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Why the 2025 Economics Nobel matters to innovators, investors and IP lawyers
This year's Economics Nobel went to Joel Mokyr, Philippe Aghion and Peter Howitt for explaining how innovation drives long-run growth and for showing, with unusual clarity, that progress works through creative destruction. Each new wave displaces what came before. That can sound paradoxical until you put it in market terms: When a better product arrives, sellers of the older one lose out; the act is creative for consumers and society, and destructive for incumbents who are outcompeted.
For entrepreneurs and IP practitioners, the lesson is practical, not abstract. If innovation advances by knocking down yesterday's winners, you need an intellectual property and go-to-market strategy that anticipates the pushback. Otherwise, sensible investors and venture capitalists will avoid founders who cannot tell signal from noise when rivals turn defensive.
In the IP world we often call breakthrough entrants disruptive technologies. They attract capital because they can unlock exponential adoption and offer a first-mover runway before competitors catch up. But disruption also invites countermoves, from fast followers, from distribution gatekeepers, from incumbents with deep pockets. That is exactly where a deliberate IP posture earns its keep: Patents and other formal registrations, a proactive product roadmap, brand building, and, where it makes strategic sense, vertical integration and acquisitions to secure critical capabilities.
The arc from steam to electricity to AI is a reminder that technologies don't just add; they often replace. Electricity "demolished" steam; AI may, in some arenas, do the same to today's knowledge work. Founders face a choice: Defend the current era against the next, or design to embrace it. Even large incumbents have lived both sides of this story.
Think of the "Philips syndrome" – the worry that a dominant player might buy a superior invention just to shelve it because it threatens an existing profit pool. Yet Philips also shows the counter-example – how brand strength and diversification can help an incumbent absorb waves of innovation rather than be flattened by them.
There is a harder edge to the Nobel narrative that business often glosses over. Creative destruction cuts both ways. Civilian benefits like GPS and satellite services come from tools that were once military; the same steam power that moved goods also powered rail lines to terrible ends. That is why universities and funders insist on ethical clearance frameworks to assess dual-use risks. As Mokyr argues, lasting progress requires not only that something "works", but that we understand why it works, because only then can innovation sustain itself responsibly, iteration after iteration.
Taken together, the laureates' work doesn't license complacency; it demands strategy. Build for the upgrade path, not the snapshot. Protect what you must, partner where you should, and be candid about where adoption will hurt someone who used to win. Creative destruction, properly channelled, is not a wrecking ball; it's the price of progress and the engine of it. Entrepreneurs already know this in their bones.
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