Economists tell us that the primary role of entrepreneurs in the economy is to engage in a process they call “creative destruction.” Through their innovations, entrepreneurs help create new industries that transform or even replace old and declining industries.
For example, online media sites such as the Huffington Post have played a significant role in the decline of the print-based media industry and in the demise of many traditional daily newspapers. Creative destruction is a not a common occurrence, but when it happens, its impact is profound
The venture capital world views entrepreneurs as agents of “creative disruption.” Venture capitalists like to invest in businesses that challenge the status quo with new solutions to existing market needs. Introducing new products to existing markets is more common than entrepreneurs creatively destroying entire industries, but it is still not an everyday occurrence.
The fact is that most entrepreneurs do not destroy or even disrupt. The vast majority of entrepreneurs engage in “creative opportunism.” Change creates numerous opportunities for entrepreneurs to fill small gaps or find little niches in the market.
All three of these roles of entrepreneurship are important in their own way, and they all work hand-in-hand to build economic growth.
Creative destruction helps to renew our economy so it can continue to expand. Creative disruption creates significant wealth out of change, which is the fuel for economic growth. And creative opportunism creates most of the new jobs in our economy – almost 80 percent of the new jobs over the past thirty years were created by small businesses.
So what industries are currently ripe for the destructive, disruptive, and opportunistic work of entrepreneurs? Where should entrepreneurs be looking for the next waves of opportunity?
When I first came to Nashville ten years ago, healthcare and music were industries I would put at the top of this list. While there are still many opportunities for entrepreneurs in these industries, other industries have emerged as being on the cusp of fundamental change.
Here are a few that have recently caught my attention:
- Advertising: While mass media advertising worked well with the Baby Boomer Generation of consumers, the Millennials do not trust traditional advertising. They get information on what products to buy based on the opinions of their friends transmitted through social media, not from ads developed on Madison Avenue.
- Senior care: We all know that the wave of Baby Boomers, also known now as the “grey tsunami,” will create significant opportunities in senior care. However, Boomers have fundamentally different expectations than their parents, so they most likely will not accept many of the business models for senior care that are common today.
- Education: Technology and unsustainable cost increases will be the likely sources of significant disruption in the education industry over the next decade.
And what successful entrepreneurial ventures will come out of the changes taking place in these and many other industries? Stay tuned. That is something that only time and the forces of the free market can tell us.