"Creative Destruction" and the growth of industrial manufacturing...

If you are the CEO of an industrial manufacturing firm, then you may have found the Republican caucuses to be mildly entertaining, though of scant relevance to such immediate needs as business tax reform. You can listen for only so long to a debate seemingly centered on which candidate is the most conservative.

But now comes this controversy over "Creative Destruction" and it gets your attention.

Turns out the concept of creative destruction has been around a long time, with origins in the writings of Karl Marx and Friedrich Engels in their 1848 work, The Communist Manifesto. But let's not get derailed by this fact. Much talk as to Mitt Romney's conservatism has centered on his approach to "creative destruction" while he was the leader of Bain Capital, the private equity endeavor he led early in his career. Regardless the popular debate about Romney's role, the root question here is this:

Is it the business of a business to employ successful people or to make money?

The answer must be both. It is not DESTRUCTIVE for a private equity firm to buy a company and to then let people within the company go, if that is the right CREATIVE approach to bringing greater value to the marketplace. To the extent Romney's Bain Capital did this while he was at the helm, there may be some debate, but this is not the important debate when it comes to an industrial manufacturing company's growth.

Organizational change is often necessary to improve value definition and value delivery, so as to build value recognition in the marketplace. In any organization, it is the people and not the product line card that make the company a success: Any failure of management to bring value to the marketplace is not the fault of the private equity group cleaning up after them.

The misfortune that befalls employees in these creative destruction scenarios is directly attributable to the people at the top. Ultimately, the success of any industrial manufacturer depends on value delivery: If your company is not generating value to your end customers, then it will not generate returns to your stakeholders.

And isn't this a more relevant definition of "destruction"?

jb
www.centrifuge-now.com