Henry Ford began producing Model T in Detroit around 1908. In the 1960s, Detroit rose to the mountaintop and became one of the most important tech-cities in America, as entrepreneurs moved there, to pursue a future of starting a car company. The number of car startups in Detroit exceeded 100! And the future looked unbounded.
Then, OPEC (Organization of the Petroleum Exporting Countries) which began life in Baghdad (Iraq), in Sept 1960, started to work! OPEC’s work was to get members to control crude oil production in order to get more money per barrel in the international market.
OPEC contributed to the destruction of Detroit because prices of fuel went up even when Detroit car makers like Ford, GM and Chrysler were not paying deep attention to Japanese car makers who produced fuel-efficient vehicles. The American car makers have always liked their big cars, typically agents of fuel guzzling!
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The Japanese introduced a huge shift, and made cars that used less fuel per mile driven, and consumers moved: expectation demand worked. Just like that, Detroit began a sustained decline as the big 3 car companies lost market shares with layoffs, and plant closings everywhere. Detroit has not recovered – in short, Detroit city went through bankruptcy, and the car makers were bailed out by the U.S. to ensure their continued existence.
Simply, Detroit was innovation. But Detroit declined. The modern American Detroit today is Silicon Valley. This is Google’s 21st birthday. Google’s impact cannot be overstated in our world; it has totally redesigned and transformed how we find and consume information. With Google, Facebook, Apple, Intel and amalgam of other companies, America has renewed even as Detroit faded.
With Uber and Lyft, adding a new layer on Detroit, U.S. will get a part of the game in most parts of the world, irrespective of the brand of cars people use. So, in Lagos or Nairobi, even if you are using Toyota for Uber, America will get a part of that revenue. Simply, creative destruction can come but nations with inherent internal capabilities will always emerge stronger.
Creative destruction can be described as the dismantling of long-standing practices in order to make way for innovation. Creative destruction was first coined by Austrian economist Joseph Schumpeter in 1942. Schumpeter describes creative destruction as innovations in the manufacturing process that increase productivity, but the term has been adopted for use in many other contexts.
The Lesson for Nigeria
In this video, I have shared what needs to happen for us to have that internal capacities to renew. Yes, as the Kano groundnut pyramid was declining, Nigeria could have made Eket a powerful city for energy technologies. As the palm oil declined in Owerri along with cocoa in Ife, Kainji dam could have been boosted to power the next industries in Nigeria. We must be prepared for shifts and re-alignment as a nation, across all the geopolitical zones. All the young people are going to Silicon Valley, not Detroit, and America continues to thrive. Nigeria needs to see itself as one nation in order to have a big picture perspective on how to manage creative destruction as it happens.
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And that is why we must be careful with phrases such as ‘the good old days’, it may sound utopian but it’s anti-innovation, most times.
Your major concern should not be about fallen empires, but rather the rising empires which should replace them.
When you fight so hard to protect supposed legacies, you may end up denying yourself the opportunity to come up what is truly generation -defining and life-changing innovations; never place a limit on human capabilities, there is always a chance to outdo what is currently obtainable.
Nigeria may not win with the old playbook or by attempting to revitalise moribund industries; but there is a big chance of winning, if it can create new businesses and models, going ahead to make itself indispensable to the rest of the world.
When Einstein gave greater weight to imagination than knowledge, it’s a testament that you can do better with what is to come, rather than what you already have.
Detroit faded, but there emerged Silicon Valley; as we whine over Ajeokuta Steel, the never do well refineries and petrochemicals, the hibernating textile industry, and the stillbirth power sector, which empires have replaced them?
That we keep crying over past glories shows dearth of imagination.
Francis, your comment is even better than this piece. This is iconic: “as we whine over Ajeokuta Steel, the never do well refineries and petrochemicals, the hibernating textile industry, and the stillbirth power sector, which empires have replaced them?”
I agree
Thank you Prof,
I did enjoy the part of where capital is required. it means that investment to profit will require huge capital to ensure that it survive. Every sector of the economy you turn to, we can see the opportunity, but really no support in terms of capital investment, where we all expect government to support and provide necessary capital, and as you have pointed out, we need venture capitalist to aid project with minimum return period of about 5 years to ensure that the project plan from prototype to commercialization is well cater for.