Until the late 19th century, the term “innovation” had a somewhat negative connotation, associated with rebellion, disobedience, and disruption. However, in the early 20th century, thanks to the new and scientific use of the term by Joseph Schumpeter, it gradually acquired a positive meaning. In fact, presenting a positive concept of innovation was itself a new idea initially introduced by Schumpeter.
In Schumpeter’s definition, innovation is seen as a disruptor of the existing order and economic equilibrium, creating a new order and balance. The term “Creative Destruction” refers to this very concept.
In a 1930 article titled “Innovation,” Schumpeter argued that 80% of innovative thoughts are essentially derived from existing events around us. He suggested that innovative transformations should be sought not externally, but within ourselves.
According to Schumpeter, the dimensions of innovation include:
- New products
- New methods of production
- Opening up new markets
- Access to new raw materials
- New organizational methods
The transportation industry serves as a vivid example of Creative Destruction. With the advent of the steam engine in the 19th century, railways were constructed in several countries, which led to a reduction in transportation costs, the creation of new industries, and the emergence of new jobs. Ultimately, this innovation paved the way for broader development.
