Adrian Woolridge's Shumpeter column for The Economist has been mined for the best material and published as a book.
When our founder Jack Covert and former president Todd Sattersten were putting together The 100 Best Business Books of All Time, Todd asked me to help him write a sidebar on why, if you're going to read just one magazine, it should be The Economist.
We wrote then that:
There isn't always time to read a book, so if you can find time read just one business publication a week, make it The Economist. ... The Economist staff is not confined to reporting only on the business community, but covers all aspects of contemporary life—political movements and trends, government policy, international debates, science, and culture—that may affect that community.
There are other publications I enjoy more personally—The Believer, Lapham's Quarterly, and Foreign Affairs are probably my top three—but given the breadth of scope combined with the ability to hone in on the most important issues, I can't argue with Todd's logic that The Economist is the one that businesspeople should pick up first. Ironically, considering that the quote above begins by stating that "There isn't always time to read a book," I am writing today to recommend just that, a book, from The Economist. But even that doesn't negate the point made. The Great Disruption is pulled from the magazine's popular Shumpeter column written by Adrian Woolridge, and because it's in column-sized bites, you can take it with you and read it as individual lessons if you wish—though it has been organized into very seven very cohesive parts if you choose to take it in that way.
(Two fun asides about The Economist here: first, although I just called it a magazine and it looks and feels like one, The Economist actually refers to itself as a newspaper; second, the Shumpeter column is one of the few in said "newspaper" that carries a byline, as most pieces are published anonymously for very interesting philosophical and historical reasons that you can find on their About Us page.) The Economist imprint in the PublicAffairs publishing house is relatively new, but it is a great addition to the business book genre and it seems to be gaining steam. This is the second book from them that has gotten my attention recently (I recently reviewed Frugal Innovation: How to Do More with Less by Navi Radjou and Jaideep Prabhu in a February Jack Covert Selects review) and I'm looking forward to seeing their Guide to Intellectual Property written by Stephen Johnson coming out next month.
But, back to The Great Disruption. Adrian Woolridge has culled and curated into book form his best columns from the last five years, all centered around the theme of "creative destruction" that economist Joseph Schumpeter (who Woolridge's column in named after) made famous. As Woolridge argues, Schumpeter is the economist whose ideas are most aligned to the realities of the modern age:
If the post-war era as the age of Keynes, the modern era is the age of Schumpeter. Entrepreneurs have taken central stage. Change has speeded up. Disruption has become endemic. Over the past two decades there have been innumerable disruptions in almost every industry under the sun, disruptions that have not only forced incumbents to fight for their life but have frequently turned assets into liabilities and business models into prisons. So many disruptions, in fact, that they add up to one great disruption: a great disruption not of "traditional society" of the sort Marx chronicled but of capitalism itself.
I am a little weary of the celebration of disruption in today's business world. Not only is it putting a great many human beings out of work, a trend very well documented by Woolridge in the early parts of the book, it is becoming the new, unquestioned dogma of business, and unquestioned assumptions are never healthy for business in the long term, which has to be especially true when the dogma encourages destruction. As Andrew Keen wrote in The Internet is Not the Answer, "[T]he real dogma of our libertarian age lies in glamorizing the turning of things upside down, in rejecting the very idea of 'permission,' in establishing a cult of disruption."
But that doesn't mean that it's not happening; it very much is, and it would be foolish to bury our heads in the sand and ignore it. It behooves us to not only acknowledge these trends, but to strive to ascertain some meaning for ourselves and our businesses in them. Because of this, The Great Disruption's introduction alone is worth the price of the book for how well Woolridge assesses and explains the paradigm shift from a more Keynesian world economic order to one that Joseph Schumpeter championed, and what that means for the world and all of us who work in it.
The post-war order rested on three pillars: managerial capitalism, social-democratic politics and a Western-centric balance of power. Now managerial capitalism is giving way to entrepreneurial capitalism; social-democratic politics is coming apart; and the centre of economic activity is shifting inexorably to the emerging world, particularly Asia. These changes are unleashing troublesome demons that were imprisoned during the years of managerial, social-democratic Western hegemony, in particular the demons of inequality, identity politics and existential despair.
Woolridge also questions the way his column's namesake framed the idea of creative destruction, even as he argues that we should continue down its course.
The biggest reason to keep your foot on the accelerator rather than touching the brake or turning the steering wheel is that the benefits of all this change continue to outweigh the costs. Schumpeter's memorable phrase about creative destruction has actually done some harm: it implies that the destructive part of entrepreneurship is just as weighty as the creative part. In reality, creation outweighs the destruction. ... The balance between creation and destruction may have been too close for comfort for people in the rich world in recent decades. But stand back and look at the world as a whole and there is no doubt that creation wins out easily. In the past 20 years more people than ever before have risen out of poverty. And in the next 20 years the living standards of middle-class Westerners may improve significantly as technology raises the productivity of the service sector. The gale that Schumpeter celebrated may blow a little harshly at times. But it is nevertheless blowing us to a better place.
Woolridge doesn't ignore the faults. He devotes an entire section of the book to looking at these issues "from the point of view of people who are at the sharp end" of disruption—from those whose jobs have been "reorganized" to those involved in "the revival of the class struggle [that] can be found in San Francisco" as rich tech workers price out and displace long-standing residents of that city. He also points out that the "booming technology firms" that have created much of this disruption "are now at the centre of worries about inequality." (Yes, the book uses British spelling.) Because, even though they turn up their nose at the old world and its traditional institutions, talk about pulling down traditional barriers and espouse the equalizing effects of the Internet, it is still mostly a world of white men—and even if they're a bit younger and wearing hoodies instead of suits, creating more rich white men doesn't seem all that revolutionary. You could argue that the more traditional world is doing just as much, if not more, in its diversity efforts.
It is also true that this new world is increasingly dominated by big companies, just as the old one was, but there is, according to Woolridge, a caveat:
The all-disrupting internet is increasingly dominated by leviathans. But the heads of big companies are having to act like entrepreneurs rather than bureaucrats in order to survive.
And that, he believes, makes all the difference. And, though I remain skeptical, I want to agree. I'd like to believe the idealism of this new age and its new institutions will eventually align. I hope that the entrepreneurs who promote the level playing field, diversity, and democratization of the internet instill those values within their companies. There's evidence that efforts are underway, just as they are in the corporate world. There's a very long way to go in both. But regardless of where you work or what you do, it is certain that the pace of change and disruption is picking up.
In 1937, at the height of the Great Depression, the average lifespan of a company on the Standard and Poor's 500 was 75 years. By 2011 it had fallen to just 18. ... Shumpeter once said that the average firm stands on ground that is crumbling beneath its feet. The ground is more treacherous than ever.
As we said in The 100 Best, there isn't always time to read a book. But, when you do get the time, you won't go wrong with The Great Disruption: How Business is Coping with Turbulent Times by Adrian Woolridge.