Creative Destruction: A Six-stage Process for Transforming the Organization

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Harvard Business Press, 1995 - Business & Economics - 259 pages
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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. For those who are leading organizational transformation in the information economy, Creative Destruction presents profitable solutions to a challenge that mirrors the complexity of the change from the agrarian to the industrial economy a generation before it. It is a process that will engage managers well into the next century.
 

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Contents

The Need for Organizational Transformation
1
The Six Stages of Creative Destruction
21
Stage One Downsize
38
Stage Two Seek Dynamic Balance
68
Stage Three Develop a MarketAccess Strategy
97
Stage Four Become Customer Driven
120
Stage Five Develop a Market Foreclosure Strategy
144
Stage Six Pursue Global Scope
166
Management Principles Essential to the ITEnabled Network Organization
187
What Size Is Right Size? A Theory and Simulation of Firm Design
204
Notes
233
Index
251
About the Authors
259
Copyright

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