Creative Destruction: Why Companies That Are Built to Last Underperform the Market--And How to Successfully Transform Them Book

Being in search of excellence--or built to last--is one thing. Sustaining superior performance over the long haul, Richard Foster and Sarah Kaplan point out in Creative Destruction, is another matter entirely. Based on a concept first advanced some 70 years ago by economist Joseph Alois Schumpeter, Foster and Kaplan (longtime McKinsey & Company executives) propose that corporations can outperform capital markets, and thus maintain their leadership positions, only if they creatively and continuously reconstruct themselves in ways that keep them ahead of the upstart challengers waiting in the wings. The decidedly radical paradigm that they champion has been urged in one form or another by others since Schumpeter, but this effort is particularly convincing because of the massive research the authors call upon to back it up: McKinsey studies of more than 1,000 corporations in 15 industries over 36 years. Citing the specific reasons behind ups and downs at firms such as Storage Technology, Intel, Johnson & Johnson and Corning, Foster and Kaplan claim that the process of creative destruction must become an integral part of today's corporations from top to bottom if they truly hope to attain lasting excellence (and beat Wall Street's primary indices for more than a few fleeting years). Firms that have mastered elements of this practice have done so by innovatively shedding detrimental processes and operations while cleverly spotting and appending those that add new value. The authors write that, "The key to their success is the balance they have struck between creativity and destruction--between continuity and change." Their book offers impressive insight into the acts of both breaking down and building up; if its analyses of past performance mean anything, it should prove very interesting to savvy managers as well as long-term investors. --Howard RothmanRead More