars or adverse global warming that will lead to unfavorable climate change in the world. The fast pace of technological innovation is creating problems that human beings cannot handle, thus according to Rebecca Costa’s idea of Watchman’s Rattle people seems to have reached their cognitive threshold thus leading to the rampant cases of terrorism and environmental destruction.

The rate at which companies are competing to innovate is such that they are forced to innovate as a means of survival. It has become a matter of life and death and, as Bill Gates puts, that people must innovate or die. This implies that even unethical means can be used to innovate a product as long as it will ensure that the innovator is not at risk of dying. A good illustration of this absurd call for innovation is the ongoing debate about GMOs where some people claim that GMOs cause cancer while the creators of such products insist that the products are safe for human consumption. The consumer is left without sufficient information about a product that he or she is supposed to use.

Finally, innovation is the source of layoffs and therefore employee unrest in companies and factories. As science continues to produce new machines for producing or carrying out mass processes, people are laid off their work rendering them poor. The layoff may lead to civil unrest and the need to regulate innovation. A classical example is the innovation in tea-picking industry where factories introduced new machines for picking tealeaves, replacing thousands of workers from their works. The innovated machine cannot pick the quality of tealeaves that human beings were picking and therefore lead to a drop in demand.

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