It’s time for Creative Renewal

Creativity is one of humanity’s most valuable assets. It can be defined as the ability to generate new and useful ideas, solutions, or works of art through imagination, insight, and a degree of originality. It is also the key to our common future.

In previous articles, I have discussed how concepts such as creativity, creative destruction, innovation, and disruptive innovation contribute to our development in different ways.

Here I define the different concepts and summarize them under the umbrella term Creative Renewal .

Creativity

Creativity can be defined as the ability to innovate and break free from established perspectives.

It is essentially a mental process that combines knowledge, experience, and intuition to create something new and valuable. It does not occur in a vacuum. Rather, it occurs in some kind of context where it builds on knowledge that already exists but is combined together in a different way.

Creative thinking simply allows us to spin new ideas and weave together new possibilities. Creative ideas often come when we are not actively doing something—like in the shower or on a walk. Yet they are not random; they come mainly in the areas where our waking mind is engaged.

Interestingly, research has shown that lone individuals can often outperform a group when it comes to the generation of creative ideas. Moving from idea to reality, however, is another matter.

But what does this have to do with creative destruction?

Creative destruction

Creative destruction briefly describes the process by which old business models, technologies, or products are replaced by new and more efficient ones. According to Joseph Schumpeter’s theory of creative destruction, first published in 1942, it is an inevitable part of economic growth and innovation.

A clear example of creative destruction is the rise of the steam engine and how it replaced older forms of energy and labor – today translated into how renewable energy is replacing coal, oil, and gas. Or how digital photography emerged and replaced analog photography (think Kodak). These can most probably be described as radical innovations, as they transformed entire industries and created new market leaders.

Creative Destruction can even be said to be the underlying dynamics of many of today’s big corporations, like Amazon, Apple, Airbnb, Uber, and Netflix. They all started small and gradually challenged the incumbents of their respective industries.

The entrepreneur is the star in this theory: an economic actor who, through creativity and innovation, shakes up markets and creates change. The entrepreneur introduces new combinations of ideas that lead to innovation and overturns the existing order by introducing new technologies, products, or services, thus making current offerings obsolete.

In short, the idea behind creative destruction is that creativity and innovation are the driving forces behind economic development. Simply put, innovation creates new markets and opportunities while destroying old structures. Companies that don’t adapt become irrelevant and, therefore, risk going under while new companies emerge. In this way, economies and societies are renewed over time.

Innovation

Innovation can be seen as the process of taking an idea from concept to reality, be it a new idea, a new product, or a new method. Innovation creates new ideas, products, or services that add value to businesses and society.

Innovation can also aim to improve something existing by making it more efficient, user-friendly, affordable, or sustainable. So it’s not just about creating something new but also about creating something that adds value – economically, socially, or environmentally.

Innovation takes place not only at the product level but in a variety of areas—from services and business models to processes and organizational formats to concepts and brands. An example of a social innovation that addresses social needs and challenges better than existing solutions is microfinance, which offers financial services to low-income groups.

But what is disruptive innovation?

Disruptive innovation

Disruptive innovation is a concept popularized by Harvard professor Clayton Christensen.

Christensen’s definition of disruptive innovation describes how a smaller company or start-up with limited resources can successfully challenge established companies.

When incumbents focus on improving their products and services (and incrementally raising prices) for their most demanding (and often most profitable) customers, they end up outperforming the needs of some customer segments and ignoring the needs of others. Their solutions also tend to become more expensive.

Therefore, smaller companies and start-ups with limited resources can successfully target these overlooked customer segments and markets and gain a foothold by delivering more targeted and customizable features—usually at a lower price.

Moreover, already well-established companies chasing higher volume and profitability in the larger and more sophisticated customer segments tend not to react to the arrival of these new entrants (they are simply not seen as a threat until it is too late).

Therefore, the new entrants move ’up’ the market rather imperceptibly, eventually delivering the performance demanded by the incumbents’ more sophisticated customers while often retaining the advantages that underpinned their early success.

Step by step, this means that incumbents are facing a completely new competitive landscape – and have been hit by what Clayton Christensen calls disruptive innovation.

It’s worth noting that the term disruptive innovation is now used somewhat loosely to refer to any kind of major change, often simply as disruption. Clayton Christensen himself was concerned about how the term came to be used as it became more popular.

Creative renewal – a modern-day phoenix

Creativity, creative destruction, innovation, and disruptive innovation are closely intertwined concepts. They can be seen as forces that destroy the old and create the new—and thus equally necessary for the renewal of our society, like a modern-day phoenix reborn from the ashes of the fire it burned in.

Creative renewal could be considered an umbrella term describing the transformation and renewal of businesses and society through a combination of creativity, innovation, creative destruction, and disruptive innovation.

Creative renewal could also be seen as a process with different life cycle stages:

• Creativity initiates new ideas and concepts.
• Innovation develops and implements these ideas, driving growth and customer adoption.
• The forces of Creative destruction ensure that inefficient or outdated technologies and business models are replaced, driving change and enabling renewal.
• Disruptive innovation can accelerate these processes by creating new markets and challenging established structures, especially in the growth and maturity phases.

I personally believe that our ability to find creative solutions to problems—big and small—is precisely what will help us find our way forward even in today’s climate and nature crisis. That’s why innovation is one of the key solutions to our challenges—not just in new products and services but across our entire business and social spectrum – as well as in our way of thinking.

Through Creative Renewal, we will find the power to renew our society, move away from fossil fuels to renewable energy, and shift from business as usual to the impact industries of the future.

Will it happen? It is already happening, but not fast enough. The question is now how to speed up the process of Creative Renewal to enable these important shifts sooner rather than later.

So, when is the best time for a creative renewal of your business?

And how will you renew yourself to stay relevant and attractive in our rapidly changing world?

Food for thought.

Elisabet Lagerstedt

Elisabet Lagerstedt is the founder and director of Future Navigators. As a trusted advisor, consultant, and Executive Coach, she helps business leaders navigate beyond business as usual to build Better Business and co-create a better future - through insight, strategy, innovation, and transformation. Elisabet is also the author of Better Business, Better Future (2022) and Navigera in i Framtiden (2018).