High-technology industries are tough places to do business.
Competition is constant, fierce and characterized by only temporary advantage, fueled by the ease with which software makers and other high-tech companies can copy and distribute new products and services. Instantaneous delivery through the Internet to hundreds of millions of consumers means a company with a slightly better online marketplace or search engine, for example, can quickly dominate the market, and just as easily be dethroned by a rival with a new approach.
Competitive Contagion
- The Situation: Brutal competition is spreading beyond high-tech industries into the rest of the U.S. economy.
- The Background: Technology use is fueling the trend. Software and computer systems allow companies to quickly deploy new business processes, which can give them a leg up over rivals.
- What’s Ahead: Competition is poised to intensify further as industries become more reliant on technology.
If this brutal competitive cycle—first described as “creative destruction” by Austrian economist Joseph Schumpeter in 1942—makes you uncomfortable, we’ve got some bad news. We’ve been studying competition in all U.S. industries, not just the high-tech ones, and we’ve observed a remarkable pattern: On average, the whole U.S. economy has become more “Schumpeterian” since the mid-1990s. What’s more, these changes have been greatest in the industries that buy the most software and computer hardware.
Over the past dozen years, in other words, information-technology consumption is associated with the kinds of competitive dynamics we’re accustomed to seeing in the IT-producing industries. And because every industry will become even more IT-intensive over the next decade, we expect competition to become even more Schumpeterian.
PROCESS INNOVATION
What we have observed in industry after industry is the emergence of widespread process innovation and replication that is analogous to the product innovation and replication that takes place in high tech. Just as Google Inc. can take an improved search algorithm and make it immediately available via the Web, or Apple Inc. can quickly distribute an updated version of iTunes, companies in other industries can invent a new way of doing business, embed it in internal software, and deploy it as widely as necessary across locations, divisions and departments to gain an advantage.
CVS Corp. Chief Executive Officer Tom Ryan in 2001 wanted to improve customer satisfaction in the company’s pharmacies, so he directed a cross-functional team to devise a better way of filling drug prescriptions. The team decided to change the order of two steps and shift the initial data-entry step so
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On the contrary, I think “Schumpeterian” economics have now been waylaid by the concept of the totalitarian ecosystem… Where the people who control the platforms as kings.
So yes, I’m talking about the Google, Apple and Facebook’s of the world. Where once you get one of their devices, you’re sucked deep, deep into their abyss of co-dependance.
Dog eat dog? It’s more like dog stacked upon dog into a canine pyramid.
Best,
Kenneth Yu ~ http://www.spurpress.com