An exploratory study of organization architecture and the balance between exploration and exploitation of knowledge

Abstract

Purpose -This article aims to explore how organizational architecture (OA) for an information technology organization can balance between exploring new information technologies (IT) that promise significant but uncertain growth opportunities, and exploiting already existing IT that guarantee immediate survival. Design/methodology/approach -The literature on organizational architecture (OA) and the balance between the exploitation and exploration of knowledge is reviewed. Data collected from in-depth case study of a global IT consulting firm highlights the importance of OA in balancing exploitation and exploration. Findings -Four elements of OA emerged as critical in balancing exploitation and exploration: embedding autonomous exploratory units within large exploitative sectors; creating organizational roles to integrate between exploration and exploitation; developing technology solutions that support the interplay between exploitation and exploration; and establishing a reward structure that fosters the cooperation between exploring and exploitative agents. Practical implications -Results of the study suggest that the switch between exploration and exploitation is key to emerging dynamic capabilities in IT firms. It is important for organizations to define: strategic goals that highlight the importance of both exploration and exploitation for the organization; roles that specifically focus on exploration, exploitation and the coordination between the two capabilities, technologies that support both exploration and exploitation; and reward both capabilities. These four elements of the architecture interact together to support a structure of large exploitative units with embedded small explorative units to support recombination and innovation at the project, the department, and the organization levels. Originality/value -There is limited research on the effect of organizational design on IT development capabilities. Organizational architecture that balances between exploiting stable domain knowledge and emerging new technologies is crucial in today's global and competitive environment. In this study, a new framework emerges that provides a starting point for future quantitative research on how OA can balance conflicting organizational capabilities for firms engaging in IT development. The paper provides a foundation for future studies to test five propositions on the effect of strategy, structure, roles, technology, and reward on the dynamic capabilities of exploitation and exploration.

A Framework for Exploring IT-Led Change in Morphing Organizations

“…The performance of an organization and the outcome of organizational change emerge from the interaction between the organization's structures, individuals within the organization and the organizational strategies, which form the context for technology use (Yeo & Marquardt, 2015) in the organization architecture. Much of the research about organizational design focuses on organizational structures (Sherif et al, 2013). For example, Ethiraj & Levinthal (2004) consider organizational design based on two choices: the number of departments and the assignment of functions to departments.…”

“…Organizations need to have sufficient flexibility to enable them to respond to the demands and opportunities of innovations in IT, balanced with stability to maintain their unique identity. Sherif et al, (2013) describe an ambidextrous structure as one that allows organizations to move between organic and mechanic organizational structures depending on market conditions.…”

“…The organizational architecture is different to the organizational structure. Sherif et al, (2013) describe an organization architecture as a high level map of the organization that includes people, processes and technology. The formal and informal organization structure form part of the organization architecture.…”

“…Saucer & Willcocks (2004) emphasize that defining the organizational architecture is not a one-off task (like designing a building); it is a continuous process of adjustment to meet the changing needs of the business environment. Sherif et al, (2013) suggest that the organization architecture includes three architectures:…”

“…The organization architecture provides an abstraction of organizational factors that influence an organization's IT development capability (Sherif et al, 2013). IT can in turn also influence these factors in the organization architecture to lead change in the organization.…”