Introduction to Management

Countdown to Extinction

The vast majority of species that have ever lived on Earth have gone extinct. This is the flip-side to the process of evolution: there are losers and they are trimmed from the gene pool. Similarly, most organizations that have ever existed no longer exist. Nearly all for-profit firms have been liquidated or gone bankrupt. Many non-profit firms run out of funding or are decommissioned. Most governments which have ever been created have been overturned.
In economics, the brutality of competition is called “creative destruction.” Natural selection produces firms that are more and more efficient at converting resources into the value of finished products. It also destroys organizations that are less efficient and distributes the resources that were once controlled by less efficient firms to more efficient firms.
Most organizations, no matter how strong, do not last forever. For example, the British East India Company was formed based on a Charter from the Queen of England. The company effectively ruled large parts of India, had a government-established monopoly on trading, and could wage war on behalf of the crown. Despite all these advantages, it was dissolved in 1874.
Modern managers expect a changing business environment. The dynamics of the economy will destroy many organizations. The organizations that do survive will often change dramatically and may have substantially different operations from those they had five years ago.
Countdown to Extinction537Countdown to Extinction