Schumpeter (1883-1950) was born in Moravia--then part of Austria-Hungary but now in the Czech Republic--and was a gifted mathematician. But his love was economics, particularly as related to entrepreneurship, and he's best remembered for his socio-economic theory of creative destruction.
At the root of creative destruction, according to Schumpeter, are entrepreneurs, some laboring as individuals and some as employees of forward-looking firms, but all possessing a spirit of innovation that drives economic growth forward by improving on and "destroying" the old. And if the old is a hide-bound, monopolist entity or system that has long been a barrier to progress, so much the better.
According to Schumpeter, innovation tends to come from companies and individuals that provide any of the following:
--New markets or products
--New equipment
--New sources of labor and raw materials
--New methods of organization or management
--New methods of inventory management
--New methods of transportation
--New methods of communication
--New methods of advertising and marketing
--New financial instruments
What are destroyed by these innovations are companies and systems that have become entrenched, that are regarded as part of the status quo. The destruction is painful to those individuals who are part of the established system (look at how digital photography killed Polaroid and nearly did so with Kodak). But it's generally rewarding to society as a whole, because the new methods, technologies and systems provide more value at lower costs than the old.
