The Role of Enterprise Logic in the Failure of Organizations to Learn and Transform

Abstract

Profound change in the global business environment is foregrounding the need for new competitive strategies in organizations. The realization that success in the era of knowledge capitalism depends upon the creative productivity of knowledge workers is focusing attention on the forms of intangible capital that underpin creativity, learning and innovation as sources of competitive advantage. In this article we argue that many organizations are failing to execute mission-critical change because their leaders fail to comprehend how such change is inhibited by the `enterprise logic' of the organization. Through the case of an Australian financial services company, we show that embedded within the functional hierarchical structure of most large organizations is the strategic intention of managerial control, and we argue for the envisioning and development of a form of enterprise logic that is predicated on new structural forms that encompass the principles of co-ownership and lateral power relations.