Entrepreneur’s Diary #83 – So What Exactly Is An Enterprise?

Up until now, I defined an enterprise as a social system. This is still true. But now I learned more. Or rather:
🙂 I am bold enough to believe I learned more.

Firstly, an enterprise consists of many people. Once, when I gave a presentation in a grammar school, one of the young students said it is a heap of humans. So we are talking an assembly of people. They develop a social life. You get common concepts and a feeling of belonging together.

The “heap of humans” is represented by a juristic person or corporate body, the enterprise and its “structural parts“– the managers and directors. It owns various kinds of things, such as office equipment, machines or buildings. But also patents and special knowledge. It develops a culture and “basic beliefs”, a value system, routines and rituals. Symbols are created and a “brand” is developed.

As opposed to other social systems, such as churches, associations or countries, an enterprise has an economic goal.
It might be – as it says in the Bavarian Constitution – to produce goods and provide services needed by humans at home (and abroad), thereby making a fair profit. But it might also happen that the only interest of an enterprise lies in making profit and it is totally irrelevant if what it produces is sensible or if it produces anything at all. Over the last few years, the latter case increased drastically, not only in the financial sector.

So this was how I used to define enterprises. During the last few years, however, I got more and more aware that something is missing in this definition.

It is the organization of an enterprise. Now that is indeed something hard to describe. Yet in many ways it plays a central role and has profound significance. Organization can work in all varieties of ways.

For instance, it might be democratic or non-democratic. Hierarchical or cooperative. Intensely regulated or chaotic. With a system of punishment or rewards. Creating fear or helping to develop life in various dimensions. There can be internal rivalry or the promotion of collaboration. The system might let people meet at eye-level, or else let them feel who is boss. The organization can influence the enterprise. It certainly has a huge impact on and relevance for the enterprise.

So now here are a few questions:

What exactly is an organization? Even if an enterprise has “no” organization at all, would that again be a form of organization?
Can you change an organization, and if: how??

Will an organization automatically evolve from the routines and rituals lived in an enterprise? Is an organization the sum of all the processes trained and realized in an enterprise?

What is the influence of the symbols an enterprise gave itself? What is the relationship between the culture and organization of an enterprise?

And the more I think and read about it, the more I realize what a complex thing even a small enterprise is. And how it is perhaps impossible to control the change that is always necessary “from the top”.

And how antiquated the understanding of management and leadership you get at universities still is. We are talking an understanding on which (mostly unsuccessful) enterprises are founded and which many enterprises still live on a huge scale.

All I conclude from this is that my firm intention to do a little better should be even stronger.

(Translated by EG)

For all articles of my entrepreneur’s diary, click here: Drehscheibe!

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