Toward a smarter enterprise

What is it about?

Purpose – This article develops a new synthesis on the emergence of knowledge-centric innovative enterprises that function in a dis-aggregated and dispersed form, and contemplate a paradigm shift in strategy and organization design based on the economic and managerial realities that seek reduction in both bureaucratic cost and transaction cost. A constant challenge to large organizations as well as those pursuing the intent to grow bigger is how to sustain the innovative dynamism. Design/methodology/approach – The authors review the evolution of disaggregated and dispersed enterprises and discuss the changing cost structures for transactions, integration and coordination in the global knowledge economy. They elaborate the benefits of scale reduction and dispersed operations with examples. Findings – Their review of the extant practices suggests that managers are finding value in disaggregating the firm operations. Disaggregation enhances the firm agility and responsiveness and helps the firm exploit the fleeting opportunities without incurring the opportunity cost or risking high investment.

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Why is it important?

Corporations need to become nimble, and their structure should be networked and permeable with significant industry actors. Integration would be imprudent if there is huge sunk cost due to uncertainty in business. Scale reduction and disaggregation, and operating in a dispersed mode – like a shoaling form – would help the companies exploit the fleeting opportunities without incurring the opportunity cost and risking high investment. Originality/value – In addition to reviewing the rise of disaggregated enterprises, we explore the economic and managerial rationale of the disaggregation strategy, and discuss the learning and innovation, investment and cost-related advantages that stem from the disaggregated form of organization.

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