Day 3 – Creative destruction

Creative or creational destruction describes the phenomenon of the new displacing the old. New technologies displace old technologies. New products displace old products. And new companies displace old companies.


Try to find examples of creative destruction. Also consider what impact creative destruction has had.

1. What technologies have disappeared and been replaced by others?

2. What products have disappeared and been replaced by others?

3. Do you find creative destruction perhaps in other areas? Maybe in sports? Think of strategies and positions in football. Think of movement patterns in the high jump. Maybe you can find creative destruction in a sports field that is closer to your interests.


This exercise is not designed to appeal to your lowest destructive instincts. Rather, it is to help you recognize the potential that lies in successful innovation. Displacing others with your own innovations certainly has the appeal of improving the economic situation of your company. On the other hand, and this is at least as important, the examples you have found show you what happens to those who do not successfully innovate. They are ousted. There are more than a few who interpret innovation as an issue that is economically decisive for life and death. Philosophers, practitioners and scientists all agree on this.

Management of innovation as overcoming boundaries

As we have seen, innovation plays a crucial role in keeping companies competitive. The underlying mechanism is creative destruction, which you have already addressed in this exercise.

If you have ever asked yourself what innovation management actually is, the following should answer your question:

We define innovation management as the monitoring, controlling and internal promotion of innovation activities. This includes the entire process from idea generation and market launch to the diffusion of new products or processes. Innovation management takes on a cross-sectional function in the company, which is usually also institutionalized in large companies, but is rarely defined as a function in small companies.

All innovation managers – regardless of the field, size or orientation of the company – constantly face boundaries. They must systematically try to overcome these boundaries: disciplinary and sectoral boundaries, boundaries of their own company and its organization, and boundaries between producer and customer.

Innovation management itself must try to overcome these challenges through creative and novel approaches. Let’s look at these boundaries a bit more here.

Overcoming disciplinary and sectoral boundaries

At the beginning of the 20th century, Schumpeter (1912) already stated that innovations should be regarded as new combinations (of ideas, knowledge and technologies). Over the course of the last century, little has changed. New products, new services, new production processes, new business models or organizational structures are created by creating new combinations of what already exists and its further development. What should be emphasized here is the convergence of technologies, in which two technologies that initially developed separately from one another eventually follow a common development path. The resulting new technology opens up completely new horizons. Examples include mechatronics as a combination of mechanical engineering and electronics, optoelectronics as a new combination of optics and electronics, or the convergence of voice and data technologies (Fai and von Tunzelmann 2001). Likewise, of course, the development of the cell phone as a new combination of telephone technology and radio technology falls into this area. In the service sector, we can refer to the convergence of wellness and health services with conventional hotel services to form the growth field of wellness tourism.

Innovations thus arise at the interface between areas that were originally separate from one another. The areas can be fields, disciplines or even just different departments in a company. Overcoming inter-organizational boundaries is thus of outstanding importance for the generation of innovations (Heinze and Kuhlmann 2008). The challenge of innovation management is to overcome these boundaries and to realize the development potentials that exist in the heterogeneity of different fields, different disciplines and within one’s own company.

It turns out that innovations help companies break the usual routines in a field and thus achieve high returns. The so-called returns to innovation are considerably higher and more attractive for innovators in low-tech industries than in high-tech industries. High economic opportunities – the chance to differentiate oneself from the competition – are quite significant in low-tech industries. These can be utilized through innovation activities (Ebersberger, Marsili, Reichstein, and Salter 2008), realizing growth potential and breaking out of growth patterns dictated by the sector context (Reichstein, Dahl, Ebersberger, and Jensen 2009).

Overcoming corporate boundaries

In an increasingly complex world, no company today – regardless of its size – can master and further develop all the technologies and capabilities currently required to generate innovations. Innovative companies must therefore overcome corporate boundaries and work together with partners in an interactive innovation process to drive forward the development of necessary technologies (Tether 2002; Dachs, Ebersberger, Pyka 2008). Innovation collaborations help increase the productivity of the innovation process (e.g., Czarnitzki, Ebersberger, Fier 2007).

The boundaries of the company are thus becoming increasingly unimportant, indistinct and diffuse as a result of increasingly sophisticated technologies.

No innovating company can rely solely on its own skills; rather, it is crucial for successes that innovating companies are able to integrate into, maintain and manage development and knowledge networks that provide complementary knowledge and skills. If you see yourself in the role of a manager, what this means for you is to find partners who have access to knowledge and technologies that match what your company already has.

The innovation process must be placed on a broader and more stable footing by targeted overcoming of the boundaries of one’s own company through cooperation.

For modern innovation management, a large number of questions arise in the context of managing innovation collaborations, which are aimed at initiating, managing and securing IPR (intellectual property rights) in collaborations. Here it becomes clear once again what you have already experienced on day 0: You need help and support from experts. Don’t be afraid to get it!

Overcoming the boundaries between producers and consumers

The success of an innovation is ultimately measured by the acceptance that new goods, new services or new production processes find among the respective customers or users. Without the customers’ willingness and ability to pay, any technical innovation, no matter how brilliant, cannot be considered a successful innovation. For innovation success, you need not only technical success but also economic success.

In the context of successful innovation management, the role that the customer can play in the course of the innovation process is increasingly coming to the foreground. The customer is the only arbiter of the success or failure at the end of the development process. In modern and open innovation processes, customers are integrated into the development and design of new goods or services from the very beginning. In this process, the knowledge and expertise of customers is not only used in the phase of collecting ideas for new innovation projects (Herstatt and Verworn 2007), they are also integrated in the development, testing of initial prototypes, in interface design, and so on.

The focus here is on developing new goods, services or processes that deliver the greatest possible benefits to the respective customers and thus ultimately mobilize customers’ willingness to pay for the innovating companies. It has been shown that innovation projects, which are carried out with the involvement of customers, are generally more successful than innovation projects that do not undergo the litmus test of customer acceptance until market launch.

In innovation management, therefore, the boundary between consumers and producers of innovations must be overcome in a systematic way. Customers become co-innovators through their integration into the innovation process. They become idea generators who provide lasting influence on the development paths of successful companies (von Hippel 1988, 2005; von Hippel and Katz 2002). The general trend in recent innovation management research is a call for openness in the innovation process (Chesbrough 2003, 2006a, 2006b).

The focus is not only on integrating the customer into the innovation process. Rather, it is pointed out that the integration of diverse external sources of innovation and external actors increases the productivity of the innovation process of businesses (Laursen and Salter 2006; Ebersberger et al. 2008, Bogers et al. 2018).

However, companies show different incentives to open up their innovation process. Especially small and medium-sized companies open up their innovation process less frequently than comparable but larger companies do (Ebersberger et al. 2008).

Opening up the innovation process (open innovation) to the outside world, however, requires – almost as a fundamental requirement – an internal opening up of the innovation process. Innovation is not the responsibility of a few employees at headquarters or in special areas such as research and development. Rather, internal openness must make innovation a topic for all employees (Sutton 2002).

To achieve this, however, it is not only necessary to create internal structures that offer all employees opportunities and incentives to participate in the innovation process, but the management philosophy must also permit and promote this internal openness. As managers, you must set an example of this openness. Knowledge management and idea management thus represent a decisive contribution to increasing innovativeness (Czarnitzki and Kraft 2007).

The Importance of Open Innovation and Collaboration

Question: Who do you need to realize your innovation ideas? Who are the key partners for implementation?