Dreams, Dramas, & Creative Destruction
Posted by Orrin Woodward on November 25, 2011
Joseph Schumpeter, one of the top economist of the twentieth century, described in Capitalism, Socialism and Democracy the principle of continuous improvement in a free enterprise environment, terming it Creative Destruction. Entrepreneurs are the key to this process, focusing on advancing products, processes, and systems in an effort to satisfy their customers’ wishes. I copied Schumpeter’s thoughts on the Creative Destruction process in blue and attached my commentary on how it applies in today’s networked economy:
Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. . . The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers, goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.
Orrin Woodward: Change is a given wherever freedom is present. That is why free enterprise is the best economic arrangement for productivity. Neither crony capitalism on the right nor socialism to the left can hold a candle to the productive power of a free people in a free enterprise environment. Regretfully, few countries or companies in the world ever practice true free enterprise for long.
. . . the history of the productive apparatus of a typical farm, from the beginnings of the rationalization of crop rotation, plowing and fattening to the mechanized thing of today–linking up with elevators and railroads–is a history of revolutions. So is the history of the productive apparatus of the iron and steel industry from the charcoal furnace to our own type of furnace, or the history of the apparatus of power production from the overshot water wheel to the modern power plant, or the history of transportation from the mail-coach to the airplane.
Orrin Woodward: With freedom, entrepreneurs are always thinking of better ways to serve the customers. When a better idea is implemented, costs go down, quality goes up, and customer satisfaction is rewarded through increased profits for entrepreneurs.
The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .
Orrin Woodward: In free enterprise, old companies with old ideas will lose out to companies with improved ideas and execution. History is filled with examples of giant firms that fell when they stopped innovating for the future, defending the status quo instead. In the past, America was the envy of the free world because new entrepreneurs, with no money or special deals, could win through the power of better ideas executed upon properly. This is what Creative Destruction is all about – the termination of existing modes of production and services, replaced by better models. For example, think of how Blockbuster lost a ton of business to the newer ideas executed by NetFlix. Blockbuster lost because it was slow to adjust to the new rules of the game. Now NetFlix is suffering from the effect of Creative Destruction itself. Creative Destruction is always at work in a free economy.
Every piece of business strategy acquires its true significance only against the background of that process and within the situation created by it. It must be seen in its role in the perennial gale of creative destruction; it cannot be understood irrespective of it or, in fact, on the hypothesis that there is a perennial lull. . . .
Orrin Woodward: Networking is long overdue for a gale of Creative Destruction that will improve the entire industry. When existing non-innovative companies run into this gale, they can respond in several ways.
The first, and best way, is to compete by developing better ideas, improving the value to all networking consumers. The second, and more common way, is to legally restrain or coerce potential competitors not to compete. This is the worst method, but sadly all too prevalent.
The third way, used when older staid companies refuse to compete in the marketplace, is to support sites who smear the new leaders. These leaders, if allowed to compete in the marketplace, would help to improve the entire industry. However, the older, more established firms view the new companies as competitive threats that must be destroyed or tamed. Therefore, if they cannot tame the new business through legitimate competition in the marketplace, then they must believe supporting an online smear campaign is their next best alternative.
. . . But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.
Orrin Woodward: LIFE is striking at the foundations of the old networking business model. It is taking the best examples of leadership, community building, and life coaching, and marrying them together into a digital age business. The benefits to the consumer are lower prices, higher rewards, and best value proposition, making the risk/reward ratios the best in the history of networking.
I have yet to see any legitimate criticisms of the LIFE business model and I am not shocked by this. How can anyone criticize these improvements on the current benchmarks in the profession?
1. LIFE is attracting numerous customers. In fact, one member had a customer sign up over ten customers in two days! You heard me correctly. I said a customer just signed up ten other customers so that he and several of his friends can enjoy their products for free through the three for free program.
2. LIFE has the lowest monthly subscription price on the market – ($50 to $125).
3. The leadership information is taught around the globe on the principles taught from two Wall Street Journal and New York Times best selling authors and Top 30 leadership gurus.
