Roger Ehrenberg has an interesting post about the newly crowned king of the auto world, Toyota. Ehrenberg evokes Schumpeter's creative destruction model to suggest that even a successful company like Toyota faces the danger of being made obsolescent by its competitors. In fact, maybe Toyota faces even greater danger than other companies, Ehrenberg suggests, because of its size and success. We forget that in the past, companies now viewed as dinosaurs (or at least stumbling giants) -- Montgomery Ward, Sears, Kmart -- were feared to be unstoppable juggernauts who would crush all competitors.
If a company's very success can be its undoing (a thesis advanced more recently in Clayton Christensen's The Innovator's Dilemma, among other places), then is there any hope of surviving creative destruction? Only by internalizing a creative destruction mindset, so that we continually view all of our activities, processes, systems, and products with the eyes of the hungry competitor, the demanding customer, and the unsentimental investor. Making onself obsolete, as Drucker noted, is far cheaper than waiting for the competition to do it.
So will Toyota be able to continually renew itself from within? That's the question its customers, owners, and employees are hoping it will get right. It certainly seems to focus rigorously on cultivating the creative destruction mindset within. We'll see if it's enough to overcome size and success.
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