Ambidextrous organization

From Wikipedia, the free encyclopediaOrganizational ambidexterityrefers to an organizations ability to be efficient in itsmanagementof todays business and also adaptable for coping with tomorrows changing demand. Just as beingambidextrousmeans being able to use both the left and right hand equally, organizational ambidexterity requires the organizations to use bothexplorationandexploitationtechniques to be successful.Origin and Development[edit]Organizational ambidexterity was defined as an organizations ability to be aligned and efficient in its management of todays business demands as well as beingadaptiveto changes in the environment at the same time.[1]This term of organizational ambidexterity was first used by Duncan,[1]however, it wasMarch[2]that had been credited for developing and generating greater interest in this concept, especially in the late 20th and early 21st century.Ambidexterityin an organization is achieved by balancingexplorationandexploitation, which allows the organization to becreativeandadaptable, while also continuing to rely on more traditional, proven methods of business.[2]Explorationincludes things such as search, variation,risk taking,experimentation,flexibility, discovery orinnovation, whereas exploitation includes such things as refinement, choice,production,efficiency,selection,implementation, andexecution.[2]Companies that focus only on exploration face the risk of wasting resources on ideas that may not prove useful or never be developed. On the other hand, companies that focus only on exploitation may acceptstatus quoperformance and products and fail to reach optimal levels of success.Organizational ambidexterity is defined broadly, and several other terms are also highly related or similar to the construct of ambidextrous organization, includingorganizational learning, technological innovation, organizationaladaptation,strategic management, andorganizational design. Things such as reconciling exploitation and exploration, thesimultaneityof induced and autonomous strategy processes, synchronizing incremental and discontinuous innovation, and balancing search and stability also tend to refer to the same underlying construct as ambidextrous organization.[3]Whereas earlier studies regarded the trade-offs between exploration and exploitation to be insurmountable, more recent research has paid attention to a range of organizational solutions to engender the existence of ambidexterity. One recent hot research topic in this area focused on theleadershipcharacteristics that enable organizations to manage the contradictions that they face and achieve ambidexterity,[4][5][6]which is the origin of the concept ambidextrous leadership. Several antecedents, outcomes of organizational ambidexterity as well as related moderators have also been identified in the existing literature. These topics are introduced in later sections.Two Models[edit]Organizational ambidexterity can be considered primarily from two angles. One is architectural or structural ambidexterity, which uses dualorganizational structuresand strategies to differentiate efforts towards exploitation and exploration.[7][8][9]Structuralambidexterity includes dual parts, with one part focusing on exploitation and the other focusing on exploration. Its also known as the spatial separation of the dual strategies concepts outlined above. The other approach is contextual ambidexterity, which usesbehavioralandsocialmeans to integrate exploitation and exploration at the organizational unit level.[10][11]Contextual ambidexterity is a balanced type that takes a mid-level position between exploitation and exploration, also known as parallel structures or hybrid strategies.Although both angles are related to the theme of organizational ambidexterity, they strongly differ in the way how they are configured. There has always been a debate of which of the two different approaches is right. The balanced type (i.e. contextual ambidexterity) is consistent with the systems approach of fit across multiple dimensions,[12][13]but contradicts the opinion that organizational choice is discrete.[14][15]On the other hand, the dual type allows both discrete orientations and fit across dimensions at the unit level but creates a misfit between organizational units. Some researchers argued that inconsistent structures may lead to low performance.[16][17]There are also some researchers trying to investigate the external and internalcontingenciesunder which different configurations can be found. One factor would be the speed and type oftechnological changethat organizations confront. In an environment where changes are slow, there will be sufficient time to react to the radical changes by constructing dual structures and strategies. However, in a high-competitive environment, balanced structures may be better prepared to deal with the constant need for alignment.[3]In future studies, the different organizational ambidexterity configurations can be compared to find a better solution for dealing with the exploitation and exploration paradox.Antecedents[edit]Ambidexterity is often considered a capacity or skill and can therefore be facilitated by either the organization as a whole or managers /CEOs.