Table of contents
Exploitation – Exploration......................................................................................................................1
Building ambidexterity into an organization......................................................................................1
Exploration and Exploitation within and across organisations...........................................................4
Exploitation-Exploration tensions and organizational ambidexterity: Managing paradoxes and
innovation........................................................................................................................................10
Organizational ambidexterity: IBM and Emerging business opportunities......................................15
Corporate entrepreneurship................................................................................................................19
Improving firm performance through entrepreneurial actions: Acordia's corporate
entrepreneurship strategy...............................................................................................................19
A STORY OF BREAKTHROUGH VERSUS INCREMENTAL INNOVATION: CORPORATE
ENTREPRENEURSHIP IN THE GLOBAL PHARMACEUTICAL INDUSTRY...............................................21
Meeting the Challenge of Corporate Entrepreneurship...................................................................27
Corporate Entrepreneurship and the Pursuit of Competitive Advantage.........................................29
Exploitation – Exploration
Building ambidexterity into an organization
Adaptability vs. Alignment: The article highlights the challenge of striking a balance between
adaptability and alignment in organizational strategy.
Case Example: Ericsson: The case of Ericsson exemplifies the potential pitfalls of overemphasizing
adaptability. Despite its technological advancements, Ericsson faced organizational challenges,
leading to significant layoffs and restructuring.
Two Forms of Ambidexterity:
, Structural Ambidexterity: Traditional approach involves creating separate structures for
different activities, such as core business units and R&D departments. However, this can lead
to isolation and lack of acceptance for new ideas.
Contextual Ambidexterity: Proposes individual employees make choices between alignment-
oriented and adaptation-oriented activities in their day-to-day work. This approach provides
flexibility for employees to decide how to divide their time between different activities.
Challenges with Structural Ambidexterity:
Isolation and lack of acceptance for ideas in R&D and business development groups.
Top-down nature, relying on business-unit managers to allocate employees' time.
Contextual Ambidexterity:
Focuses on individual employees making choices based on the context of their work.
Requires a more flexible organizational structure, emphasizing the human side of the
organization.
Complementary Approaches: Contextual ambidexterity is presented as complementary to structural
ambidexterity. Successful companies like Hewlett-Packard, 3M, and Intel use a combination of both
approaches.
Conclusion: Achieving the right balance between adaptability and alignment is crucial for
organizational success. The contextual ambidexterity model emphasizes individual decision-making
within a flexible structure, offering a nuanced perspective on organizational ambidexterity.
Contextual Ambidexterity Behaviors:
1. Taking Initiative: Ambidextrous individuals go beyond their job roles, identifying and seizing
opportunities. Example: A sales manager develops a new software module based on a
client's needs.
2. Cooperative Nature: They actively seek collaboration with others. Example: A marketing
manager initiates a European marketing forum to foster collaboration among peers from
different countries.
3. Building Internal Linkages: Ambidextrous individuals act as brokers, creating internal
connections. Example: A plant manager facilitates a $10 million investment opportunity by
connecting regional managers.
4. Multitasking Ability: They comfortably handle multiple roles. Example: An operations
manager manages daily operations while concurrently developing an electronic module for a
coffee vending machine.
Attributes of Ambidextrous Individuals:
Acting beyond job confines for the organization's broader interest.
Acting spontaneously with motivation and information, without seeking superiors'
permission.
Engaging in actions aligned with the business's overall strategy.
Contextual Ambidexterity at Organizational Level:
Defined as the collective orientation of employees toward simultaneous alignment and
adaptability pursuit.
, Manifested in individual behaviors and unwritten routines within organizations.
Analogous to the concept of market orientation, contributing to long-term performance.
Ambidextrous Organizations Examples:
1. Renault: Transformed from a state-owned, struggling company to a profitable industry
leader. Balanced alignment and adaptability through consistent strategy and fostering a deep
desire to adapt.
2. Oracle Corp.: Leading enterprise software company with a focus on adaptability. Maintains
aggressive performance expectations but aligns around adaptability, allowing for quick shifts
in business strategies.
Building Contextual Ambidexterity:
Managers can shape organizational context through systems, incentives, and controls.
Four attributes (stretch, discipline, support, trust) define an organization's context, creating
dimensions of performance management and social support.
High-performance context is essential for achieving ambidexterity and superior performance.
Escaping Suboptimal Contexts:
Burnout Context: Overemphasis on performance management without social support can
lead to exhaustion and performance decline.
Country-Club Context: Excessive social support without high-performance expectations can
result in satisfactory but lackluster results.
Companies must engineer shifts in behaviors to escape suboptimal contexts and foster
ambidexterity.
Pathways to Ambidexterity:
1. No Single Pathway: Organizations can achieve ambidexterity by either building performance
context around existing social support or vice versa.
2. Leadership Models: No single leadership model exists; different styles, such as charismatic or
collegial, can foster ambidextrous organizations.
3. Clear and Simple Priorities: Consistent application of chosen focal elements is crucial for
ambidexterity success.
Conclusion: Executives seeking to build ambidextrous organizations can learn valuable lessons from
individual behaviors, organizational contexts, and successful examples, ultimately contributing to
long-term performance.
Diagnosing Organizational Context:
Organizations must evaluate their current state in terms of performance management, social
support, and the balance between the two.
A diagnostic tool involving responses from a diverse group within the organization provides a
quantitative analysis.
Supplementing quantitative analysis with qualitative discussions reinforces a reliable
understanding of necessary changes for high performance.
Focus on Levers and Consistency:
, No specific organizational levers consistently linked to success were found.
Higher-performing companies focus consistently on a few levers, such as Scotch's emphasis
on professional development, knowledge transfer, and a participative strategic-planning
process.
Consistency is crucial to enable individual-level ambidexterity, contributing to high
performance over time.
Building Understanding at All Levels:
The "erosion effect" indicates that lower-level employees rate organizational ambidextrous
characteristics lower than top-management counterparts.
Effective organizational context relies on clear and consistent communication at all levels.
Understanding top management initiatives is essential for impacting individuals' capacity for
ambidexterity.
Complementing Contextual and Structural Ambidexterity:
Contextual ambidexterity complements structural ambidexterity.
Structural separation can be essential but should be temporary, allowing new initiatives
space and resources before reintegration.
Contextual ambidexterity enhances both separation and reintegration processes.
Viewing Contextual Ambidexterity Initiatives:
Ambidexterity arises through the creation of a supportive context where individuals make
their choices.
Leadership is displayed by everyone in the organization, not just through formal structures or
charismatic leaders.
Ambidextrous leadership should emerge at all levels, driven by initiatives but allowing
leadership to be inherently ambidextrous.
Exploration and Exploitation within and across organisations
Introduction:
March (1991) distinguished between two organizational behavior gestalts: exploration and
exploitation.
Exploration involves search, experimentation, and variation, while exploitation enhances
productivity and efficiency through choice, execution, and variance reduction.
Both are vital for organizational learning but entail inherent contradictions.
Scholars initially focused on knowledge development versus refinement, but the framework
broadened to encompass specialization, experience, diversity, and experimentation.
Debates arose on fundamental assumptions: narrow versus broad application, coexistence,
complementarity or contradiction, continuum versus discrete choices, specialization versus
balance, and the impact on organizational performance.
Discussion Overview:
Origin and evolution of exploration and exploitation concepts are discussed.
Examination of their environmental, organizational, and managerial antecedents follows.
Trade-offs and tensions in balancing these activities are considered.
Modes of balance involve contextual ambidexterity, organizational, temporal, or domain
separation.
