The great economist Joseph Schumpeter wrote of “creative destruction,” where each innovation not only created value for consumers but also wiped out the previous incumbent. The winners scaled up and dominated their markets, but were in turn vulnerable to the next generation of innovators. Schumpeter’s observation describes markets in software, media, and the Internet much better than traditional markets in manufacturing and services. But as more and more industries become increasingly digitized and networked, we can expect the Schumpeterian dynamic to spread.
