In a World of Creative Destruction Comes Innovation

At first the Energizer bunny ad theme was funny.

Then it was overdone.

Then it was incredibly annoying.

Just the sight of the little pink bunny with glasses and a bass drum can send people into a rage, all wishing for the chance to drop-kick the fuzzy ball of frustration into the next state.

At least on this front we now have some peace, but it comes with a cost. Energizer is steadily losing ground in the disposable battery business, which is causing the company to shut down plants and fire workers.

Welcome to the world of creative destruction, where innovation is painful… but helpful.

If you want to know the reason behind the decline in disposable battery sales, take a quick glance at almost any teenager. Handheld devices like PSPs and iPhones don’t use disposable batteries. Neither do laptops or tablets.

As the mobile world converges to a few devices, the need for many different entertainment platforms – and their power supplies – is dwindling.

At the same time, the technology behind batteries themselves has evolved at a rapid pace, allowing rechargeable batteries to provide sufficient power for normal use.

For society, these developments bring great benefits.

As devices converge there should be a narrowing of what consumers want to own and carry, with only the software varying by user. And using rechargeable batteries lowers the amount of discarded disposable batteries that end up in landfills.

Other, larger benefits are only just beginning to emerge…

The additional resources being poured into small battery development for use in personal devices can lead to innovation in large battery technology. By “large” I don’t mean like a car battery. I mean the suitcase-sized battery used in plug-in vehicles…

Even though there is a lot of hype around electric vehicles (EVs) today, the reality is that sales are slow and consumers are skeptical. For good reason. Right now plug-in cars (not hybrids) are severely limited in range because of their batteries.

The growth in EV use in California has been moderate, but is already causing problems as public charging stations in parking lots are full. If you drive an EV to the airport, counting on a charging station so you can make it home, you might be unpleasantly surprised. Greater range obviously helps to eliminate this issue.

Then there are storage-container-sized batteries used at electrical transfer stations…

This is where power generation and electrical use converge. Electrical use – meaning when consumers use their appliances, air conditioning, etc. – varies during the day, during the year and with the weather. Power generation can adjust to this use when using coal- or gas-fired plants because the energy company controls the input.

However, when green sources such as solar or wind are added to the mix, the timing of power generation becomes a question. If the wind is up there’s no problem. If the wind dies down end users face a real possibility of rolling blackouts during peak use hours.

This conundrum of not being able to match power generation from green sources with power use is one of the biggest hurdles for reliance on renewable energy. Having the ability to store large amounts of electricity in more efficient, deep cycle batteries is the missing link in the chain.

So while we worry over the loss of jobs as Energizer closes disposable battery plants, and we cheer the retirement of that dang bunny, it serves us well to remember that all of this is part of that vital economic process called creative destruction… where better, more efficient production and processes displace the old.

Along the way, that’s how we raise our standards of living.


Rodney

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Categories: Innovation

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.