Creatively Destroying Pontiac

by Elaine Schwartz    •    Nov 7, 2010    •    686 Views

At some point, sooner or later, people get tired of black. During the 1920s, Henry Ford realized that the Model T, so very practical and affordable because it only came in black, needed some vitality.

What forced him to recognize that the Model T was becoming obsolete? The Pontiac (and Chevrolet, Oldsmobile, Buick, and Cadillac). Competing against Ford’s Model T, General Motors created a car for every pocketbook in different colors. Pontiac was second in line, as the consumer moved up the price ladder of G.M. cars.

Fast forward to 2010. 84 years old, the Pontiac has died. According to the NY Times, the cause was indifference. Pontiac will join its sibling, the Oldsmobile, which left us 6 years ago.

The Economic Lesson

Pontiac’s demise reminds us of Joseph Schumpeter. The word to associate with Schumpeter is entrepreneur. For Schumpeter, the entrepreneur is the innovator whom we find in small and large businesses. Increasingly, though, bureaucracy takes over and kills creativity. Perhaps, the Pontiac died because G.M. no longer sparked entrepreneurial passion.

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