Ambidextrous organizations: from theory to practice

Tamam Guseinova, HEC Paris MSc in Strategic Management
11th of June, 2015
Ambidextrous organizations:
from theory to practice
Under the supervision of: Pr. Frédéric LEROY
Professional Dissertation

Agenda
•  IDENTIFYING LITERATURE GAP
–  AMBIDEXTERITY
•  SIX FIELDS OF RESEARCH WITHIN THE THEORY
•  INSIGHT INTO AMBIDEXTERITY
–  INNOVATION AND ORGANIZATION DESIGN
•  INNOVATION & INDUSTRY LIFE CYCLE
•  ORGANIZATION AS TRANSFORMATION PROCESS
•  INTERPLAY BETWEEN TYPES OF ORGANIZATION STRUCTURES AND TYPES OF ACTIVITIES
•  NEW INNOVATION PROCESS
•  ORGANIZATIONAL MODELS FOR FOSTERING INNOVATION
–  NEW TAXONOMY OF AMBIDEXTERITY
•  HYPOTHESES AND METHODOLOGY
–  HYPOTHESES
–  RESEARCH METHOD
•  RESEARCH RESULTS
–  GENERAL FINDINGS
–  ANALYSIS OF CASES CONFIRMING HYPOTHESES
•  CIBA VISION: PARTITIONAL AMBIDEXTERITY TO OVERCOME A RADICAL CHANGE
•  BIOTECH AND LARGE PHARMA INDUSTRY: RECIPROCAL AMBIDEXTERITY TO BENEFIT FROM A
CREATIVE CHANGE
•  MERRILL LYNCH: HARMONIC AMBIDEXTERITY IN REALMS OF INTERMEDIATING CHANGE
–  AMBIDEXTERITY IN INDUSTRIES UNDER PROGRESSIVE CHANGE
•  CONCLUSIONS, LIMITATIONS AND FURTHER RESEARCH
2
Tamam Guseinova, MSc in Strategic Management

3
Defining ambidexterity, its scope and boundaries Ambidextrous organization and its environment
Relating ambidexterity theory to other theories
Defining value of ambidexterity to a firm
Levels of ambidexterity
Mechanics of ambidextrous organizations
Six Fields Of Research Within Ambidexterity Theory
We focus our research on theory development, particularly on the interplay between ambidextrous
organizations and their environment while leveraging on other aspects of ambidexterity theory
•  Different views on ambidexterity from the
perspectives of organizational design
•  Firm’s size
•  Structural/ contextual dimensions
•  Intra- & inter-firm organization of activities
•  Ambidextrous Organization
•  Ambidexterity of Functions
•  Ambidexterity at Project level
•  Ambidextrous Individuals & Teams
•  Ambidextrous Leadership
•  What are the key managerial and
organizational characteristics that underpin
their ability to both exploit and explore?
•  Different mechanics for different forms of
ambidexterity
•  Analysis of ambidextrous firm’s larger
ecosystem
•  What are the characteristics of environment in
which ambidextrous organization turn out to be
effective?
•  Research studying ambidexterity as a dynamic
capability (Jansen and al., 2009; O'Reilly &
Tushman, 2008)
•  Integral view on ambidexterity, absorptive
capacities and external networks (Datta, 2011).
•  Relation between ambidexterity and firm’s
performance (Derbyshire, 2014; Uotila and al.,
2009; He & Wong, 2004)
Tamam Guseinova, MSc in Strategic Management!  IDENTIFYING LITERATURE GAP:
Ambidexterity
Theory development
Measuring the results of theory application

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Insight Into Ambidexterity: Definition, Forms, Scope and Boundaries
①  Ambidextrous organizations –
•  organizations “aligned and efficient in their management of today’s business demands, while
also adaptive enough to changes in the environment that they will still be around
tomorrow” (Gibson & Birkinshaw, 2004);
•  Organizations that excel at exploiting current activities and assets as well as exploring
for future
②  Ambidexterity
pursued through
different
dimensions of
organization
design
③  Ambidexterity and
the company size
④  Ambidexterity
within one
company and
across
organizations
Structural
Require physical separation of a new business
from the old one, integration through corporate
vision
Contextual
Individual employees divide their time between
alignment-focused and adaptability-focused
activities
Sequential
Switching from exploitation to exploration mode
in the course of company’s life and vice versa
•  Primarily large companies, incumbents in their domain
(O’Reilly & Tushman, 2008);
•  Also fit for small and medium companies (Voss & Voss,
2013)
•  Complex intra-firm structure (Lakhani, Lifshitz-Assaf &
Tushman, 2012);
•  Ability to reconcile the internal exploitation with external
exploration or vice versa through strategic alliances,
market for ‘ideas’ and open innovation
Ambidexterity
•  All companies
c a n b e
a m b i d e x t r o u s
through intra-firm
organization or by
also leveraging
o n e x t e r n a l
network
•  A m b i d e x t e r i t y
forms strongly
interrelate with
r e l e v a n t
o r g a n i z a t i o n
dimensions
•  T h e p r o v i d e d
typology is neither
integral, nor plain

