Page 169 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

Shanghai in 1999 to develop closer ties with its manufacturers
and closely monitor product quality.
As a result, Uniqlo flourished. It increased its market share
from 7.3 percent to 23.3 percent between 1997 and 2000 and
became the market leader.

■ OFTHE CREATIVE FORCES OF ■
DESTRUCTION AND LEADERSHIP

“This process of Creative Destruction is the essential fact about
capitalism. It is what capitalism consists in and what every cap-
7
italist concern has got to live in.” So wrote Joseph Schumpeter.
For companies that have prospered during the Great Recession,
a well-earned sense of accomplishment and relief may be in order.
Executives have been forced to make tough decisions with wide-
ranging and long-term implications. Getting through the down-
turn was no easy task. Unfortunately, the path will not become
easier in the near future.
As Schumpeter pointed out more than a half century ago, the
process of creative destruction in a capitalist system never
ceases. Heightened exogenous stress—such as that caused by a
recession—may accelerate the process of destruction, but cre-
ative destruction will persist even in the absence of shocks.
This process of creative destruction has two implications for
companies today related to the current status of the damaged
economy. First, companies that have been weakened by the
recession or that have failed to adapt may yet succumb. Second,
even if a company survives the downturn in good shape, the
actions taken now will shape its pathway into the future.

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