Ambidextrous Organization - Wikipedia, The Free Encyclopedia

17/6/2014 Ambidextrous organization - Wikipedia, the free encyclopedia
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Ambidextrous organization
From Wikipedia, the free encyclopedia
Organizational ambidexterity refers to an organizations ability to be efficient in its management of todays
business and also adaptable for coping with tomorrows changing demand. Just as being ambidextrous means being
able to use both the left and right hand equally, organizational ambidexterity requires the organizations to use both
exploration and exploitation techniques to be successful.
Contents
1 Origin and Development
2 Two Models
3 Antecedents
4 Outcomes
5 Related Moderators
6 Levels of Ambidexterity
7 Ambidextrous Leadership
8 Controversy and Future Directions
9 See also
10 References
11 Further reading
Origin and Development
Organizational ambidexterity was defined as an organizations ability to be aligned and efficient in its management of
todays business demands as well as being adaptive to changes in the environment at the same time.
[1]
This term of
organizational ambidexterity was first used by Duncan,
[1]
however, it was March
[2]
that had been credited for
developing and generating greater interest in this concept, especially in the late 20th and early 21st century.
Ambidexterity in an organization is achieved by balancing exploration and exploitation, which allows the
organization to be creative and adaptable, while also continuing to rely on more traditional, proven methods of
business.
[2]
Exploration includes things such as search, variation, risk taking, experimentation, flexibility, discovery
or innovation, whereas exploitation includes such things as refinement, choice, production, efficiency, selection,
implementation, and execution.
[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 accept status quo performance 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, including organizational learning, technological innovation, organizational
adaptation, strategic management, and organizational design. Things such as reconciling exploitation and
exploration, the simultaneity of 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 the leadership characteristics 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
Organizational ambidexterity can be considered primarily from two angles. One is architectural or structural
ambidexterity, which uses dual organizational structures and strategies to differentiate efforts towards exploitation
and exploration.
[7][8][9]
Structural ambidexterity 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 uses behavioral and social means 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 internal contingencies under which different
configurations can be found. One factor would be the speed and type of technological change that 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
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 of exploitation and periods of exploration.
[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 of leaders (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 and job-enrichment schemes,
[7]
building trust with supervisees,
[7]
being supportive,
[7]
using complex
behavioral repertoires,
[23][24]
and the creation of a shared vision.
[25]
In addition, several characteristics of organizational culture are also emphasized on building an ambidextrous
organization. Successful organizations should be able to balance the hard elements (discipline and stretch) and the
soft elements (support and trust) in their organizational contexts.
[10]
It was also suggested that establishing shared
goals, developing a collective 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, recruitment and training
[25]
are also important aspects of establishing an
ambidextrous organization.
Outcomes
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. Innovation is defined as the sequence of activities by which a new
element is introduced into a social 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 the status quo (West & Farr, 1990). Most theoretical models of
innovation differentiate at least two processes: idea generation and idea implementation (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 sales growth 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 with performance.
[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 as Apple, General Radio, Nordstrom and British Airways have all had continued success
throughout the years because of their capacity for ambidexterity. From 1981 to 1986, British Airways experienced
increased profits and customer satisfaction. The top executives of British Airways credited the formation of a more
ambidextrous culture and leadership with the companys improved performance.
[9]
Related Moderators
Moderators exist in the relationship between organizational ambidexterity and organizational outcomes.
Environmental dynamism and competitiveness moderate the relationship between exploitation/ exploration and
performance (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 of exploitative, explorative and 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 orientation was also proved to moderate the relationship between exploitation/ exploration and
performance. Market orientation was 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 firm resources (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 of hierarchical administration 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 between structural and 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
The functional definition of ambidexterity was originally used to describe organizations, but recently this concept
was extended to multiple organizational levels, including individuals, teams, and leaders. On the most general level,
the concept of ambidexterity implies successfully managing the dichotomy of explorative variability creation and
exploitative variability reduction.
Whenever there are needs to be both explorative and exploitive, conflict occurs (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
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 that CEOs and 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 of leadership styles (Jansen et al.,
2009). Leaders who are transformational encourage out of the box thinking, information sharing and question
assumptions.Transformational leaders promote exploration and innovative thinking. Transactional leaders focus 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
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-called success 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 of cross-functional teams to achieve breakthrough
innovations. Still others have suggested that a company may be able to alternate between different organizational
models, focusing on exploitation and exploration at different time periods. For example, in a study of biotechnology
firms it is shown how an organization's management control system can be adjusted periodically to achieve this
changing focus on exploitation and exploration.
[11]
Researchers also debate if ambidexterity can be attained
because exploration and exploitation tend to emerge from contradictory information and knowledge inputs and
because success due to exploration/exploitation tends to be self-reinforcing leading to the use of the same methods
in the future.
[2][26]
An empirical study of ambidexterity in organizations (He & Wong, 2004) further cautions that
very low levels of both exploration and exploitation are not sufficient to contribute to superior firm performance.
Ambidexterity can also be hampered by employee desire to receive organizational rewards. If organizations base
their evaluation and reward systems on 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 the social context of organizational ambidexterity. (Rosing et al., 2011).
See also
References
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 leadership
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Amabile, T. M. (1988). A model of creativity and innovation in organizations. In B. M. Staw & L. L.
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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.
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.
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.
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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.
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