[18]From the structural ambidexteritys view, organizations can solve the paradox by temporarily cycling through periods ofexploitationand periods ofexploration.[15][19][20][21]From the other point of view (contextual ambidexterity), firms ought to address exploitation and exploration simultaneously and internally to achieve the goal ambidexterity.[9][10]Contextual ambidexterity is more difficult to achieve than structural ambidexterity because managing two inconsistent alignments within an organization simultaneously is far more complex than managing one consistent strategy after another.[22]Thus most studies on how to build ambidextrous organizations in literature focused on contextual ambidexterity rather than structural ambidexterity.The role ofleaders(or managers) is always highlighted towards building an ambidextrous organization. Several recommendations have been made to organizations on how to achieve contextual ambidexterity, including using of meta-routines andjob-enrichmentschemes,[7]buildingtrustwith supervisees,[7]being supportive,[7]using complex behavioral repertoires,[23][24]and the creation of a shared vision.[25]In addition, several characteristics oforganizational cultureare also emphasized on building an ambidextrous organization. Successful organizations should be able to balance the hard elements (disciplineand stretch) and the soft elements (supportandtrust) in their organizational contexts.[10]It was also suggested that establishing shared goals, developing acollective identity, creating a culture of support, and giving personal meaning to individuals contributions to the overall purpose of an organization all contributes to ambidexterity.[10]A decentralized structure[9]and a culture of excellence,recruitmentandtraining[25]are also important aspects of establishing an ambidextrous organization.Outcomes[edit]Ambidexterity is beneficial to organizations in many aspects. As it is the ability to keep a balance between explorative and exploitative processes, the most core outcome of ambidexterity is innovation because innovation needs both explorative and exploitative aspects.Innovationis defined as the sequence of activities by which a new element is introduced into asocial unit, with the intention of benefiting the unit, some part of it, or the wider society (West & Farr, 1990). The new element need not be entirely novel or unfamiliar to members of the unit, but it must involve some discernible change or challenge to thestatus quo(West & Farr, 1990). Most theoretical models of innovation differentiate at least two processes: idea generation and ideaimplementation(e.g., Amabile, 1988; West, 2002). The generation phase is closely linked to explorative activities while the implementation phase is highly linked to exploitative activities. An ambidextrous organization is able to pursue innovation (creating new products/services) while also maintaining itself through the continued use of proven techniques/products.[2]In addition, ambidexterity can promote some other positive organizational outcomes besides innovation. It has been proved in literature that the interaction between explorative and exploitative innovation strategies (in other words, ambidexterity) is positively related to salesgrowth rate, and imbalance between explorative and exploitative innovation strategies is negatively related to sales growth rate (He & Wong, 2004). Various organizations have been able to overcome organizational challenges and become more innovative because of ambidexterity. A study looking at 41 businesses found that ambidexterity was highly correlated withperformance.[10]Similarly, another study of 34 high-tech organizations showed that their ability to simultaneously execute exploration and exploitation was associated with higher performance (Chandrasekaran et al. 2012).Companies such asApple,General Radio,NordstromandBritish Airwayshave all had continued success throughout the years because of their capacity for ambidexterity. From 1981 to 1986,British Airwaysexperienced increased profits and customer satisfaction. The top executives ofBritish Airwayscredited the formation of a more ambidextrouscultureandleadershipwith the companys improved performance.[9]Related Moderators[edit]Moderators exist in the relationship between organizational ambidexterity and organizational outcomes. Environmentaldynamismandcompetitivenessmoderate the relationship betweenexploitation/explorationandperformance(Levinthal & March, 1993; Lewin, Long & Carroll, 1999). Empirical studies also showed that pursuing exploratory innovation is more effective in dynamic environments, whereas pursuing exploitative innovation is more beneficial to a units financial performance in more competitive environments (Jansen, van den Bosch, &Volberda, 2006). Although they were not directly testing an ambidextrous orientation, results indicated a positive performance effect of simultaneously pursuing exploitative and exploratory innovation under high dynamic and competitive environments. The effects ofexploitative,explorativeand balanced corporate alignment