‘Creative destruction’: learning from the commercial sector to achieve a ‘Better Way
James Dixon
During the Better Way discussion on joining forces on Tuesday 21st September, which was focused on building alliances with the commercial/business sector of the UK economy, I introduced the concept of ‘creative destruction’. This is well known, and frequently practised, within the commercial/business sector but generally ignored by the statutory and voluntary sectors of the UK economy.
Maybe this is because it contains an inconvenient truth; which is that if an organisation wants to prosper it must continually change and innovate, at least at the speed of the market or environment in which it is located. In order to find the resources needed for the change, the organisation must refrain from doing what it has always done but which no longer represents cutting edge activity. Failure to do this will result in competitors taking their place.
This process of constant renewal wasn’t always the ‘norm’ even in the business sector. In the 1930s, Joseph Schumpeter, who named the process ‘creative destruction’, urged organisations to abandon assumptions of continuity and tackle the cultural barriers that make it hard to change, even in the face of clear market threats. As most business in the early part of the 20th century were ‘built to last’, very few did survive. ‘Cultural lock-in’ is at its best the core beliefs and assumptions that bind people together, but when they become out of sync with the market or environment in which they operate, managers begin to make poor decisions and to supress those people in the organisation with genuine vision or new ideas.
This process of renewal has its counterpart in the natural world. My grandfather, who was a shepherd in rural Northumberland, knew that each year new blood had to be introduced into the flock at the expense of older sheep who would otherwise become unproductive. At the same time the farmer who didn’t rotate his crops would soon deplete the soil until it became mere dust. Most suburbanites know that in order to keep their gardens looking good they must prune their roses each year and regularly introduce new plants. Creative destruction, with its emphasis on renewal and innovation, is essential and ‘normal’ both in the material world and in the world of ideas.
During 2005-07 I was fortunate to be given an opportunity to research how creative destruction and other ‘social marketing’ practices might assist emerging social and community enterprises to identify, define and promote their ‘customer value proposition’, while continuing to achieve their broader social aims and objectives. In the U.S.A. where earlier I had been for 4 years the Marketing Director of a ‘not-for-profit’ organisation, the term ‘social marketing’ refers to the use of commercial sector marketing principles and techniques to advance a social cause, idea or behaviour, such as promoting healthy living or equality, as opposed to simply maximising profits or promoting a brand. This requires a customer orientation, on-going ‘market’ research, an understanding of social capital and a knowledge of both resource-based, and exchange theories.
Broadly speaking I found that not only did most of the statutory, voluntary or social enterprise organisations that I interviewed not practise anything that I recognised as social marketing; but that they strongly resisted the idea believing that it only applied to the commercial sector. However, If the community sector believes that it can make a significant contribution to the design and delivery of the new generation of community services - which will eventually have to be introduced – then social marketing is likely to be a key tool.
All the other sectors of the U.K. economy are already using mainstream marketing practices to influence potential service users and generate revenue, and marketing techniques are commonly used by larger charities to attract donations. However, what makes social marketing such a powerful potential tool for the social sector is its ability to help organisations identify and communicate a true social purpose that genuinely chimes with those they serve; and also, to make policy campaigns more effective. Perhaps social marketing can provide a common approach across different sectors and generate mutual learning that might lead to a Better Way of working than at present.
James Dixon ended his career in the commercial sector as a marketing director and has since founded community interest companies in Newcastle and Croydon. He has also worked as a Community Development Manager with both Alcohol Concern and Scope, before studying, throughout 1999, at The School for Social Entrepreneurs. In 2007 he was awarded a Master of Studies Degree in Community Enterprise from Cambridge University for his work on developing a strategic ‘social’ marketing approach for the community sector. Currently he is studying how increased collaboration within the community, commercial and statutory sectors might help regenerate local areas and create ‘Places of Wellbeing’ based upon ‘whole systems’, ‘co-production’ and ‘social value’ approaches.
