The last light bulb factory (the G.E. plant) in the U.S. shut down recently in Winchester. It’s an exit to a company that traces its roots to Thomas Alva Edison in the 1800s. There is a transformation taking place right now to a different kind of bulb. They are more energy efficient, but the bulbs require more manual labor, so they’re primarily being manufactured in China. It is an outsourcing and exporting of labor.
We should never lose sight of the fact that we’re talking about people and their jobs. There are about 200 people who worked at that factory in Winchester who no longer have a job.
But we need to have some understanding about what’s going on – it’s an ongoing process called Creative Destruction. It’s an economic theory about innovation and progress popularized by the Austrian American economist Joseph Schumpeter and adapted from the work of Karl Marx. It refers to a natural process in capitalism that acknowledges the role of destruction in most kinds of innovation. Things that existed before and enjoyed advantage for a while may be destroyed to create new advantages.
We have seen innovative, dominant companies like Xerox and Polaroid fade as other things come to the forefront. Remember Montgomery Ward, FedMart (which became Costco), Woolworth’s? These companies were outdone by nimbler competitors. Tapes got replaced by compact discs, and now we have MP3s.
Right now, there are free online newspapers leading to the creative destruction of traditional newspapers. Printed directories of all kinds have gone online. It has a direct impact if you’re caught in the middle of the transition. Radio has adapted by merging two technologies (radio and podcasts) to make the transition and survive in a different form.
These changes can be used for good as well as for evil, but it shows the challenge to the world that things adapt and change.
Creative destruction has brought us wonderful things. I love my digital camera, but the workers at Polaroid, Kodak and similar manufacturers and suppliers in the industry were negatively impacted. Consumers adapt, and it does have a downside to those people in those industries unless they adapt to new skills.
In the long term, society as a whole has enjoyed a rise in overall quality of life from innovation. For example, in 1790, 90% of Americans were farmers. Now 2.6% are farmers. Farm jobs were destroyed for exponential productivity gains. Most would argue, however, that present day farmers enjoy a more prosperous lifestyle than they did back then.
So my message to you today is to understand the process of creative destruction. There are opportunities that arise from that destruction. And the challenge to the individual is to stay aware of the changes that are occurring and take pro-active action to address shifts in your industry. Seek out opportunities for education, training, and skill development before you are forced to as a result of economic shifts.
Live your dreams and not your fears.
Adapted from a radio interview with Dr. Miles Davis by Randy Woodward on River 95.3