activities on performance were compared under varying environmental conditions (Raisch & Hotz, 2008). The construct of environmental munificence was developed to reflect an organizations opportunities and dynamism (Zahra, 1993). They found that, although exploration was positively related to performance under high environmental munificence, a balanced orientation failed to significantly affect performance in times of low environmental munificence (Raisch & Hotz, 2008).Market orientationwas also proved to moderate the relationship betweenexploitation/explorationand performance.Market orientationwas defined as the capability to generate, disseminate, and respond to intelligence pertaining to current and future customers (Kohli & Jaworski, 1990). A longitudinal study by Kyriakopoulos and Moorman (2004) showed that market orientation positively moderates the impact of pursuing high levels of exploitative and exploratory marketing strategies on new product performance; however, firms that pursue an ambidextrous orientation without strong market orientation display a significant reduction in new product financial performance.Another factor that may moderate ambidexteritys effect on performance is firmresources(Kyriakopoulos & Moorman, 2004).[21]Firms with rich resources have the ability to exploit and explore simultaneously, whereas firms with less resources may not be able to afford such a complex strategy. Similarly, Lubatkin et al.[5]stated that small firms lack the amount of slack resources and the kind ofhierarchicaladministration systems that can help or impede larger firms in managing their contradictory knowledge processes and, thus, affect the attainment of ambidexterity (p.647). This idea was supported by empirical evidence that small firms may benefit more from a one-sided orientation than from mixed strategies (Ebben & Johnson, 2005).Boundary conditions were also addressed on choosing betweenstructuraland contextual ambidexterity. For example, spatial separation was suggested as an appropriate solution for environments characterized by long periods of stability, disrupted by rare events of discontinuous change.[9]Research also found that firms operating in dynamic competitive environments rely on contextual ambidexterity rather than developing spatially separated units (Jansen, van den Bosch, &Volberda, 2005).Levels of Ambidexterity[edit]The functional definition of ambidexterity was originally used to describe organizations, but recently this concept was extended to multiple organizational levels, includingindividuals,teams, andleaders. On the most general level, the concept of ambidexterity implies successfully managing thedichotomyof explorative variability creation and exploitative variability reduction.Whenever there are needs to be both explorative and exploitive,conflictoccurs (Bledow, Frese, Anderson, Erez, & Farr, 2009). Thats when ambidexterity is necessary. Actually, regulating the conflicting demands of innovation is not only a challenge for the upper echelon of an organization but also a phenomenon that spans all levels of an organization. Employees as individuals, collectives of employees such as work teams, and the organization as a whole all have to find strategies to deal with conflicting demands in order to succeed in innovation and adaption to changing markets. Some examples of strategies and tactics that could be implemented at all three levels of analysis were also listed out (Bledow et al., 2009). These examples are presented in Table 1, including a separation strategy (in the Separation column) or an integration strategy (in the last two columns).Ambidextrous Leadership[edit]Recently the focus on organizational ambidexterity has become more concentrated on how leaders act ambidextrously to achieve organizational ambidexterity. Senior managers may be the key for facilitating the context and social base for ambidexterity. Noting that ambidextrous organizations require significant amounts of mobilization, coordination, and integration activities to maintain both exploitation and exploration, informal and social integration of the senior team as well as the cross-functional interfaces of the formal organization contribute to the success of organizational ambidexterity significantly (Jansen, Tempelaar, van den Bosch, &Volberda, 2009). A recent model of ambidexterity and leadership suggests thatCEOsand top management teams (TMT) play an integral role in establishing ambidexterity in small-to-medium sized organizations (Cao, Simsek, & Zhang, 2010). The model suggests TMTs are where processes such as information sharing and knowledge processing, which influence ambidexterity, are likely to occur. Furthermore, it is the CEO who has the ability to access the most valuable and diverse information needed to avoid separation of explorative and exploitative behaviors. The greater the interface between TMTs and CEOs in small-to-medium sized organizations, the greater the amount of ambidexterity.The concept of ambidexterity was first formally introduced into the leadership area by the Rosing, Frese and Bausch (2011) paper, holding the idea that leaders should be able to lead