Combining Competence Building and Leveraging: Managing Paradoxes in Ambidextrous Organizations

Published: 2021-09-14 09:55:09
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Category: Management, Workforce

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The competitive arena in business environments has changed in many ways. The globalization of markets, rapid technological change, shortening of product life cycles and the increasing aggressiveness of competitors, require firms to respond flexibly and rapidly. Not just fast-moving, hightech industries have been facing these changes; even industries that were supposed to be stable are heating up. As competition intensifies and the pace of change accelerates, firms are increasingly confronted with a tension between exploiting existing competencies and exploring new ones. Firms seek to adapt to environmental changes, explore new ideas or processes, and develop new products and services for emerging markets. In addition, they need stability to leverage current competences and exploit existing products and services.
Firms, however, seem to have a preference for short-term exploitation efforts. The returns to exploitation are ordinarily more certain, closer in time and closer in space than are the returns to exploration. Furthermore, past exploitation in a knowledge domain makes future exploitation in the same domain even more efficient. As a result, firms increasingly maintain the status quo, exhibit convergence, and develop highly specialised competences that may become core rigidities. Although the preponderance for exploitation may enhance short-term performance, it can result in a competence trap since firms may not able to respond adequately to environmental changes. Focusing on exploration can also have dysfunctional effects. Excessive exploration may enhance a firm’s ability to continually renew their knowledge stock, but can trap organizations in an endless cycle of search and failure and unrewarding change. These firms escalate resources and time to exploration and become over sensitive to short-term variations and local errors without gaining benefits from exploitation. Accordingly, too much emphasis on exploration can result in a failure trap.Long-term survival of organizations, therefore, depends on firms’ ability to refrain from competence and failure traps and “engage in enough exploitation to ensure the organization’s current viability and engage in enough exploration to ensure future viability. Correspondingly, previous literatures have argued that successful firms are ambidextrous – aligned and efficient in managing today’s demands, while also being adaptable to changes in the environment. Organizational ambidexterity refers to an organization’s ability to perform two different things at the same time, who introduced the term ‘ambidextrous organization’, focused on the ability of organizations to design dual structures that facilitate the initiating stage and implementation stage of the innovation process. More recently, Tushman and O’Reilly defined ambidexterity as the “ability to simultaneously pursue both incremental and discontinuous innovationand change”.
Ambidextrous organizations generate rents through revolutionary and evolutionary change, creating and sustaining advantages, responsiveness and efficiency, change and preservation, or exploratory and exploitative innovations. They reconcile conflicting demands from task environments and synchronize and balance concurrent exploration of new opportunities and exploitation of existing capabilities. For instance, Bradach (1997) described how chain organizations, such as KFC, Pizza Hut, and Hardee’s, have been able to achieve both innovation and control in one organization. Moreover, Tushman and O’Reilly (1996) argue that large corporations, such as Hewlett-Packard, Johnson & Johnson, and Asea Brown Boveri (ABB), have been able to compete in mature market segments through incremental innovation and in emerging market segments through discontinuous innovation. Although these three organizations operate in different industries, each of them has been able to renew itself through exploiting existing competencies as well as exploring new ones simultaneously.

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