• Will Sarni

Creative Destruction and Hydration

We are in the midst of a “hydration revolution,” which I believe is part of the creative destruction of the water sector.

First, what is creative destruction and how it is a force in disrupting the water sector and hydration? Over 70 years ago, the economist, Joseph Schumpeter described the dynamic pattern in which innovative startups unseat established firms through a process he called “creative destruction.” As summarized in the 1999 article by Stuart L. Hart and Mark Milstein, “Global Sustainability and the Creative Destruction of Industries,” most twentieth century economists have focused on competition under conditions of static equilibrium. But Schumpeter insisted that disequilibrium was the driving force of capitalism. Hart and Milstein make the case that sustainability is a driving force for disequilibrium and, in turn, disruption of industries. Since this article was published, we have seen industries disrupted by sustainability and new industries and companies emerge. Most obvious is the rise of the renewable energy sector and electric vehicles (EVs). Costs for renewable energy and EVs have steadily decreased giving rise to renewable energy technologies such solar and battery storage increasingly integrated in homes and communities. Also, the recent announcement of Hertz purchasing 100,000 Tesla cars continues the destruction of the automotive sector by EVs. We are now seeing the creative destruction of the water sector and our traditional methods of hydration (think: water fountains and bottled water). Pre-pandemic, the water fountain was commonplace, and hydration was dominated by bottled water choices. We now see water fountains replaced by hydration stations, such as those provided by Flowater, Instream Water and HOPE Hydration. We're also seeing alternatives such as smart bottles providing real time information on hydration. A company called REBO provides a product like this, for example. While these alternatives have not replaced traditional hydration technologies, they are challenging the status quo. These innovative startups are forcing the industry to respond and accelerate their own innovation and/or acquire forward-thinking technologies. As Hart and Milstein stated, “The dynamics of creative destruction will work against firms that rely only on incremental improvements.” Time is of the essence in responding to global trends in sustainability including hydration, and these startups have the potential to change the status quo. Our discussion on The Stream (season 3, episode 9) with PierAndrea Quarta, CEO of REBO, provides insights on the nature of the hydration revolution and what the future may hold.


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