4 Exploration and Exploitation in Organizations Flashcards
What is organizational ambidexterity?
Organizational ambidexterity is a company’s ability to balance alignment (exploiting existing capabilities and delivering current value) and adaptability (exploring new opportunities and adjusting to change), ensuring long-term success.
What is the difference between structural ambidexterity and contextual ambidexterity?
Structural ambidexterity separates exploration and exploitation activities into distinct units or teams. Contextual ambidexterity, on the other hand, empowers individuals to simultaneously pursue both alignment and adaptability within their day-to-day roles, supported by the organization’s culture and systems.
Which two dimensions of organizational context enable contextual ambidexterity?
Contextual ambidexterity is enabled by a “high-performance context” comprising two dimensions: (1) Performance Management (stretch and discipline) and (2) Social Support (trust and support). Both must be strong and balanced to foster ambidextrous behaviors in employees.
What are the key behaviors of ambidextrous individuals in a high-performance organizational context?
Ambidextrous individuals are proactive and initiative-taking, cooperative, skilled at brokering connections across the organization, and comfortable multitasking—effectively balancing the demands of current performance while seeking new growth opportunities.
What is an ambidextrous organization and why is it important?
An ambidextrous organization is one that can exploit existing capabilities to maintain current success while also exploring disruptive innovations for future growth. This dual focus is essential for long-term adaptability, competitiveness, and avoiding strategic stagnation.
How do ambidextrous organizations structure their innovation efforts compared to traditional approaches?
Instead of fully integrating or completely separating new ventures, ambidextrous organizations set up structurally independent units with their own processes, cultures, and incentives, while maintaining tight senior-level integration. This allows freedom for innovation and synergy with the core business.
What role do senior executives play in an ambidextrous organization?
Senior leaders in ambidextrous organizations must be “ambidextrous” themselves—able to support both incremental improvements and radical innovations. They provide a clear, overarching vision, align incentives across units, and ensure that the separate innovation units are integrated at the top management level.
What are some key success factors for building an ambidextrous organization?
Key factors include:
- A compelling, unifying vision communicated by senior leadership.
- Structurally independent innovation units with distinct cultures and processes.
- Tight integration at the executive level, with aligned incentives and common goals.
- Leadership teams capable of managing trade-offs between current operational excellence and future breakthroughs.
Please mark as True or False the following statements about “Building Ambidexterity into an Organization” (Birkinshaw and Gibson, 2004)
Ambidextrous individuals are comfortable with having a dual role inside of an organization
Contextual ambidexterity does not require any executive management’s support to develop inside an organization
Contextual ambidexterity is not a replacement for structural ambidexterity
An ambidextrous individual is someone who goes against a company’s policy to take advantage of an opportunity
Ambidextrous individuals are comfortable with having a dual role inside of an organization
True. Individuals who are contextually ambidextrous can balance both exploitation (efficiency, execution) and exploration (innovation, new opportunities). They operate effectively in dual modes.
Contextual ambidexterity does not require any executive management’s support to develop inside an organization
False. Top management plays a critical role in creating the organizational context (culture, incentives, norms) that encourages ambidexterity. It does require executive support.
Contextual ambidexterity is not a replacement for structural ambidexterity
True. Contextual and structural ambidexterity are complementary rather than mutually exclusive. Structural ambidexterity separates exploratory units from exploitative ones, whereas contextual ambidexterity enables individuals to integrate both behaviors within a single organizational unit.
An ambidextrous individual is someone who goes against a company’s policy to take advantage of an opportunity
False. Ambidextrous individuals do not simply break rules; rather, they find ways to both adhere to core organizational objectives (exploitation) and pursue novel ideas (exploration) within the organizational context.
Please mark as True or False the following statements about “The Ambidextrous Organization” (O’Reilly and Tushman, 2004)
The case of USA Today shows that executives who can understand the needs of different types of businesses are necessary in ambidextrous organizations
Ambidextrous organizations can pioneer radical innovation while pursuing incremental innovation
An organization should hire ambidextrous employees to become successfully ambidextrous
Ambidextrous organizations tend to structure their breakthrough projects into an independent unit with no tie to the traditional business
The case of USA Today shows that executives who can understand the needs of different types of businesses are necessary in ambidextrous organizations
True. In their article, O’Reilly and Tushman highlight how top leadership must grasp and bridge the requirements of both exploratory (new) and exploitative (established) businesses, as illustrated by examples such as USA Today.
Ambidextrous organizations can pioneer radical innovation while pursuing incremental innovation
True. The essence of ambidexterity is the ability to explore radically new opportunities while simultaneously exploiting existing capabilities.
An organization should hire ambidextrous employees to become successfully ambidextrous
False. O’Reilly and Tushman emphasize designing structures that separate breakthrough (exploratory) units from ongoing (exploitative) operations, with a shared senior management team providing the necessary integration. It is not primarily about hiring individuals who are themselves “ambidextrous,” but rather about creating the right organizational architecture and leadership oversight.
Ambidextrous organizations tend to structure their breakthrough projects into an independent unit with no tie to the traditional business
False. While ambidextrous organizations do structure radical innovation efforts in separate units (to protect them from the routines of the core business), there is still an essential link at the top-management level. The senior team coordinates resources, fosters knowledge sharing, and ensures strategic alignment across both new and established units.
Exploitation (and returns)
Refinement, production, efficiency, implementation …
Returns from exploitation are reliably linked to the time and place in which they take place.
Exploration (and returns)
Variation, risk taking, experimentation, play, flexibility …
Returns from exploration are uncertain, more remote in time, and organizationally distant from the locus of action and adaptation
Rules, and their functions
- Embody ‘the way we do things here’
- Problems solved in the past generate solutions which are stored in rules and procedures
- Such rules and procedures are used any time a similar situation ensues
- Rules (and roles) are hierarchically structured
- They define roles and ‘proper’ organizational behaviour
- They define control mechanisms
Definition: Ambidexterity
“The ability to simultaneously pursue
both incremental and discontinuous
innovation and change results from
hosting multiple contradictory
structures, processes, and cultures
within the same firm” (Tushman &
O’Reilly, 1996: 24)
A few Challenges with Ambidexterity
Alignment of: Exploitative | Explorative
Strategic intent:
Critical tasks:
Competencies:
Structure:
Control, rewards:
Culture:
Leadership role:
Alignment of: Exploitative | Explorative
Strategic intent: Cost, profit | Innovation, growth
Critical tasks: Operations, efficiency,
incremental innovation | Adaptability, new products, breakthrough innovation
Competencies: Operational | Entrepreneurial
Structure Formal: mechanistic |Adaptive, loose
Control, rewards: Margins, productivity | Milestones, growth
Culture: Efficiency, low risk,
quality, customers| Risk taking, speed flexibility,
experimentation
Leadership role: Authoritative, top down | Visionary, involved
