The first Standard and Poor's index of 90 major US companies was created in the 1920s. The companies on that original list stayed there for an average of 65 years. By 1998, the average anticipated tenure of a company on the expanded S&P 500 was 10 years. If history is a guide, over the next quarter century no more than a third of today's major corporations will survive in an economically important way.

So conclude Richard Foster and Sarah Kaplan in Creative Destruction: Why Companies That Are Built to Last Underperform the Market—and How to Successfully Transform Them.¹ Foster, a McKinsey director, and Kaplan, who worked at the Firm for many years as an expert on innovation, argue that an accelerating pace of change has ended an era of corporate development that lasted more than seven decades. Foster and Kaplan, using their research on the performance of more than 1,000 corporations in 15 industries over a 36-year period, show that the corporate equivalent of El Dorado—the golden company that continually outperforms the markets—has never existed. Managing for survival, even among the best and most revered corporations, doesn't guarantee long-term performance for shareholders.

In fact, the opposite is...