Summary Readings 1ZM40 Topics 1 and 2
Content
Topic 1 – Exploitation - Exploration ........................................................................................................ 1
❖ Building Ambidexterity into an Organization – Birkinshaw & Gibson (1u) ............................. 1
❖ Organizational Ambidexterity: IBM and Emerging Business Opportunities – O’Reilly, Harreld,
Tushman (2u) .................................................................................................................................. 4
❖ Exploitation-Exploration Tensions and Organizational Ambidexterity: Managing Paradoxes
of Innovation – Andriopoulos & Lewis (1u20) .............................................................................. 10
❖ Exploration and Exploitation within and across Organizations – Lavie, Stettner, Tushman
(16.50) ........................................................................................................................................... 13
Topic 2 – Corporate Entrepreneurship ............................................................................................. 21
❖ Meeting the Challenge of Corporate Entrepreneurship – Garvin & Levesque ..................... 21
❖ Improving Firm Performance through Entrepreneurial Actions: Acordia’s Corporate
Entrepreneurship Strategy – Kuratko, Ireland & Hornsby ............................................................ 25
❖ Corporate Entrepreneurship and the Pursuit of Competitive Advantage – Covin & Miles .. 29
❖ A Story of Breakthrough Versus Incremental Innovation: Corporate Entrepreneurship in the
Global Pharmaceutical Industry – Dunlap-Hinkler, Kotabe & Mudambi ...................................... 33
Topic 1 – Exploitation - Exploration
❖ Building Ambidexterity into an Organization – Birkinshaw & Gibson (1u)
Adaptability: ability to move quickly toward new opportunities, to adjust to volatile markets and to
avoid complacency. Next to this, alignment is very important: a clear sense of how value is being
created in the short term and how activities should be coordinated and streamlined to deliver that
value.
Ambidexterity: includes adaptability and alignment. Right balance is difficult. Focus too much on
alignment -> short-term results look good, but changes in industry will blindside you sooner or later
(Lloyd). Too much attention on adaptability -> means building tomorrow’s business at the expense of
today’s (Ericsson). The higher the level of ambidexterity (Alignment x Adaptability), the higher the
business unit performance (straight line up). A supportive organizational context – characterized by a
combination of performance management and social support – is associated with a higher level of
ambidexterity. Ambidexterity mediates the relationship between organizational context and
performance -> influence of organizational context on performance only occurs through the creation
of ambidexterity.
Two Forms of Ambidexterity
• Structural ambidexterity
o Create separate structures for different types of activities.
o Necessary because the two sets of activities are so dramatically different that they
cannot effectively coexist.
o However, can also lead to isolation -> groups have failed to get their ideas accepted
because of their lack of linkages to the core businesses.
, • Contextual ambidexterity
o Calls for individual employees to make choices between alignment-oriented and
adaptation-oriented activities in the context of their day-to-day work.
o In business units that are either solely aligned or solely adaptive, employees have
clear mandates and are rewarded accordingly.
o In a BU that is ambidextrous, the systems and structures are more flexible, allowing
employees to use their own judgment as to how they divide their time between
adaptation-oriented and alignment-oriented activities.
The two forms are best viewed as complementary. Many successful companies use a combination of
both approaches to deliver simultaneously on the needs for alignment and adaptability.
Contextual Ambidexterity Four ambidextrous behaviors in individuals:
• Ambidextrous individuals take the initiative and are alert to opportunities beyond the confines
of their own jobs;
• Ambidextrous individuals are cooperative and seek out opportunities to combine their efforts
with others;
• Ambidextrous individuals are brokers, always looking to build internal linkages;
• Ambidextrous individuals are multitaskers who are comfortable wearing more than one hat.
These four attributes collectively describe an ambidextrous employee and have several important
commonalities:
• They constitute acting outside the narrow confines of one’s job and taking actions in the
broader interests of the organization;
• They describe individuals who are sufficiently motivated and informed to act spontaneously,
without seeking permission or support from their superiors;
• They encourage action that involves adaptation to new opportunities but is clearly aligned
with the overall strategy of the business.
An individual’s ability to exhibit ambidexterity is facilitated (or constrained) by the organizational
context in which he/she operates, so contextual ambidexterity can also be diagnosed and understood
as a higher-order organizational capability.
• Organizational level: contextual ambidexterity can be defined as the collective orientation of
the employees toward the simultaneous pursuit of alignment and adaptability. Unwritten
routines. Analogous to the concept of market orientation: collective orientation of people
throughout a business toward the gathering, interpretation and dissemination of market
, knowledge. Both are potentially important capabilities for contributing to long-term
performance.
o Example: Transformation of Renault by Schweitzer. Nissan became part of Renault as
well. A simple and consistent strategy was built around seven strategic goals.
