The 2025 Nobel Prize Just Explained Why Your AI Strategy Is Failing
(And I'm spending the next few weeks unpacking what to do about it)
Recently, the Nobel Prize in Economic Sciences went to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work on how innovation and creative destruction drive sustained economic growth.
If you’re an executive leading AI transformation, you should care about this.
Here’s why: Their work mathematically proves that growth comes from g = λln(γ), the rate of innovation (λ) multiplied by the size of technological gains (γ). But here’s what most leaders miss: every gain requires destroying something that currently works.
This isn’t just economic theory. It’s the exact dynamic playing out in every boardroom wrestling with AI.
The Question No One Wants to Answer
I’ve spent the last decade helping companies innovate, building products, leading teams, advising executives on how to turn complexity into clarity. And I keep seeing the same pattern:
Companies aren’t failing at AI because they lack technical capability. They’re failing because their leaders can’t bring themselves to embrace creative destruction from the inside.
They won’t cannibalize profitable products. They protect legacy systems. They fund AI as a side bet, not a strategic imperative. And then they wonder why startups eating their lunch had no such hesitation.
The Nobel laureates didn’t just explain why economies grow. They explained why your best people might be your biggest blockers, and why that’s exactly the leadership challenge you need to solve.
What I’m Building
I’ve written extensively about innovation failure modes, about getting to the “why” beneath surface problems, and about leading through discomfort and uncertainty. But I’ve never examined these ideas through the lens of creative destruction theory, until now.
Over the next few weeks, I’m publishing a series that connects the dots between Nobel Prize-winning economics and the daily reality of leading in the AI era.
The series will include:
Part 1-3: Classic Frameworks, Reimagined
“The Six Barriers to Creative Destruction: Why 94% of Leaders Fail at Innovation”
(A re-examination of “Why Innovation Efforts Fail” through the λln(γ) formula)“Mokyr’s Lesson for AI Leaders: Why ‘How’ Without ‘Why’ Leads to Hollow Innovation”
(Revisiting “It’s Not the What, It’s the Why” with insights from the Industrial Revolution)“Leading the Poisson Process: Why Comfort with Uncertainty Is Your Only Competitive Advantage”
(How “Comfort in the Discomfort” becomes essential when innovation is inherently stochastic)
Part 4-7: New Frameworks for the AI Era
“The Cannibalization Coefficient: A Diagnostic for Measuring Your Organization’s Appetite for Self-Disruption”
(Is your company optimizing λ, γ, both, or neither? And what to do about it)“From Poisson to Policy: Making Peace with the Stochastic Nature of AI Innovation”
(Why traditional planning fails for AI, and what works instead)“The Business-Stealing Paradox: Why Your Best Innovators Are Your Biggest Threat (And Why That’s Good)”
(Resolving the tension between protecting current business and enabling future growth)“Creative Destruction in the AI Era: Why the Formula Has Changed, And What It Means for Leaders”
(How AI compresses innovation cycles from decades to months, and the leadership implications)
Why This Matters Now
We’re in the middle of the fastest technological transformation in human history. AI is compressing the creative destruction cycle from years to months. The half-life of competitive advantage is shrinking.
The leaders who thrive won’t be the ones with the best AI tools. They’ll be the ones who can architect productive creative destruction, who can create the conditions where their organizations enthusiastically build the innovations that obsolete their current advantages.
That’s what this series is about.
Subscribe to follow along. Let’s figure this out together.
The dot-com crash didn’t end the Internet. It refined it.
The AI reckoning won’t end innovation. It will separate the leaders who embrace creative destruction from those who cling to what worked yesterday.
Which side of that divide will you be on?
First piece drops next Tuesday. See you then.