their team to match the complexity and the pace of innovation (Ancona, Goodman, Lawrence, & Tushman, 2001). Ambidextrous leadership was defined as the leaders ability to foster both explorative and exploitative behaviors in followers by increasing or reducing variance in their behavior and flexibly switching between those behaviors (Rosing et al., 2011).The construct of ambidextrous leadership has also been linked to the combination ofleadership styles(Jansen et al., 2009). Leaders who are transformational encourage out of the box thinking, information sharing and question assumptions.Transformational leaderspromote exploration and innovative thinking.Transactional leadersfocus on making incremental improvements and making the best use of existing process. The transactional leadership style promotes exploitative behaviors. An ambidextrous leader is able to switch back and forth between transformation/exploration and transaction/exploitation as needed, in other words, being able to switch between different leadership styles at the appropriate time, in order to foster innovation and then implement plans. Ambidextrous leadership consists of three elements (1) opening leader behaviors to foster exploration, (2) closing leader behaviors to foster exploitation, (3) and the temporal flexibility to switch between both as the situation requires (Rosing et al., 2011). Opening leadership behaviors include: allowing for multiple ways to accomplish a task, experimentation and errors, whereas closing behaviors include; monitoring routines, sticking to plans and minimizing errors. The Rosing et al. (2011)s model of leadership and innovation was shown in Figure 1.Controversy and Future Directions[edit]Some scholars as well as practitioners have argued that established companies simply lack the flexibility to explore new territories.[24]One contributing reason could be the so-calledsuccess trap(i.e. the focus on their, historically successful, current business activities) (Walrave, Van Oorschot, & Romme, 2011). A possible solution for big companies is to adopt a venture capital model - funding exploratory expeditions but otherwise not interfering too much with their operations. Another suggestion is for the use ofcross-functional teamsto achieve breakthrough innovations. Still others have suggested that a company may be able to alternate between different organizational models, focusing onexploitationandexplorationat different time periods. For example, in a study of biotechnology firms it is shown how an organization'smanagement control systemcan be adjusted periodically to achieve this changing focus on exploitation and exploration.[11]Researchers also debate ifambidexteritycan be attained becauseexplorationandexploitationtend to emerge from contradictory information and knowledge inputs and because success due toexploration/exploitationtends to be self-reinforcing leading to the use of the same methods in the future.[2][26]An empirical study ofambidexterityin organizations (He & Wong, 2004) further cautions that very low levels of bothexplorationandexploitationare not sufficient to contribute to superior firm performance.Ambidexterity can also be hampered by employee desire to receiveorganizational rewards. If organizations base their evaluation andreward systemson the completion of routine tasks, employees will be more likely to conform to standardized procedures.[7]To avoid hindering ambidexterity, organizations should be sure to reward innovative thinking as well as completion of routine tasks.Despite the controversy surrounding the possibility of organizational ambidexterity, it is likely to continue to be a highly researched concept in the future. Future research is likely to focus on the role of ambidextrous leaders, ambidextrous teams and thesocial contextof organizational ambidexterity. (Rosing et al., 2011).See also[edit] Ambidexterity Communities of innovation Contingency Theory Exploitation Exploration Innovation Knowledge management Leadership Organizational culture Organization design Organizational learning Organizational structure Success trap Tacit knowledge Technological change Transactional leadership Transformational leadershipReferences[edit]1. ^Jump up to:abDuncan, R. (1976).The ambidextrous organization: Designing dual structures for innovation. Killman, R. H., L. R. Pondy, and D. Sleven (eds.) The Management of Organization. New York: North Holland. 167-188.2. ^Jump up to:abcdeMarch, J. G. (1991). Exploration and exploitation in organizational learning.Organization Science, 2, 71-87.3. ^Jump up to:abRaisch, S., & Birkinshaw, J. (2008). Organizational ambidexterity: Antecedents, outcomes, and moderators.Journal of Management, 34, 375-409.4. Jump up^Beckman, C. M. (2006). The influence of founding team company affiliations on firm behavior.Academy of Management Journal, 49, 741-758.5. ^Jump up to:abLubatkin, M. H., Simsek, Z., Ling, Y., & Veiga, J. F. (2006). Ambidexterity and performance in small- to medium-sized firms: The pivotal role of top management team behavioral integration.Journal of Management, 32, 646-672.6. Jump up^Smith, W. K., &Tushman, M. L.