he authors of "Creative Destruction," Richard Foster and Sarah Kaplan of McKinsey & Company, say companies that fail to keep pace with the capital markets' changing preferences will decline and die. They urge that companies constantly reassess their businesses as coldly as the markets do.

In the authors' view, top managers must systematically rethink the future and remain alert to possibilities. If they do not, even the strongest can fall to innovative upstart competitors. Following are excerpts from an interview conducted via e-mail with the authors.



Q. Anyone can slough a mediocre business. Are you advising companies to "destroy" their money makers?



A. No. We are advising those companies with a rich portfolio of options to "think like the market" and remove those businesses that the market would remove, say, from the S.& P. 500 list. A prerequisite is having an option to purchase another property, much like the S.& P. 500 adds another company.



Q. What concretely does it mean to "destroy" your business? What are Steps 1, 2, 3?



A. "Destroy" was the word Schumpeter [Joseph A. Schumpeter, an Austrian economist] used to describe businesses that disappeared through acquisition or bankruptcy. For most multibusiness-unit companies, it really means "trade" or "sell" the business. The mechanics of "trading" a business are well known, and not as important as the philosophy that there is a right time to sell all businesses and redeploy the funds.



Q. Given the wreckage of the Internet economy, what happened to the attacker's advantage?



A. The attacker's advantage is alive and well. Our rule of thumb is that 1 out of 20 attackers is ultimately successful. Despite the attackers' casualties, the attack itself is successful, as seen by the defenders who lose market share and economic power. The Internet carnage is just the most recent example.



Q. Is this the moment to be destroying something? Aren't the markets taking care of that?



A. The markets are doing a rather nice job of "destroying" those companies without plans robust enough to make it through the current storm. That said, those companies that do nothing but "hunker down" will lose out to companies now looking for options to purchase key skills, intellectual capital or market access at low prices. Strong competitors are gathering even more strength for the next expansion.



Q. Is top-tier performance always the right goal?



A. Meeting the test of top-tier performance is very tough, if the measure is total return to shareholders. To pass the test continually, companies have to be able to continuously change at least at the pace and scale of the relevant industry. Attempts to reach the goal may actually increase the corporation's risk. Moreover, some companies may feel that the ultimate measure is the environment they create for their employees, their role in society — for example, health care products — or their community.



Q. Shouldn't the market just do its work? Let the corporations that cannot keep the pace die? Others will replace them, and the economy will work just fine?



A. The investor argument — "You just manage operations, and leave the capital allocation to us" — is not one that many C.E.O.'s will accept. Often C.E.O.'s believe they have a stewardship responsibility to employees, and indeed to other stakeholders including customers and communities. The strongest way to discharge this responsibility is to learn to manage by the discipline of discontinuity, that is, by creating, operating and, ultimately, trading assets when the time is right.