Q.What did Joseph Schumpeter mean by 'creative destruction'?

Schumpeter's idea explains why innovation, not just risk-taking, is central to entrepreneurship and to economic growth.

Schumpeter viewed the entrepreneur primarily as an 'innovator' who introduces 'new combinations' — a new product, process, market, source of supply, or organisational form. As these innovations succeed, they render older combinations obsolete, destroying them even as they create something new and more efficient in their place; Schumpeter regarded this cont …

The economist Joseph Schumpeter placed innovation, not merely risk-bearing, at the very centre of his theory of entrepreneurship. He described the entrepreneur as an 'innovator' whose defining role is to carry out 'new combinations' of the factors of production, which he identified as taking any of five forms: introducing a new product (or a new quality of an existing product), introducing a new method of production, opening a new market, finding a new source of supply of raw material or semi-manufactured goods, or creating a new form of business organisation (such as forming or breaking up a monopoly position).

Schumpeter called the wider economic process by which these successful innovations continuously replace older products, firms, technologies, and ways of working 'creative destruction'. The term captures a deliberate double meaning: it is CREATIVE, because it produces genuinely new and more efficient products, methods, and forms of business; and it is DESTRUCTIVE, because in doing so it renders the older products, methods, and firms it displaces economically obsolete, often driving them out of the market entirely. …