For public service organizations (PSOs) it is essential to be able to simultaneously optimize and innovate policies, processes and services. This article explores how PSOs shape these dual practices by examining optimization and innovation practices in eight Dutch regional water authorities (RWAs) using focus groups. It uncovers mutually reinforcing differences in culture, strategy and management leading to different ambidextrous configurations. In low ambidextrous RWAs a legalistic taskorientation goes along with a transactional management style and focus on optimization only. In high ambidextrous RWAs a societal value-orientation, integrative strategies, and a more transformational management style lead to more embedded innovation practices.

Public performance is a multidimensional construct (Andrews, Boyne, Moon, & Walker, 2010). Central to the concept is the creation of public value (Moore, 2005;Van Dooren, De Caluwe, & Lonti, 2012). Desired outcomes are often defined in terms of efficiency, effectiveness, quality, future-proofing, responsiveness, and legitimacy toward stakeholders (Boyne, 2002a; Yang & Panday, 2007). Public performance can thus be conceptualized as achieving public goals in a legitimate, effective, and efficient manner, preserving present and future quality of public services (Verbeeten, 2008).The public sector is challenged to innovate to enhance performance (e.g., Osborne & Brown, 2011), while at the same time improving current operations in order to enhance efficiency and lower costs (e.g., Pollitt & Bouckaert, 2004, p. 8). Innovation is generally defined as the implementation of a new (technical, organizational, policy, service, or other) concept that changes and improves the functioning and outcomes of the public sector (Hartley, 2005;Damanpour et al., 2009), thereby creating public value (Moore, 2005;Moore & Hartley, 2008). This concept is perceived as new by an individual or other unit of adoption (Rogers, 1995, p. xvii), and represents a discontinuity with the past (Osborne & Brown, 2011). However, performance can also be enhanced by gradual improvement, in continuity with the past (Moore, 2005). It is important to distinguish gradual improvement from innovation, as both processes demand different approaches (March, 1991). This distinction may be blurred in public innovation policy (Osborne & Brown, 2011), and innovation and improvement are often assumed to be synonymous (Hartley, 2005). To enhance clarity we will refer to continuous, gradual, intentional improvement as optimization. Innovation thus concerns the implementation of new policies, processes, technologies and services, in discontinuity with the past, whereas optimization concerns the improvement of existing policies, processes, technologies, and services, in continuity with the past (Damanpour et al., 2009;Osborne & Brown, 2011). The literature stresses that both are essential for enhancing performance (

To enhance public service performance (PSP), public organizations are challenged to optimize and innovate their processes, techniques, policies and services. But can public organizations go too far when innovating and optimizing? Based on survey data from Dutch water authorities, we show that optimization initially contributes more to PSP than innovation, but its contribution is curvilinear: the impact of optimization becomes smaller the more optimization is conducted. The relation between innovation and PSP is, however, linear. Based on additional qualitative data, we show that ambidextrous water authorities run less risk of over-optimizing and use integrative strategies to deal with innovation-optimization tensions.

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