What it means

The idea is to deliberately destroy and replace perfectly good revenue streams with income from new or newly reinvented products/services.  Instead of just waiting for competition or other market forces, this forces innovation from the very top, thus acting as a catalyst for research and experimentation.  This automatically challenges the organization to continually drive the marketplace instead of reacting to it.


General Electric sets an internal target of 50% of revenue from products and services which are less than 5 years old.  This puts managers in much closer touch with current customers and the marketplace in order to come up with new ideas ahead of their competitors.  This results in a driven culture of creativity and innovation instead of a culture that is complacent with the cash cows and the status quo.

How to use

The next time you hear your client talking about how well their current revenue streams/products are selling, introduce the concept of creative destruction to them.  Not to rain on their parade, but to challenge them to keep inventing new ones, even though they clearly don’t have to.  That’s the game here.  Creative destruction is far beyond the notion of “necessity being the mother of invention.”  Creative destruction is its own form of immaculate conception.

Comments from coaches

“I used this with a client and they stopped fighting me about making important changes.”

“I used this with a CPA who was wasting a lot of time (and thus had high opportunity costs).  He knew what the term meant but had never applied it to himself!”


Thomas Leonard