4. LIFE has meetings anywhere in the USA and Canada thanks to internet streaming technology.
5. LIFE flows close to 70% of the PV revenue back to its members (the highest in the industry to my knowledge).
6. LIFE has a 30 day no questions asked return policy. We want satisfied customers or your money back.
7. LIFE products already have thousands of satisfied users. Our best product is the changed lives of our customers and members.
8. The TEAM community building techniques have been benchmarked by nearly every other networking company, with many of the top networking leaders already customers of TEAM’s business building materials.
If any legitimate analyst would like to compare LIFE’s break-away compensation plan with any of the other break-away business models, then I am more than happy to do so. Show me any company that has a break-away compensation plan that rewards its members better? Since no other break-away pays up to 50% on the first type of bonus, I don’t think they really want to go there. In fact, it’s probably why they haven’t. In addition, when the older models pay 4% leadership bonus and LIFE pays 8%, I can see the need to deflect attention from that anyway they can. More telling, when the older models pay a 1% depth bonus and LIFE pays 4%, maybe the “no comment” policy is the right option. Lastly, when the older models pays no depth bonus after three legs, but LIFE compensates another 2% bonus on six legs, it becomes clear why the cat has got their tongue. Another 1% is the reward for nine legs over with further bonuses continuing through eighteen legs currently.
I guess, in hindsight, it would be silly for anyone to belabor these non-flattering points of the older business models. For if someone honestly compared the many break-away compensation plans, he would then have to admit that LIFE’s plan rewards customers and members much faster and more lucratively than the older models do. Maybe that’s the reason why, when discussing LIFE, the criticisms spewed forth are either outright lies, half-truths, or plain old-fashioned gossip. I guess the LIFE founders should take this as a backhanded compliment to our business, since even would-be criticisms have said nothing valid against the business model itself.
I thank God I live in America, and on this Thanksgiving weekend, I pledge to create a business model that is win-win for our customers and for also for anyone willing to apply themselves to building communities. If at any time this proves too tough, he can always go back to customer status and enjoying the world-class products and the best prices on the market. Thankfully, as long as North America maintains its freedoms, the LIFE founders are free to apply our revolutionary strategies to satisfy our members and customers, knowing they will be rewarded or punished based upon the viability of our ideas in the marketplace.
The LIFE founders have resolved to learn from our previous networking experiences, vowing to creatively destroy any parts that we did not believe satisfied or exceeded the customers’ expectations. We plan on doing this through applying free enterprise principles in the marketplace, not feeling the need to resort to reputation assassinations of our former associates. Perhaps both sides would benefit from applying this highroad principle. Certainly, the consumers would benefit by enjoying the freedom to study the pros and cons of each potential business models on its merits.
A person only has so much mental energy. The question is: what is he investing it in – dreams or dramas? The more he fills his head with dramas, the less room he has for dreams. In truth, I have never met a dream achiever who invested much time in drama loving. Conversely, I have never met a drama lover, who invested much time in dream achieving. This is why I have invested my life in dream achievement and quickly identify and disassociate myself from the drama lovers of life. Victors love dreaming for it keeps their mind free from dramas. Victims, on the other hand, love dramatizing for it keeps their mind free from dreams. Whichever group you choose to associate with determines your future destiny.
If anyone reading this has a dream and desires to achieve it by helping LIFE TEAM apply the free enterprise creative destruction principles to the networking profession, then I welcome you. If anyone reading this wants to join the online agenda-laden purveyors of dramas, then I support your right to do so. I only request that you ponder this: why is it that one side uses its freedoms to create a new business model, which benefits the consumer; while the other side uses its freedoms in an attempt to destroy the new model, which hurts the consumer? When a person realizes the economic consequences of Creative Destruction upon the older business models, the fog is lifted and the truth is revealed. Ponder wisely. Sincerely, Orrin Woodward