5
Innovation And Industry Life Cycle. New Framework Relating Two Theories
Innovation – “the commercial or industrial application of something new—a new product, process or
method of production; a new market or source of supply; a new form of commercial, business or financial
organization” (Schumpeter, 2011)
①  Level of
organization
affected by
innovation
②  What is the
nature of
innovation?
③  What is
affected by
innovation?
④  What is the
magnitude of
innovation?
⑥  Influence on
competencies
⑤  Innovation
within product
system
•  Individual level;
•  Group/ team level
•  Organizational Level
•  Level of industries
•  Level of geographic regions
•  Technology innovation
•  Social innovation
•  Business innovation
•  Business Model
•  Operational
•  Products, services, markets
•  Incremental
•  Radical
•  Modular
•  Architectural
•  Competence-enhancing
•  Competence-destroying
Innovation taxonomy New industry-based framework
Five-forces framework Static view on industry
S-curve; Abernathy/
Utterback model
Dubious tool for corporate
planning
McGahan: 4 trajectories of industry evolution
depending on type of innovation needed
Core activities
Threatened Not threatened
Coreassets
Threatened
Radical Change
Everything is up in the air
E.g.: makers of landline
telephone handsets, overnight
letter delivery carriers, travel
agencies
Creative Change
The industry is constantly
redeveloping assets and
resources
E.g.: motion picture industry;
sports team ownership;
investment bankingNotthreatened
Intermediating Change
Relationships are fragile
E.g.: automobile dealerships;
investment brokerages;
auction houses
Progressive Change
Companies implement
incremental testing and
adapt to feedback
E.g: online auctions; commercial
airlines; long-haul trucking
!  IDENTIFYING LITERATURE GAP:
Innovation and organization design

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Organization As Transformation Process
Contextual
dimensions
•  Culture;
•  Environment;
•  Goals and strategy;
•  Size;
•  Technology;
Structural
dimensions
•  Formalization;
•  Specialization;
•  Hierarchy of authority;
•  Centralization;
•  Professionalism;
•  Personnel ratios.
Elements of organization design
Organizations – (1) social entities that (2) are goal-directed, (3) are designed as deliberately structured
and coordinated activity systems, and (4) are linked to the external environment (Daft, 2012)
•  A system of interrelated contextual and structural dimensions
•  A set of key components that ensure a process of transformation of inputs into outputs
Organization as a transformation process
Mechanistic structures Organic structuresOR
Organization can be presented as a transformation process of inputs into outputs within structural and
contextual dimensions that results in either mechanistic or organic organizational structures

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Interplay Between Types Of Organization Structures And Types Of Activities
Mechanistic structures
Organic structures
•  Highly correlated to strong formalization
and standardization
•  Great emphasis on formal organization
arrangements Firm’s size
!  Ensure high operational efficiency but
stifle innovation
•  Low degree of formalization and
standardization
•  Employees may not have well-defined job
responsibilities
•  Operations may be characterized by a
high degree of variation
!  Create conditions for experimentation
a n d i m p r o v i s a t i o n à F o s t e r
innovativeness in organization
Exploitative activities
Explorative activities
•  Is not accompanied by acquiring new
knowledge (Gupta, Smith & Shalley,
2006)
•  Refinement and extension of existing
competencies, technologies, and
paradigms (March, 1991)
•  Learning gained through processes of
c o n c e r t e d v a r i a t i o n , p l a n n e d
experimentation, and play” (Baum, Li &
Usher, 2000)
•  Experimentation with new alternatives
(March, 1991)
There is a trade-off between exploration and exploitation, but to ensure simultaneously current high
performance and future sustainability firms should accommodate both exploitation and exploration

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New Innovation Process: Simultaneous Development And Commercialization
①  Technology Push*
②  Market pull*
③  The “Coupling” Model of Innovation* ④  Integrated Innovation Process
Basic science
Design and
engineering Manufacturing Marketing Sales
Market need Development Manufacturing Sales
The need to reconcile the trade-off between exploration and exploitation is accentuated by evolution
of innovation process towards simultaneous idea development and its commercialization
*Rothwell, 1994
A standard innovation process is divided in four steps (Rohrbeck & Gemünden, 2011):
•  Idea generation;
•  Selection;
•  Development (product and process development);
•  Commercialization

