“Corporations are built on the assumption of continuity; hence their focus is on operations. Capital markets are built on the assumption of discontinuity; their focus is on creation and destruction. This is the central contradiction of the life of a corporation: It cannot succeed without excellent operations, but it will fail if it focuses primarily on operations. Corporations are afflicted with the survivor’s curse: Most are unable to earn above-average or even average shareholder returns over the long term. Their control processes – the very processes that help them survive for the long haul – deaden them to the need for change. Mr. Welch’s mastery of creative destruction was rooted in his ability to decentralize operating responsibilities and make creative destruction the responsibility of senior management. This is a very difficult balancing act.”
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