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.
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
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, andorganizational 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[edit]
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[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 ofexploitation 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[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.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 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 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[edit]
Moderators exist in the relationship between organizational ambidexterity and
organizational
outcomes.
Environmental dynamism andcompetitiveness 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
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
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
ofhierarchical 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[edit]
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[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 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[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-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 andreward
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[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 leadership
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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.