P2JW35502C-0-R00400-2--------XA 12/21/2009 EE,MW,NY,SW,WE

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R4 Monday, December 21, 2009 THE WALL STREET JOURNAL.

BUSINESS

Creativity, Meet Destruction

The Decade Rewrote the Corporate Handbook, Thanks to the Web, Globalization and the Collapse of Two Bubbles
By Scott Thurm and iTunes reshaped the music Both small retailers and in- by China’s Cnooc Ltd. to buy Uno-
industry; its iPhone revolution- dustrial behemoths such as Gen- cal Corp., and by a Dubai com-
To understand the challenges ized communications by open- eral Electric Co. now view their pany to manage U.S. ports. A
that faced businesses the past 10 ing itself to independent innova- suppliers, their markets and sweeping effort to lower global
years, consider the household tors. their rivals globally. GE in 2007 trade barriers—known as the
names that didn’t make it “This is what [Austrian econ- for the first time recorded more Doha round of talks—has stalled.
through the decade: Anheuser- omist Joseph] Schumpeter had revenue from outside the U.S. Resistance grew as the econ-
Busch, Compaq, Gillette, Enron, in mind with his term ‘creative than inside, joining consumer omy soured. The U.S. economic-
Lehman Brothers, Merrill Lynch, destruction,’ ” says Paul David, brands such as Coca-Cola Co. stimulus package included sev-
WorldCom. an economic historian at Stan- and Procter & Gamble Co. eral “Buy American” provi-
Companies always fail or get ford University. Industrial col- Other U.S. mainstays suc- sions; numerous countries re-
acquired. But the past decade lapse is a “messy, messy pro- cumbed to international rivals, stricted immigration and sent
was unusually tumultuous: Two cess,” Mr. David says. “It’s a most notably in the auto indus- once-welcome foreigners pack-
investment bubbles grew, then great drama, and watching it try. In 2008, Japan’s Toyota Mo- ing. The World Trade Organiza-
burst, each followed by a reces- play out in this decade has been tor Corp. knocked General Mo- tion projects global trade will
sion. The Internet matured into very interesting.” tors Corp. from its 77-year reign fall 9% this year, the biggest
a crucial cog of commerce and The pace of business acceler- as the world’s leading auto drop since World War II.
Getty Images

spawned innovative upstarts ated as well, with whipsaw maker by units sold. This year, Strengthened national
while ravaging one traditional in- changes in strategic fashion. Ten there will be more cars sold in boundaries mirrored the grow-
dustry after another. Global play- years ago, business stalwarts China than in the U.S. ing role of government in the
ers from emerging economies A Lehman employee carries a box while another walks with him out of the raced to develop dot-com strate- The financial crisis and reces- economy, in the wake of the fi-
muscled their way into busi- New York headquarters on Sept. 15, 2008, after rescue attempts failed. gies, until the dot-coms them- sion forced GM into a govern- nancial crisis. For three de-
ness’s top ranks. Wall Street was selves went bust. From the rub- ment-supervised bankruptcy cades, government had been in
remade almost overnight by the change the world. It did—but scandal. ble emerged a credit bubble, sym- and aid package. Among the pro- retreat, disassembling regula-
financial crisis. And govern- not always in the ways expected. As the decade rolled on, the bolized by the private-equity spective buyers for its parts are tory structures perceived as sti-
ments reversed a decades-long On the decade’s 11th day, Internet came to be known for de- shops that took companies such several Chinese companies. fling innovation and growth.
retreat to lay a more forceful Time Warner Inc. and America stroying businesses. It upended as Chrysler and utility TXU U.S. companies that had But the financial crisis and reces-
hand on the global economy. Online Inc., two icons in their in- decades-old business models in Corp. private, loaded with debt. viewed emerging countries as sion often made the govern-
Companies found themselves dustries, said they would merge, fields such as media, advertis- When funding evaporated dur- markets now “also have to look at ment the lender, and investor, of
in a wired, instantaneous, hyper- in a deal then valued at $156 bil- ing, travel and entertainment, as ing the credit crisis, cash be- them as competitors,” says Ms. first and last resort. At decade’s
competitive and shrinking lion that was seen as the herald consumers and advertisers mi- came king and conservative Kanter, the Harvard professor. close, the U.S. government owns
world, where a single misstep of new era. But the marriage of grated to the digital world. stewardship was again re- Surging demand from emerg- about 60% of GM, 38% of Citi-
can be fatal and executives can old media and new media But that same shift created warded. ing economies contributed to an group Inc. and 80% of American
plunge from heroes to outcasts quickly foundered. The compa- opportunity. No one epitomized upward trend in commodity International Group Inc.
in weeks. nies, each substantially that better than Google Inc. A Sharing the Spotlight prices. Oil, selling for $25 a bar- In that light, Edward Whita-
“Both the exuberance and the shrunken, completed a divorce mere 15 months old at the begin- This was also the decade rel 10 years ago, topped $140 in cre Jr. may just be the executive
depression—the rise and the fall— this year. ning of the decade, it morphed when the U.S. saw its singular mid-2008, before retreating. of the decade. Ten years ago, Mr.
seem bigger and more wide- Other tech and telecom titans from a startup technology com- pre-eminence on the world busi- That propelled seven oil compa- Whitacre was smashing govern-
spread,” says Rosabeth Moss suffered even more. Lucent Tech- pany into an advertising and me- ness stage substantially lessen. nies into the ranks of the world’s ment barriers to reassemble
Kanter, a professor at Harvard nologies Inc., the world’s ninth- dia powerhouse and is now plot- Ten years ago, seven of the 25 most valuable companies, up much of the old AT&T Corp. To-
Business School. most-valuable company at the ting a move into communica- world’s 10 most valuable compa- from two a decade ago. day, he is effectively a govern-
decade’s start, was swallowed tions. There, it will clash with Ap- nies were based in the U.S. To- The march to an integrated ment servant, as chairman and
Rise and Collapse by France’s Alcatel SA in 2006. ple Inc., which was reborn follow- day, only four are; three are global economy has not been interim chief executive of GM.
The decade began amid eu- WorldCom Inc., also in the top ing the return of co-founder based in China, and one each in smooth. Post-9/11 political oppo- —Erin White contributed
phoria that the Internet would 25, collapsed in an accounting Steve Jobs in 1997. Apple’s iPod Brazil, Australia and the U.K. sition in the U.S. stymied plans to this article.

