Saturday, February 24, 2007
"creative destruction" by Richard Foster
By the end of the 1990 s, we were well into what Peter Drucker called the " Age of Discontinuity ". Extrapolating from the past patterns, we calculate that, by the end of the year 2020, the average life time of a corporation on the S&P willhave been shortened to about 10 years as fewer and fewer companies fall into the category of " survivors". The Age of Discontinuity arose from fundamental economic forces. Among these are :
(a) The increasing efficiency of business due to dramatic decline in capital costs .
As industry shifted from goods to services, there was a consumer decline in interaction and transaction costs. These costs declined because of the advent of IT and the steady rise oin labour productvity due to advances in technology and management methods.
(b) The increasing efficienty of capital markets, due to the incrasing accuracy ( and transparency ) of coroprate performance data.
The global GDP will double in the next 20 years , creating approximately $20-$40 trillion in new sales. If, through the productivity improvements the world can save 2% of the $25 trillion new produced, the market value of those savings willrun into the trillions. Incumbent firms have an unprecedented opportunity to take advantage of these times.
The one hundred or so sompanies in the current S&P 500 that surviveinto the 2020 s will be unlike the corporate sruvivors today. They will have to be masters of crative destruction,- built for discontinuity, remade a like the market.
" creative destruction " by Richard Foster
(a) The increasing efficiency of business due to dramatic decline in capital costs .
As industry shifted from goods to services, there was a consumer decline in interaction and transaction costs. These costs declined because of the advent of IT and the steady rise oin labour productvity due to advances in technology and management methods.
(b) The increasing efficienty of capital markets, due to the incrasing accuracy ( and transparency ) of coroprate performance data.
The global GDP will double in the next 20 years , creating approximately $20-$40 trillion in new sales. If, through the productivity improvements the world can save 2% of the $25 trillion new produced, the market value of those savings willrun into the trillions. Incumbent firms have an unprecedented opportunity to take advantage of these times.
The one hundred or so sompanies in the current S&P 500 that surviveinto the 2020 s will be unlike the corporate sruvivors today. They will have to be masters of crative destruction,- built for discontinuity, remade a like the market.
" creative destruction " by Richard Foster
