Creative Destruction

The economist Joseph Schmumpter popularized the idea of Creative Destruction, which states that the rise and fall of companies is an integral part of long-term economic growth. You'll find a similar theme in The Innovator's Dilemma. Given the current economic crisis we've seen a lot of companies in near freefall. There's the fall, where's the rise?

HP Founders GarageHP Founders' GarageLicense: CC BY 2.0, Brian Solis

Once we recover from the shock of the recent economic crisis, the rise will likely come from the surge in small businesses founded by entrepreneurs released (dare I say liberated) from old, failed businesses. Ever since the greed is good 1980's, too many bright graduates have made a beeline for the finance industry. That era is coming to an end it appears. Finally there's something else to occupy these graduates beyond separating high-net-worth-individuals from their fortunes.

It has never been easier to start a small business - no upfront fortune is required. The lesson learned from the dotcom bubble is to keep your costs under control - start small and fund growth through profits. How likely are you to find financing for extravagancies (Herman Miller has made his chair fortune, he doesn't need your help anymore) anyway in the current climate? For example consider the start up costs for an engineering design consultancy:

  • US$30/month - web hosting
  • US$40/month - broadband connection
  • Free/minimal cost - VOIP (e.g., Skype)
  • US$1000 - computer (it's all about the graphics card and plenty of RAM)
  • US$300/year - CAE software (e.g., Caedium Professional, of course you can go wild here)
  • Priceless - your unique ideas and perspective

Of course this assumes that you work out of your spare room, shed or garage, just like the founding fathers of Google, Apple and HP did. You don't have to aspire to be the next Google (you'll probably get better odds playing the lottery). It's enough to first aim to support yourself and build from there.

While it may not seem like the best of times, it doesn't have to be the worst of times either. Even if your venture doesn't work out it will still provide challenges and excitement until you find another position. No doubt the moxie you showed in starting a business will appeal to future employers. Don't wait for fate, go out there and make your own.