Patterns of Change
Invention or ideas lead to innovation and change, often championed by someone other than the originator – think of Carnegie, Morgan, Rockefeller and Vanderbilt. The change agent builds an empire around the innovation, typically aspiring to monopolize the commercial value of the innovation. The empire becomes exploitive of customers, employees, and the environment. Eventually, the world pushes back.
Competitors may provide the counterbalance. IBM dominated computers until Digital countered with minicomputers and then Apple surprised everyone with microcomputers, after which IBM rebounded for a while before ceding the market to Dell, HP, and Lenovo. Most recently, microcomputers have given away to portable tablets and other devices. Networked computer and communications technology has replaced the dominance of big hardware.
The automobile industry provides another compelling example. Henry Ford transformed the industry with mass production. Ford dominated until Alfred Sloan changed the game with new models each year and differentiated brands. Customers wanted more than the lowest priced black vehicle. By the 1950s and 60s, the Big Three dominated, banishing many smaller brands to oblivion.
This led to decades of poor quality vehicles, with brands becoming decreasingly distinguishable due to sharing of components and platforms to save production costs. The Big Three seemed to think that consumers would buy whatever these companies decided consumers wanted. They were right — briefly. Globalization led to higher quality, reasonably priced vehicles, especially from Japan, resulting in the Toyota Camry and Honda Accord replacing the Ford Galaxie and Chevrolet Impala as the best selling cars in the United States.
Government can also be the counterbalance. The Progressive Era followed the excess and oppression of the Gilded Age. The Sherman Antitrust Act (1890), the Federal Reserve Bank (1913), the Securities and Exchange Commission (1934), and the National Labor Relations Board (1935), first championed by Theodore Roosevelt and later by Franklin Roosevelt, reigned in and later broke up the trust empires. The Dodd–Frank Wall Street Reform and Consumer Protection Act (2010) is perhaps the most recent example of government countering excess.
Nevertheless, the exploitive change agents become enormously wealthy, often famous and are sought after for their opinions far afield from anything related to their expertise. They, of course, eventually pass away, although their heirs and assets may remain prominent for a couple of generations. These change agents were usually of great value to society, first for the creative destruction their original innovation fostered, and subsequently for the creative destruction their exploitations motivated.