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Organizational Models For Fostering Innovation
•  There are five types of actors in innovation process (Schilling, 2013):
Individuals as individual inventors or employees; Whole innovation process
Firms; Whole innovation process
Universities; Apart from commercialization
Government-funded research centers and Apart from commercialization
Private nonprofits. Apart from commercialization
①  Ambidextrous
organizations
②  Venture
boards
③  Innovation
councils
④  Cross group
solutions
teams
⑦  Thought leader
resource
networks
⑥  Shared
services
organizations
⑤  Innovation
communities
of practice
⑧  Open
innovation
networks
•  Organization design fosters
both exploitation and
exploration through specific
organizational features
•  S p e c i a l s t r u c t u r e s
c o n s i s t i n g o f C E O ,
executives of business units
& external experts
•  Small, cross-functional
governance body of senior
managers
There are quite a lot ways to foster innovation in a company, but ambidexterity is the most integral
one and can incorporate the rest of the means while also ensuring success in exploitative activities
•  Team of individuals from a
range of business units
builds cooperation to cover
blank space at intersection
of business units’ activities
•  External network of expert
practitioners & thinkers that
can be tapped at any time
•  Use of purposive inflows &
outflows of knowledge to
a c c e l e r a t e i n t e r n a l
innovation, and expand the
markets for external use of
innovation, respectively
•  Group of people who share
a concern about a topic &
deepen their knowledge &
expertise by interacting on
an ongoing basis
•  Corporate-level functional
group providing specialized
services to counterpart
function in business units

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An Integral View On Ambidexterity from Organization Design Standpoint
Structural Dimension
Where is ambidexterity pursued?
Independent
Within the same unit
Interdependent
Across units
TemporalDimension
Howisambidexteritypursued?
Simultaneous
Harmonic
(Contextual)
Based on “a set of
processes or systems that
enable and encourage
individuals to make their
own judgments about how
to divide their time between
conflicting demands for
[exploitation and
exploration]”
Partitional
(Structural)
Exploitation and exploration
is pursued simultaneously
but in separated structural
units or divisions within an
organization;
Is not restricted to a single
organization but can involve
units and divisions from
several firms
Sequential
Cyclical
(Sequential)
Long period of exploitation
is alternated by sporadic
episodes of exploration. And
this cycle repeats itself in
response to external
changes.
Reciprocal
Sequential pursuit of
exploitation and exploration
across units: the outputs of
exploitation from unit A
become the inputs for
exploration by unit B and
the outputs of unit B cycle
back to become the inputs
of unit A
More integral and structured view on ambidexterity
We opted for this taxonomy since it takes into account all the organizational dimensions and ways to
organize innovation within a company and across a network of companies
Relating ambidexterity types to organization design
Harmonic
Partitional
Reciprocal
Cyclical
•  Supportive context, organizational
practices & meta-routines, job
enrichment, task partitioning, team-
based structures, HR practices
•  Cross group solutions and innovation
communities of practice
•  Different BUs, but common vision
•  Corporate venture unit coupled with
venture boards or innovation councils
in intra-firm dimension
•  Joint ventures or strategic alliances
in inter-firm dimension
•  Open innovation networks;
•  Strategic alliances;
•  Mergers and acquisitions (in some
cases)
•  Mechanisms and human resources
practices facilitating changes from
exploitation to exploration mode and
vice versa
!  IDENTIFYING LITERATURE GAP:
New Taxonomy Of Ambidexterity

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Sealing gap between innovation theory at industry and organization levels
General hypothesis
•  Each stage of industry life
cycle requires firms to adopt a
different type of ambidexterity
Hypothesis 1
Hypothesis 2
Hypothesis 3
Hypothesis 4
A firm in an industry undergoing radical
change should adopt partitional
ambidexterity
A firm in an industry undergoing creative
change should adopt reciprocal
ambidexterity
A firm in an industry undergoing
intermediating change should adopt
harmonic ambidexterity
A firm in an industry going through
progressive change should adopt
cyclical ambidexterity
Hypotheses
•  Development of disruptive innovations within
organization structure of current core
business meets resistance or has to deal with
negligence
•  Exploration " new core asset " its
exploitation" generated cash" exploration
•  Specific requirements of talent management
for exploration phase in creative industries
•  Employees have to simultaneously exploit the
old activity and to work in new activity
•  Exploitation & exploration must be in the
same unit as they exploit the same core
assets that are relevant for both activities
•  Even under progressive change companies
should be ready for disruption in their industry
•  There can be a link between progressive
change and cyclical ambidexterity
Underlying ideas
!  HYPOTHESES AND METHODOLOGY:
Hypotheses
Interplay between theories Literature gap
•  R e l a t i o n b e t w e e n
characteristics of an industry
and its features concerning
innovation and ambidexterity
features
Innovation
Organization
Design
Industry
? AmbidexterityIndustry Change

