Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

'Creative destruction' can help rejuvenate companies, employees, executives

- by Alan Duvall 

Published in Dayton Daily News   October 8, 2006 

Creative destruction.  No, not terrorist WMD threats.  I'm talking about the purposeful demolition of a company's interior mechanisms. 

Jack Welch, the legendary CEO of General Electric, pioneered the modern business philosophy that to properly evolve companies must periodically shred existing business strategies and create new systems. 

In other words, the greatest impediment to a company’s long-term survival is the construction of an internal attitude which treasures entrenchment of existing status quo qualities – the business equivalent of hiding behind castle walls in the dark ages.  This truth can be seen in the demise of dinosaur firms such as Delphi and Delta, which ignored obvious signs of market change.   

It is perfectly natural for humans to seek safe refuge from the chaos by building rigid fortresses.  Obviously, self-destruction is counter-intuitive.   

Some scholars comparing  business to warfare cite the Prussian General von Clausewitz for his theories on conflict.  Clausewitz likened chaotic action to a “fog of war” which demanded a clear plan and clearer intellect as prerequisites to success in combat.   

Carefully craft your business model and execute it with confidence.  But do not be blind to the signs of industry mutation - the marketplace is not an inanimate object.  Commerce constantly morphs and may well render your plan obsolete.  Fighting to preserve your antiquated plan for sake of pride may render your company obsolete as well.  Flexibility and honest self-appraisal is the key. 

Perhaps the most difficult aspect of this transformational is the realization that the company has simply outgrown the abilities of its creator and leader.  It must be hard for a “Type A” executive to gaze into a mirror and honestly conclude he/she must commit the equivalent of occupational suicide for the good of the company. 

Likewise, loyal soldiers who sacrificed in the company’s early years may no longer be relevant to the present business structure.  It may be time for them to move on as well. 

Heartless?  Perhaps.  But pragmatic.  America’s business success has always been founded upon a relentless survival of the fittest mentality.   

Employees must be educated that their personal survival in the company requires a constant evolution of attitudes and skills.  Start early with the indoctrination and constantly hammer the message home if you wish to preserve their long-term status.  

And leaders – pay particular attention to that employee in the mirror.

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.