Economists tell us that the primary role of entrepreneurs in the economy is to engage in a process they call “creative destruction.” Through their innovations, entrepreneurs help create new industries that transform or even replace old and declining industries.
For example, online media sites such as the Huffington Post have played a significant role in the decline of the print-based media industry and in the demise of many traditional daily newspapers. Creative destruction is a not a common occurrence, but when it happens, its impact is profound
The venture capital world views entrepreneurs as agents of “creative disruption.” Venture capitalists like to invest in businesses that challenge the status quo with new solutions to existing market needs. Introducing new products to existing markets is more common than entrepreneurs creatively destroying entire industries, but it is still not an everyday occurrence.
The fact is that most entrepreneurs do not destroy or even disrupt. The vast majority of entrepreneurs engage in “creative opportunism.” Change creates numerous opportunities for entrepreneurs to fill small gaps or find little niches in the market.
All three of these roles of entrepreneurship are important in their own way, and they all work hand-in-hand to build economic growth.
Creative destruction helps to renew our economy so it can continue to expand. Creative disruption creates significant wealth out of change, which is the fuel for economic growth. And creative opportunism creates most of the new jobs in our economy – almost 80 percent of the new jobs over the past thirty years were created by small businesses.
So what industries are currently ripe for the destructive, disruptive, and opportunistic work of entrepreneurs? Where should entrepreneurs be looking for the next waves of opportunity?
When I first came to Nashville ten years ago, healthcare and music were industries I would put at the top of this list. While there are still many opportunities for entrepreneurs in these industries, other industries have emerged as being on the cusp of fundamental change.
Here are a few that have recently caught my attention:
- Advertising: While mass media advertising worked well with the Baby Boomer Generation of consumers, the Millennials do not trust traditional advertising. They get information on what products to buy based on the opinions of their friends transmitted through social media, not from ads developed on Madison Avenue.
- Senior care: We all know that the wave of Baby Boomers, also known now as the “grey tsunami,” will create significant opportunities in senior care. However, Boomers have fundamentally different expectations than their parents, so they most likely will not accept many of the business models for senior care that are common today.
- Education: Technology and unsustainable cost increases will be the likely sources of significant disruption in the education industry over the next decade.
And what successful entrepreneurial ventures will come out of the changes taking place in these and many other industries? Stay tuned. That is something that only time and the forces of the free market can tell us.
Hi Jeff
I agree with you that those three will see major changes, though there are several others that will also go through major shifts.
Publishing has gone through some minor ones so far, but eventually it will go through several more. Ultimate authors themselves or small groups of authors will replace most of the larger publishers, as digital and print on demand develops smaller operations will actually have a competitive advantage due to lower coststructures.
The entertainment industry, due to their own greed and excess, the cost of gone skyhigh, as digital equipment advances smaller organizations will be able to start to develop more content, and as the webs capability increases, delivery and selling that content will become easier, eventually there will be many disruptions to the existing entertainment industry, you will see and even greater shift to independent films being made, using less well known actors, and real locations.
Nice post, Jeff. Creative destruction started in advertising a while back. The increase on online advertising and social media is destroying print advertising. Another creative destruction that is ongoing is the music industry. Much like how Robert suggests the film industry is undegoing a transformation, so the music industry continues to be destroyed as we know it. The problem is that giant music companies are clinging onto a dying/dead business model of selling albums and prosecuting their potential customers in lawsuits for illegal downloading.