Creative Destruction as a Necessary Force

Since the PetLynx Summit at Fairmont Montebello, last October, much of my  speaking and writing for PetLynx has focused on ways to understand the disruptive influences that are coming toward the companion animal industry.  


Today I want to look at how 'Creative Destruction' has been, and will continue to be, a force shaping the online marketplace.  History shows this pattern repeatedly.  Observe the effects of innovations like the telescope, the printing press, the electric light bulb and the way in which society dealt with these disruptions.  


Three elements of the online marketplace:

• Scarcity and abundance are the keys to understanding why the 'online' marketplace' is so different. Obtaining goods or services from 'an approved source' or from a 'certified practitioner', or from an 'authorized retailer' which are ideas derived from the scarcity model has given way to the abundance model where everything is available anytime, anywhere at a price you can 'afford'. Finding ways to provide a 'brand advantage' is now the big job and it often takes some sweaty thinking.
• Market efficiency is what gives the 'online marketplace' more successful outcomes by bringing buyers and sellers together in one place so that supply and demand are hooked together as you can observe watching the eBay/Kijiji channel.
• Market experience is what gives the 'online marketplace' more loyal customers by remembering their interests/habits and enhancing their experience with suggestions as we can see from the success of Amazon.

Three examples of creative destruction:

• The music industry owned or controlled every aspect of the creative work product of musicians including the infrastructure to produce a recording, the distribution of content, the brand associated with the artist and the development of the artist (brand) through concerts and tours.  YouTube and other online players disrupted this model by creating an alternative online marketplace.
• The recruitment of human resources for industry and commerce relied upon agencies that controlled all the good assets.  Linked In and other online players disrupted this model by creating an alternative online marketplace where employers and human resources can now find each other more efficiently.
• Advertising in newspapers hit its peak in 2008 at 80 billion dollars per year but in the past four years has lost 60 billion dollars to land at 1951 levels just under 20 billion dollars per year. Much of this disruption has been attributed to the development of online players who created an alternative online marketplace which provides more efficient access to the consumer. 

Some organizations will be hurt by creative destruction as they duck-down behind defensive strategies and tactics or take misguided steps to leverage the coming online marketplace. On the other hand those who discover how to be the disruptive influence and bring creative destruction to a marketplace are likely to bring about a significant win for their brand. 


Moreover, I believe exploiting the online marketplace will increasingly be dependent upon identifying goods and services that are intrinsically good.  Facebook 'likes' and other similar strategies, are not cutting it in my opinion, because they have been manipulated just like visual impressions were by agencies and advertisers.  For this reason, I expect 'Certified Quality Marks' to gain significance in the online marketplace.  As we have already observed, consumers have supported the 'FairTrade' symbol and have been willing to change their buying behaviors for a good intrinsic reason like fair trade.


For those of you who are familiar with what happened historically to those bringing forward innovations that were creative and destructive.  Press on without fear. Fortunately, for most of us, in this present moment bringing forward disruptive influences are not as likely to result in banishment to some prison cell or being burned at the stake!