On Transforming Organizations through Creative Destruction

August 24

Richard Foster and Sarah Kaplan, in their recent book, Creative Destruction, analyze the major characteristics of long-term market leaders. Their premise is that most corporations operate with management philosophies based on continuity; as a result, they cannot change at the necessary pace and scale. The control processes seen as critical to their survival deaden their ability to change.

The principle element that accelerates the death of successful companies is ³cultural lock-in,² the inability to change the corporate culture even in the face of clear market threats. Successful companies, they say, embrace discontinuity, not continuity. They seek to transform the fundamentals of how business operates. Successful companies are a product of intensely creative people bent on destroying the established order‹people who are able to think in divergent ways. These people exhibit a strong interest in disciplines outside their own specialty areas. They are aggressive in acquiring new skills. They are open to new experiences, emotions, and risk taking. Their focus is not on control but permission to use money, talent, equipment, and time to make a difference.

According to the authors, in times of stress it is common to turn to authority for direction, protection, and order. Changing an organization requires the opposite. It requires moving from the technical work of problem solving to the creative process of leadership, where people with a ³sunny pessimism² have an optimistic sense while looking into the teeth of a negative outlook.