Building the entrepreneurial corporation: New organizational processes, new managerial tasks

Large, diversified companies which flourised in the early decades following the Second World War are in deep trouble. The organizational structure of this period which provided the elixir -- the multidivisional enterprise -- has proved incapable of meeting the changed world environment and the new demands of the 1990s. In a word, these companies have become fossilized and unable to adapt to the slower growth, instability and capital plenty that characterizes the present day. Even harsh cost-reduction programs have only given short-term relief. Sumantra Ghoshal and Christopher Bartlett point to the example of a few successful companies like GE, ABB and Toyota, that have broken the mold and, as well, rejected the principles of the multidivisional doctrine. The companies employ an emerging management model which the authors argue is not a new organizational structure, but a new set of key management processes, as well as new rôles and tasks of managers at different levels needed to carry out these processes. The core processes are: entrepreneurial (encouraging initiatives); integrative (linking and leveraging competence); and renewal (managing rationalization and revitalization). Each process needs a new management mindset to carry it out. Ghoshal and Bartlett's original contribution is to set these core processes and their management in a broadly-based and integrated theory which can be applied in practice. The essential task is to build up these new management rôles.