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Research Method: Development Of The Theory Through Case Studies Analysis
Research question
Is there relation between types of
industry change and ambidexterity
types?
Development of the theory itself
rather than measurement of its
application
Case studies analysis
Case studies from previous
researches on ambidexterity or on
balancing exploration and
exploitation
Analysis process for case studies
•  F o r l i s t e d
c o m p a n i e s :
d a t a b a s e o f
Bloomberg.com
•  For non-listed
companies: their
l i s t e d
competitors as a
proxy
•  F o r m o r e
precision we use
case information
•  Core assets are under threat
if the core technologies or
core products are under
threat
•  Core activities are threatened
if relationship with the
customer is being disrupted
b y e m e r g e n c e o f n e w
industry or if engagement in
the emerging business
requires new manufacturing,
marketing and sales process
•  Ambidexterity type is
defined in the paper
•  Ambidexterity type can
be inferred from the
paper based in the
Simsek and al.’ s
criteria
Industry definition
Industry change definition
•  Analysis of core assets and core
activities
Ambidexterity type
definition
•  Analysis of ambidexterity
from temporal standpoint
and in terms of
organizational design
Case studies
selection process
•  Case studies on
ambidexterity/ balancing
exploitation and
exploration;
•  Enough information to
define industry and the
type of industry change;
•  Type of ambidexterity
defined in the paper/
enough information to
infer the type of
ambidexterity for the
case;
•  Positive effect of
ambidexterity on the
company and its
performance in relevant
industry
We processed 423 articles from which we derived 43 company or industry cases. Only 14 cases met
all our criteria and were relevant according to our analysis process
!  HYPOTHESES AND METHODOLOGY:
Research method

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Case Studies Analysis Confirmed Three Out Four Hypotheses
Company Industry Type of industry change Ambidexterity type
Cisco Systems
Communications Equipment
(Sector: Technology; Industry: Hardware industry)
Creative ReciprocalProcter & Gamble
Household Products
(Sector: Consumer staples; Industry: consumer products)
Biotech & Large
Pharma
Biotech & Large Pharma, Drugs
Seiko Watch manufacturing
Radical
Partitional
Banking industry Traditional banking
IBM
IT Services
(Sector: Technology; Industry: Technology services)
USA Today Newspaper industry
CIBA Vision
Large Pharma, Eye Care Medical Devices
(Sector: Healthcare; Industry: Biotech & Pharma)
Tesco Plc.
Food & Drug stores
(Sector: Consumer Staples; Industry: Retail-consumer staples)
Intermediating HarmonicMerrill Lynch Financial services (investment brokerage)
Walgreens
Food & Drug stores
(Sector: Consumer Staples; Industry: Retail-consumer staples)
Oracle Corp.
Enterprise software company, IT Services
(Sector: Technology; Industry: Technology services)
Progressive
Harmonic
Toyota Production
System
Automobiles
(Sector: Consumer Discretionary; Industry: Automotive)
Harmonic
Intel Corp.
Semiconductor Devices
(Sector: Technology; Industry: Semiconductors)
Cyclical
We will examine in detail one case per proved hypothesis; In case of the 4th hypothesis related to
progressive industry change we will study two cases to explain the controversial results
Tamam Guseinova, MSc in Strategic Management!  RESEARCH FINDINGS:
General findings

