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The purpose of this paper is to present a data‐driven discussion about whether effective leadership and innovation are being stifled in a contemporary organizational environment of continuous change.

The elaboration and discussion are based on one component of comprehensive research that uses a qualitative and case study methodology involving interviews with 60 leaders and managers in three large organizations.

The key finding is that the accurate application of, and interaction between leadership and management releases the social capital, along with related identity and knowledge resources that helps address the tension between risk management and innovation.

The paper reports only on one component of the original study. The findings and implications reported here are regarded as tentative.

Based on the data and ensuing discussion, the implications for practice take the form of a schema of steps for managing the change culture of organizations.

By its very name and nature “innovation” requires thinking and acting outside the square. However innovation can only exist when leadership allows and fosters risk‐taking which has been well considered, actioned and managed by a knowledgeable and skilled workforce. The amount of ignorance which exists in the workplace is proportionate to the amount and type of risk management or regulatory solutions required to counter potential negativity associated with risk taking. Therefore the responsibility of any leadership desirous of change or innovation in an environment which is not overregulated must include as its priority, building and maintaining a knowledge‐culture that supports and allows risk taking. The original model presented provides a mechanism for the strategic handling of risk, innovation and change where management and leadership can co‐exist and knowledge and identity resources can be released in social capital transactions.

On April 2, 1987, IBM unveiled a series of long‐awaited new hardware and software products. The new computer line, dubbed the Personal Systems 30, 50, 60, and 80, seems destined to replace the XT and AT models that are the mainstay of the firm's current personal computer offerings. The numerous changes in hardware and software, while representing improvements on previous IBM technology, will require users purchasing additional computers to make difficult choices as to which of the two IBM architectures to adopt.