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Creative Destruction Won't Destroy Capitalism -- Richard Foster

Capitalism isn't dead, but it will be different, says Richard Foster, a former McKinsey senior partner and director who co-authored "Creative Destruction: Why Companies That Are Built to Last Underperform the Market -- And How to Transform Them." What won't change: entrepreneurs will figure out how to get around whatever regulatory structures get put in place, and gin up fast-growing, successful companies. He says that's what has always happened:

in the '70s, companies such as The Limited, The Gap, Home Depot, and John Malone's TeleCommunications Inc. sprung from the burned forest. After the crash of 1987, Microsoft, Oracle, and Amgen took off. Then in the '90s, we had the Internet companies. Creation will happen again and will again leave behind the big guys trying to rely solely on operations.
Foster says succinctly that this will be time to focus on business basics.
In the 1970s, we had the "Nifty 50"--invulnerable companies that couldn't possibly lose, and of course they all did. It will be the same today; there will be surprising losers, and survival will come down to simple things, like cash and margins.
Though Joseph Schumpeter thought creative destruction would eventually kill capitalism, Foster doesn't think it's happening now.
Equity was a very clever invention, and we are not going to give it up. This is the way people are. This is the way commerce works and will continue to work unless capitalism ends. And that won't happen, regardless of what you read in the press.
The interview is Creative destruction and the financial crisis (registration required) in the December issue of the McKinsey Quarterly.
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