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Creative Destruction: A Six-Stage Process for Transforming the Organization (Spie Proceedings Series; 2362) Hardcover – January 1, 1995

4.7 out of 5 stars 3 customer reviews

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Editorial Reviews

From the Back Cover

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.

About the Author

Nolan is the William Barclay Harding Professor of Business Administration at the Harvard Business School.
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Product Details

  • Series: Spie Proceedings Series; 2362
  • Hardcover: 272 pages
  • Publisher: Harvard Business Review Press (January 1, 1995)
  • Language: English
  • ISBN-10: 0875844987
  • ISBN-13: 978-0875844985
  • Product Dimensions: 6.4 x 1 x 9.6 inches
  • Shipping Weight: 1.3 pounds
  • Average Customer Review: 4.7 out of 5 stars  See all reviews (3 customer reviews)
  • Amazon Best Sellers Rank: #2,218,295 in Books (See Top 100 in Books)

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Format: Hardcover
Anyone with organization experience will appreciate the struggle to adjust to the information economy. The authors call for the creative destruction of the old, to be replaced by a new flexible, agile, IT-enabled network. Networkers will quickly see that the old corporate structure is aiming to change into exactly what network marketers already have. Tomorrow's successful companies will look more like networks of independent entrepreneurs held together by the need to collaborate to succeed. Remuneration will also change to look more like the pay for performance networkers already enjoy. From the networkers point of view it is heartening to see how envious organization workers will soon become of the networker's position. This book gives a six stage process for CEOs to transform their organizations into what networkers already have. - Dick Canfiel
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Format: Hardcover
There are three recent publications with the same title (Creative Destruction) whose authors correlate Joseph Schumpeter's concept of "creative destruction" with the contemporary business world. Foster and Kaplan explain "why companies that are built to last underperform the market -- and how to successfully transform them" whereas in their work, Nolan and Croson offer "a six-stage process for transforming the organization." In the third volume co-edited by McKnight, Vaaler, and Katz, various authors and co-authors of 13 anthologized essays examine various "business survival strategies for the global Internet economy." I highly recommend all three volumes as well as two of Schumpeter's works: Capitalism, Socialism and Democracy, and, Essays: On Entrepreneurs, Innovations, Business Cycles, and the Evolution of Capitalism.
As already indicated, Nolan and Croson present and explain a "six-stage process for transforming the organization" at a time when there are extraordinary demands upon today's executives. For example, they must have or quickly gain mastery of new information technologies, new organizational structures, and managing a new dominant sector of employment: professional entrepreneurs. Worse yet, they confront what the authors characterize as "four main sources of inertia": business as usual, IT that locks in "business as usual", not evolving into an IT-enabled organizational structure, and finally, workers who are not going to fire themselves. What to do? In Chapter One, the authors recommend 20 information economy management principles, half of which have been "salvaged" from the industrial economy. (See Exhibit 1-2 on pages 16-17.) Then in Chapter Two, they introduce what they call "The Six Stages of Creative Destruction": Downsize!
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Format: Hardcover
Like with so many of my other recent book reviews I came across Creative Destruction when researching my book chapter on risks in Virtual Enterprise Networks, modeled along The Networked Enterprise. This book triggered my interest when I became aware of the concept of "creative destruction", where some businesses must die for others to be (re-)born, a concept popularized by Joseph Schumpeter.

Joseph Schumpeter

I had never heard about Joseph Schumpeter before, and I don't even remember where I came across the term "creative destruction", so I searched Wikipedia, next to Google, my nuber 1 source of information:

The Austrian economist Joseph Schumpeter used the term to describe the process of transformation that accompanies radical innovation. In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.

So, what Schumpeter is saying, is that large corporations eventually become rigid and antiquated and then replaces by faster-moving, responsive and innovative competitors, and one of the ways an economy moves forward is by destroying the old in order to create new opportunities.

The role of IT

One of messages from the book is that the last thing a company should think about is how to to stand the test of time, because once they are successful, companies tend to institutionalize the thinking that allowed them to thrive, and this, in turn, becomes their doom. If you stop innovating, if you do not destroy or transform, you die.
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