Exploitation-Exploration Tensions and Organizational Ambidexterity: Managing Paradoxes of Innovation

Abstract

A chieving exploitation and exploration enables success, even survival, but raises challenging tensions. Ambidextrous organizations excel at exploiting existing products to enable incremental innovation and at exploring new opportunities to foster more radical innovation, yet related research is limited. Largely conceptual, anecdotal, or single case studies offer architectural or contextual approaches. Architectural ambidexterity proposes dual structures and strategies to differentiate efforts, focusing actors on one or the other form of innovation. In contrast, contextual approaches use behavioral and social means to integrate exploitation and exploration. To develop a more comprehensive model, we sought to learn from five, ambidextrous firms that lead the product design industry. Results offer an alternative framework for examining exploitationexploration tensions and their management. More specifically, we present nested paradoxes of innovation: strategic intent (profit-breakthroughs), customer orientation (tight-loose coupling), and personal drivers (discipline-passion). Building from innovation and paradox literature, we theorize how integration and differentiation tactics help manage these interwoven paradoxes and fuel virtuous cycles of ambidexterity. Further, managing paradoxes becomes a shared responsibility, not only of top management, but across organizational levels.

Quo vadis, paradox? Centripetal and centrifugal forces in theory development

“…1 The accumulating research has advanced scholarly work on key strategic issues, such as the relationship between control and collaboration (Gebert, Boerner, and Kearney, 2010;Sundaramurthy and Lewis, 2003), exploration and exploitation (Andriopoulos and Lewis, 2009;Raisch et al, 2009), and firms' social and financial missions (Hahn et al, 2014;Jay, 2013). As organizations face ever greater technological change, 1 The rapid growth of paradox scholarship was documented in two recent review papers in the Academy of Management Annals: Through a key word search for contradictions, dialectics, and paradox, Putnam and colleagues (2016) found 852 papers published between 1975 and 2015.…”

“…For instance, by identifying innovation as paradoxical, ambidexterity scholars applied the lens to explicate explorationexploitation tensions (e.g., Andriopoulos and Lewis, 2009;Gibson and Birkinshaw, 2004;Smith and Tushman, 2005). Likewise, to advance sustainability research, paradox is increasingly used to investigate firms' conflicting yet interdependent financial and social responsibilities (e.g., Jay, 2013;Sharma and Bansal, 2017;Slawinski and Bansal, 2015).…”

Diverging and Converging:Integrative Insights on a Paradox Meta-perspective

“…As a result, scholars alternatively emphasize the role of structural elements or agency to surface paradoxical tensions (Poole & Van de Ven, 1989). For example, whereas some scholars depict the tensions between exploring new possibilities and exploiting old certainties as embedded within adaptive systems (e.g., Andriopoulos & Lewis, 2009;March, 1991), others highlight senior leaders' agency to juxtapose these tensions and invoking their interrelationships (Smith & Tushman, 2005).…”

“…For example, studies of organizational change emphasize the inertial power that embolden the status quo over change (i.e. Levinthal & March, 1993;March, 1991), yet scholars treat paradoxes as equally informed by forces of exploration and exploitation (Andriopoulos & Lewis, 2009;Smith, 2014). Schad and colleagues therefore call for more insight about the relative influence of the forces that impinge on opposite poles.…”

“…Capturing multiple voices, then, often surfaces multiple tensions in and across organizational levels and in various combinations. Similarly, Schad and colleagues suggest that some studies have begun to unpack how tensions are nested, where one level informs and defines other levels (Andriopoulos & Lewis, 2009), as well as interwoven across type, where one type of tension informs others (Lüscher & Lewis, 2008). Together, our perspectives argue that taking multiplicity of levels, tensions, and voices into account will enhance paradox insight.…”