(2005). Managing strategic contradictions: A top management model for managing innovation streams.Organization Science, 16, 522-536.7. ^Jump up to:abcdeAdler, P., Goldoftas, B., & Levine, D. (1999). Flexibility versus efficiency? A case study of model changeovers in the Toyota production system.Organization Science, 10, 43-68.8. Jump up^McDonough, E. F., & Leifer, R. (1983). Using simultaneous structures to cope with uncertainty.Academy of Management Journal, 26, 727-735.9. ^Jump up to:abcdeTushman, M. L., & OReilly, C. A. (1996). 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Temporarily divide to conquer: Centralized, decentralized, and reintegrated organizational approaches to exploration and adaptation.Organization Science, 14, 650-669.21. ^Jump up to:abVenkatraman, N., Lee, C. H., & Iyer, B. (2007).Strategic ambidexterity and sales growth: A longitudinal test in the software sector. Unpublished Manuscript.22. Jump up^Gupta, A. K., Smith, K. G., & Shalley, C. E. (2006). The interplay between exploration and exploitation.Academy of Management Journal, 4, 693-706.23. Jump up^Denison, D., Hooijberg, R., & Quinn, R. E. (1995). Paradox and performance: Toward a theory of behavioral complexity in managerial leadership.Organization Science, 6, 524-540.24. ^Jump up to:abLewis, M. W. (2000). Exploring paradox: Toward a more comprehensive guide.Academy of Management Review, 25, 760-776.25. ^Jump up to:abBartlett, C. A., & Ghoshal, S. (1989).Managing across borders: The transnational solution. Boston: Harvard Business School Press.26. Jump up^Floyd, S. W. & Lane, P. J. (2000). Strategizing throughout the Organization: Managing Role Conflict in Strategic Renewal.The Academy of Management Review, 25, 154-177.Further reading[edit] Amabile, T. M. (1988).A model of creativity and innovation in organizations. In B. M. Staw & L. L. Cummings (Eds.), Research in Organizational Behavior, Vol. 10 (pp.123167) Greenwich, CT: JAI Press Inc. Ancona, D. G., Goodman, P. S., Lawrence, B. S., &Tushman, M. L.(2001). Time: A new research lens.Academy of Management Review, 26, 645-663. Bledow, R., Frese, M., Anderson, N., Erez, M., & Farr, J. (2009). A dialectic perspective on inn ovation: conflicting demands, multiple pathways, and ambidexterity.Industrial and Organizational Psychology: Perspectives on Science and Practice, 2(3). Cao, Q., Simsek, Z., & Zhang, H. (2010). Modeling the joint impact of the CEO and the TMT on organizational ambidexterity.Journal of Management Studies, 47, 1272-1296. Chandrasekaran, A., Linderman, K., Schroeder, R., 2012. Antecedents to ambidexterity competency in high technology organizations. Journal of Operations Management 30, 134151 Ebben, J. J., & Johnson, A. C. (2005). Efficiency, flexibility, or both? Evidence linking strategy to performance in small firms.Strategic Management Journal, 26, 1249-1259. He, Z. & Wong, P. (2004). Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis.Organization Science, 15, 481-494. Jansen, J. J. P., Tempelaar, M. P., Van den Bosch, F. A., &Volberda, H. W.(2009). Structural differentiation and ambidexterity: The mediating role of integration mechanisms.Organization Science, 20, 797-811. Jansen, J. J. P., van den Bosch, F. A. J., &Volberda, H. W.(2005). Exploratory innovation, exploitative innovation, and ambidexterity: The impact of environmental and organizational antecedents.Schmalenbach Business Review, 57, 351-363. Jansen, J. J. P., van den Bosch, F. A. J., &Volberda, H. W.(2006). Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators.Management Science, 52, 1661-1674. Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: The construct, research propositions, and managerial implications.Journal of Marketing, 54, 1-18. Levinthal, D., & March, J. (1993). Myopia of learning.Strategic Management Journal, 14, 95-112. Lewin, A. Y., Long, C. P., & Carroll, T. N. (1999). The co-evolution of new organizational forms.Organization Science, 10, 535-550. McCarthy, I.P., & Gordon, B.R. (2011). Achieving Contextual Ambidexterity in R&D Organizations: A Management Control System Approach.R&D Management, 41, 240-258 Raisch, S., & Hotz, F. (2008). Shaping the Context for Learning: Corporate Alignment Initiatives, Environmental Munificence, and Firm Performance.Strategic reconfigurations: Building dynamic capabilities in rapid-innovation-based industries, 62-85. Rosing, K., Frese, M., Bausch, A. (2011).Explaining the heterogeneity of the leadership-innovation relationship: Ambidextrous leadership.The Leadership Quarterly, 22, 956-974. Walrave, B., Van Oorschot, K. E. & Romme, A. G. L. (2011). Getting trapped in the suppression of exploration: A simulation model.Journal of Management Studies, 48, 1727-1751. West, M. A. (2002). Sparkling fountains or stagnant ponds: An integrative model of creativity and innovation implementation in work groups.Applied Psychology: An International Review, 51, 355-387. West, M. A., & Farr, J. L. (1990).Innovation and creativity at work: Psychological and organizational strategies. Chichester: John Wiley & Sons. Zahra, S. A. (1993). Environment, corporate entrepreneurship, and financial performance: A taxonomic approach.Journal of Business Venturing, 8, 319-340.