14
Hypotheses Confirmed For Radical, Creative & Intermediating Industry Change
The cases prove the existence of interrelation between industry change and ambidexterity types as
well as give insights into possible intra- and inter-firm mechanics to pursue ambidexterity
Company Industry Type of industry change
Ambidexterity
Type Mechanics
CIBA Vision
Large
Pharma
(Sector:
Healthcare;
Industry:
Biotech &
Pharma)
Radical change
•  Core assets: conventional hard lenses
were under threat of obsolescence because
of emergence of soft lenses and relevant
new production technology;
•  Core activities: “soft lenses transformed
the practitioner from lens mechanic to true
eye care professional”
Partitional
•  Six formal development projects, each
focused on a revolutionary change;
•  New units created very different
structures, processes, and cultures;
•  Overarching aspiration of “Healthy Eyes
for Life”
•  Active senior team attention to integrative
decision making
Biotech &
Large
Pharma
Biotech &
Large
Pharma
Creative change
•  Core assets: constant threat of
obsolescence to drugs since all the firms
compete in creating a more effective drug
to surpass others’ IP;
•  Core activities: value chain is largely left
intact with large pharmaceutical firms
holding their position due to expertise in
FDA approval process with complementary
assets and substantial financial resources
Reciprocal
•  Exploitation and exploration are
structurally divided and pursued inside a
network of organizations through the
means of open innovation system
•  Exploration and exploitation usually
take place in different alliances:
explorative alliance " Large Pharma/ an
alliance for exploitation" explorative
alliances, etc.
Merrill Lynch
Financial
services
(investment
brokerage)
Intermediating
•  Core assets: the expertise of financial
advisors is not under the threat of
obsolescence;
•  Core activities: providing financial services
is under the threat as Internet gives the
opportunity to bypass such entities
Harmonic
•  Integrated approach: launched an online
channel within its existing business;
•  New online products and online channel
were offered simultaneously with
traditional services;
•  Employees distribute their time between
exploitation and exploration
!  RESEARCH FINDINGS
Analysis of cases confirming hypotheses

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Explanation of Controversial Results For Industries Under Progressive Change
Discrepancy between cases is explained by different temporal perspectives. While discrediting the
notion of cyclical ambidexterity, cases imply the necessity of switching between ambidexterity modes
Company Industry Type of industry change
Ambidexterity

Type Mechanics
Oracle Corp.
Enterprise
software
company, IT
Services
(Sector:
Technology)
Progressive change
•  Core assets: there was no threat in
2004;
•  Core activities: there was no threat in
2004, although they had been threatened
before by the emergence of e-business
in 1999
Harmonic
•  Alignment around adaptability;
•  A lot people are making unilateral
decisions;
•  Hiring very smart people, getting
aggressive but not unrealistic targets and
avoiding too much formalization;
•  Objectives, goal setting programs and
incentive systems are carefully aligned
Intel Corp.
Semiconductor
Devices
(Sector:
Technology;
Industry:
Semiconductors)
Progressive change
•  Core assets: subject to Moore’s Law"
need for continuous incremental
innovations " not threatened ;
•  Core activities: stable value chain with
high interdependence of actors within the
chain
Cyclical
•  Sequential model in the context of
organic growth
•  Strategic exploitation (strong induced-
strategy process & stifled autonomous
strategy process) during Grove’s tenure,
•  Barrett led the company into a new
period of exploration
Reason for
discrepancy
•  Short-term case vs.
longitudinal case
•  Intel Corp. had some
failures during
exploitation period
IC Progressive Intermediating
(Customization)
A Exploitation/ Undermined Harmonic
1997 Harmonic
IC Intermediating
(E-business)
Progressive Radical
(Cloud, IoT)
A Harmonic
Partitional
(Oracle, IBM)Harmonic 1999 2008
Intel Corp.
Oracle Corp.
!  RESEARCH FINDINGS
Ambidexterity In Industries Under Progressive Change
IC – industry change
A – ambidexterity type

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Research Findings In The Light Of Limitations And Potential Future Research
Research
question
Is there relation
between types of
industry change
and ambidexterity
types?
Conclusions
Further researchLimitations
Hypothesis 1
Hypothesis 2
Hypothesis 3
Hypothesis 2
A firm in an industry undergoing radical change
should adopt partitional ambidexterity
A firm in an industry undergoing creative change
should adopt reciprocal ambidexterity
A firm in an industry undergoing intermediating
change should adopt harmonic ambidexterity
A firm in an industry going through progressive
change should adopt cyclical ambidexterity
Confirmed
Confirmed
Confirmed
Rejected
Methodology
•  This study necessitates very clear
and accurate industry definition
•  Only cases of successful attempt
at ambidexterity can be used
Research results
•  There is an interrelation between the type of industry change and the type
of ambidexterity companies in this industry should opt for
•  In industries under progressive change harmonic ambidexterity can
facilitate moving to another mode
•  Sample of case studies is not large
enough;
•  Potential survival bias;
•  Potential difference between intra- &
inter-firm ambidexterity;
•  Neglect of other factors
•  More cases in a larger number of industries should be studied;
•  Cases of failures at ambidexterity should be also studied;
•  Different types of case studies – longitudinal and short-term cases – should
be taken into account;
•  Relevance of research results for both intra- & inter-firm ambidexterity;
•  Control the influence of other factors on firm’s success
!  CONCLUSIONS, LIMITATIONS & FURTHER RESEARCH
Further research including a bigger range of multifaceted cases and analysis of influence of other
factors inherent in organization management is needed to verify our research results

17

Thank you for attention!

Ambidextrous organizations: from theory to practice

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