Creative destruction: a six-stage process for transforming the organization

Competing in the information economy demands a revolutionary transformation of the organization - a creative destruction of the old, hierarchical, functional entity and its replacement by a new, flexible, IT-enabled network. Many organizations have already embarked on such changes: experiments with reengineering, activity-based costing, and strategic alliances are all elements of the creative destruction process. Yet business leaders need both a framework and a comprehensive road map for managing the entire process, along with the new technologies, structure, and entrepreneurial workforce it creates. Creative Destruction identifies a new and coherent set of 20 management principles for the information economy that provide a sound foundation on which to build a network organization for the 1990s and beyond. This set of principles - concerning such aspects of management as leadership, rewards, organization of tasks, communication, cycle time, and value creation - correlates strongly with financial performance in exhaustive research and company surveys. The authors then unveil a six-stage blueprint for managing the transformation from the old set of industrial economy principles to the new. The organization must downsize, seek dynamic balance by distributing its free cash flow appropriately to its stakeholders, develop a market access strategy, become customer driven, develop a market foreclosure strategy, and pursue global scope. The payoff for a successful organizational transformation is high. Creative Destruction describes a process that will enable individuals and teams to respond to customers effectively, develop products quickly and capitalize on new market opportunities whileminimizing organizational turmoil and maintaining the stability of the firm.