Everything was aligned with this and the company developed a desire to adapt.
Building Contextual Ambidexterity
Context: often invisible set of stimuli and pressures that motivate people to act in a certain way.
Managers shape organizational context through the systems, incentives and controls they put in place,
and through the actions they take on a day-to-day basis. It is then reinforced through the behaviors
and attitudes of people throughout the organization.
Four sets of attributes interact to define an organization’s context:
• Stretch;
• Discipline;
• Support;
• Trust.
These attributes create two dimensions of organizational context:
• Performance management;
o Combination of stretch and discipline. Concerned with stimulating people to deliver
high-quality results and making them accountable for their actions.
• Social support;
o Combination of support and trust. Concerned with providing people with the security
and latitude they need to perform.
These are equally important and mutually reinforcing. Strong
presence of each will create a high-performance organizational
context that gives rise to a truly ambidextrous organization.
Burnout context: many people will perform well for a limited time,
but its depersonalized, individualistic and authority-driven ->
results in a high level of employee turnover making ambidexterity
difficult to achieve. Country-club context: employees benefit from
and enjoy a collegial environment but rarely produce up to their
potential. Low ambidexterity and produce satisfactory but
lackluster results. Low-performance organizational context:
employees are unlikely to be either aligned or adaptive, let alone
ambidextrous.
Creating a High-Performance Organizational Context
Performance management and social support factors do not
directly create high performance, they do shape the individual and
collective behaviors that over time enable ambidexterity which
leads to superior performance. Renault changed from country-club to high-performance context.
Commando-type organization: appraisal and evaluation interviews are run in a pyramidal form and
compensation is geared toward short-term objectives. Oracle on the cusp between the high-
performance and burnout contexts. Contrast between these two companies raises three critical
points:
• There is no single pathway to ambidexterity;
o Renault achieved it by building a performance context around its existing social
support. Oracle built a performance context first, then looked for ways of building
support and trust across the organization.
• There is no single leadership model for an ambidextrous organization;
, o Oracle: charismatic and directive. Renault: more collegial.
• Renault and Oracle both exhibit a clear and simple set of priorities.
o Oracle: goal setting, individual performance appraisal and risk management. Renault:
capital allocation, recruiting and vision.
The country-club context – in which there is a strong sense of support and trust, but no one works too
hard and mediocre performance is tolerated – can be as dysfunctional as the burnout context.
Government agencies, universities, and state-owned companies fall naturally into this category.
Although strategies are often initiated in a top-down fashion, each sought to create a high-
performance context in which ambidextrous behavior on the individual level would be encouraged
and rewarded.
Low-performance context: companies where there is not only little concern for performance, but also
no sense of trust or support among the employees. That is the worst, ambidexterity is impossible.
These companies must place an immediate priority on developing improved performance
management.
Five key lessons for building an ambidextrous organization:
• Diagnose your organizational context;
o Discover where your company currently stands in terms of performance
management, social support and this balance.
• Focus on a few levers, and employ them consistently;
o No evidence that specific organizational levers such as incentive compensation or risk
management, are consistently linked to success.
• Build understanding at all levels of the company;
o The lower a respondent was in the corporate hierarchy, the lower he/she rated the
organization’s ambidextrous characteristics: erosion effect. Varies with the
performance of the company. In higher-performing companies this difference was
lower.
• View contextual ambidexterity and structural ambidexterity as complements;
o Structural separation may at times be essential, but it should also be temporary, a
means to give a new initiative to space and resources to get started.
• View contextual ambidexterity initiatives as ‘driving leadership’ not as being ‘leadership-
driven’.
o Ambidexterity is achieved in large part through the creation of a supportive context
in which individuals make their own choices about how and where to focus their
energies. Leadership becomes a characteristic displayed by everyone in the
organization.
❖ Organizational Ambidexterity: IBM and Emerging Business Opportunities – O’Reilly,
Harreld, Tushman (2u)
Only a tiny fraction of organizations live to age 40 while they have all resources to continue to be
successful. Multi-level selection processes help organizations adapt in the face of technological and
market changes. Neither strength nor intelligence guarantees survival. Only adaptation can do that.
Organizational ecologists: argue that individual organizations are largely inert, like bacteria or birds,
and change occurs in the population as a whole as old forms are replaced by new ones that better fit
the changed context.