Can a company be an entrepreneur

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Case Study 3: Creative Destruction

Foster and Kaplan, drawing on research they’ve conducted at McKinsey & Company on more than 1,000 companies over 36 years show that even the best-run and most widely admired companies are unable to sustain market beating levels of performance for more than 10 to 15 years.  They write, “Corporations are built on the assumptions of continuity; their focus is on operations.  Capital markets are built on the assumption of discontinuity; their focus is on creation and destruction.”

They argue that corporations do not change or create value at the pace and scale of markets or entrepreneurs who drive markets.  The philosophy of continuity means that their governance, their control processes, and other aspects that have enabled them to survive over the long haul, deaden them to the vital and constant need for change.  Corporations, they argue, must learn to be as dynamic and responsive as the market itself if they are to sustain superior returns and thrive over the long term.  

1.) How can corporations be as dynamic and responsive as the market itself if they are not markets?

2.) Does the argument of the book make any sense?  How can corporations learn to be as dynamic as markets without experiencing creative destruction as well as creatively destroying?

3.) Can a company be an entrepreneur? Explain.

4.) What does the following mean?  Corporations are built on the assumption of continuity; their focus is on operations.  Capital markets are built on the assumption of discontinuity; their focus is on creation and destruction.

5.) Can any firm “sustains superior returns and thrive over the long term”? 

Reference no: EM13293179

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