A.G. Lafley, Robert Bruner, William George,

Procter & Gamble Darden’s dean professor, ex-CEO
This decade was a real test for The biggest change over the The continuing trend that con-
leaders. It was extremely challeng- past decade has been the growing cerns me is the trend of short-ter-
ing in a number of ways: obvi- realization of sustainability and mism. The real wealth creators re-
ously, a severe financial crisis, a its impact on world growth into quire long-term investment, mar-
global recession arguably the the future. Concerns raised by the ket development and research. I
worst since 1981-1982, continued financial crisis, the sustainability am concerned that we feel contin-
Associated Press
Associated Press

fast change in globalization, in of energy consumption and trad- uous pressure for short-term re-
competition and in technology. ing imbalances between the U.S. sults when the real job is building
There were probably more and China—all of these are a very things for the long term, such as
Reuters

failed corporations in this decade different mood from that which energy and health care. We need
than any I can remember. I cannot prevailed in 1999. a refocus on building for the long
think of a decade when there was more creative destruction. You have If you are a business executive today, you have to anticipate these term. That’s how the economy gets built, that’s how jobs get created,
to go back to the Depression. In a decade like that, the leaders that destabilizing influences; the increasingly greater rates of technological and that’s where the strength of the U.S. comes from.
made a difference stood out and delivered. innovation and globalization. We need to recognize we are operating in a global labor market.
A simple way to look at the last decade is that we had change accel- Back in 1999, growing international trade was an opportunity, and no The competitive niche we have is in our strength in innovation and
erating, we had change across more fronts, and we had change that one yet thought of it as a challenge and threat in the U.S. The world back high-tech manufacturing. I still think the U.S. is clearly a leader in inno-
was more unpredictable and more volatile. One of the keys to success then seemed pretty stable by comparison; that stability was able to sus- vation, creativity and entrepreneurship. That is what the focus needs
has been the ability to lead change and the ability to lead and manage in tain greater confidence about the future of business and greater trade. to be.
a world that is moving faster and is way more unpredictable. —Mr. Bruner is dean of the Darden School of Business —Mr. George, a professor at Harvard Business School,
—Mr. Lafley is chairman and former CEO, Procter & Gamble Co. at the University of Virginia. was CEO of Medtronic Inc.

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OF THE TOP 25
WHO’S IN CHARGE? COMPANIES REMOVED
FROM THE S&P 500 THIS DECADE:
’99 ’09 ’99 ’09 ’99 ’09
Anheuser-Busch Companies ● AT&T Corp. (New) ● Bear Stearns Cos. ● Seagram Steve Jobs
Carly Fiorina Co. ● Alcan Inc. ● BellSouth Corp. ● Circuit City ● Countrywide Financial Corp. ●
COMPAQ Computer ● Dow Jones & Co. ● Enron Corp. ● Global Crossing ● Lehman CEO of Apple Inc.
CEO of Hewlett- Packard Co.
= CEO is = CEO is = CEO Redefined the music,
less than 55 not American. is male. Brothers ● Lucent Technologies ● Merrill Lynch ● Maytag ● Nortel Networks ●
Became the first woman to computer and
lead a Fortune 20 company. years old. Bank One ● Reebok International ● Adolph Coors Company ● Rohm & Haas Co. ● mobile-phone
(HP is not one of the world’s Schering-Plough Corp. ● Times Mirror ● Tribune Co. ● Unocal Corp. ● Wachovia industries with
top 25 companies). Corp. ● WorldCom Inc. - WorldCom ● Wyeth innovation and design.

Sources: Capital IQ; Standard & Poor's; company filings; WSJ Research Andrew Garcia Phillips and Carolyn Cui /The Wall Street Journal

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