HEURISTICS FOR ADAPTIVE AMBIDEXTERITY: SIMULATING ...
André O. Laplume (student) 1 Parshotam Dass Faculty of Management I. H. Asper School of Business University of Manitoba
ASAC 2009 Niagara Falls, Ontario
HEURISTICS FOR ADAPTIVE AMBIDEXTERITY: SIMULATING STRATEGIC DYNAMICS OF EXPLORATION AND EXPLOITATION We examine Burgelman and Grove’s (2007) model of strategic dynamics using a simulation. We find support for the heuristic that strategic leaders should increase exploitation when their firm introduces decisive changes in the rules of competition, whereas they should augment exploration when other players introduce significant rule changes.
Introduction Why do some organizations perform better than others? Strategic Management scholars have answered this fundamental question in several ways. Over the last two decades, they have clearly recognized organizational learning as a critical success factor and documented its merits and limitations. With increasing attention from researchers and practitioners, balancing exploratory and exploitative learning has become a dominant issue in organizational and management theory (e.g., March, 1991, 2006). Exploration creates new knowledge, whereas exploitation makes use of and improves existing knowledge. Firms could specialize in either of these activities; however, ambidexterity (doing exploration and exploitation together) has emerged as the dominant solution for organizations (e.g., Duncan, 1976; Gupta, Smith, & Shalley, 2006; Tushman & O’Reilly, 1996). In fact, various forms of ambidexterity have been proposed and its beneficial effects have been documented (e.g., He & Wong, 2004). For example, organizations may structure themselves and their internal context to simultaneously balance exploration and exploitation (Gibson & Birkinshaw, 2004). They may manage strategic ambidexterity sequentially following a punctuated pattern (i.e., in fits and spurts) by switching between exploration and exploitation in alternating cycles (Venkatraman, Lee, & Iyer, 2007). In a special research forum in the Academy of Management Journal, Gupta et al. (2006) took stock of research on the twin concepts of exploration and exploitation and raised critical questions regarding their interplay. Similarly, in their comprehensive review, Raisch and Birkinshaw (2008) proposed a model of ambidexterity along with its antecedents, moderators, and consequences, and noted lack of research on the evolution of ambidexterity over time in organizations. In their longitudinal analysis of Intel Corporation, Burgelman and Grove (2007) proposed a dynamic approach to balancing exploration and exploration over time. According to them, “strategic leadership—how top management designs the strategy-making process”—is fundamental for balancing exploration and exploitation to maximize short-term fitness as well as long-term evolvability (Burgelman & Grove, 2007: 967; emphasis in original). They contend that corporate longevity depends on “matching cycles of autonomous [exploration] and induced [exploitation] strategy processes to different forms of strategic dynamics” (Burgelman & Grove, 2007: 965). In other words, firms survive by dynamically shifting emphasis between exploration and exploitation in response to non-linear trends, but never 1
We acknowledge financial support from the University of Manitoba Graduate Fellowship for André O. Laplume.
ASAC 2009 Niagara Falls, Ontario
HEURISTICS FOR ADAPTIVE AMBIDEXTERITY: SIMULATING STRATEGIC DYNAMICS OF EXPLORATION AND EXPLOITATION We examine Burgelman and Grove’s (2007) model of strategic dynamics using a simulation. We find support for the heuristic that strategic leaders should increase exploitation when their firm introduces decisive changes in the rules of competition, whereas they should augment exploration when other players introduce significant rule changes.
Introduction Why do some organizations perform better than others? Strategic Management scholars have answered this fundamental question in several ways. Over the last two decades, they have clearly recognized organizational learning as a critical success factor and documented its merits and limitations. With increasing attention from researchers and practitioners, balancing exploratory and exploitative learning has become a dominant issue in organizational and management theory (e.g., March, 1991, 2006). Exploration creates new knowledge, whereas exploitation makes use of and improves existing knowledge. Firms could specialize in either of these activities; however, ambidexterity (doing exploration and exploitation together) has emerged as the dominant solution for organizations (e.g., Duncan, 1976; Gupta, Smith, & Shalley, 2006; Tushman & O’Reilly, 1996). In fact, various forms of ambidexterity have been proposed and its beneficial effects have been documented (e.g., He & Wong, 2004). For example, organizations may structure themselves and their internal context to simultaneously balance exploration and exploitation (Gibson & Birkinshaw, 2004). They may manage strategic ambidexterity sequentially following a punctuated pattern (i.e., in fits and spurts) by switching between exploration and exploitation in alternating cycles (Venkatraman, Lee, & Iyer, 2007). In a special research forum in the Academy of Management Journal, Gupta et al. (2006) took stock of research on the twin concepts of exploration and exploitation and raised critical questions regarding their interplay. Similarly, in their comprehensive review, Raisch and Birkinshaw (2008) proposed a model of ambidexterity along with its antecedents, moderators, and consequences, and noted lack of research on the evolution of ambidexterity over time in organizations. In their longitudinal analysis of Intel Corporation, Burgelman and Grove (2007) proposed a dynamic approach to balancing exploration and exploration over time. According to them, “strategic leadership—how top management designs the strategy-making process”—is fundamental for balancing exploration and exploitation to maximize short-term fitness as well as long-term evolvability (Burgelman & Grove, 2007: 967; emphasis in original). They contend that corporate longevity depends on “matching cycles of autonomous [exploration] and induced [exploitation] strategy processes to different forms of strategic dynamics” (Burgelman & Grove, 2007: 965). In other words, firms survive by dynamically shifting emphasis between exploration and exploitation in response to non-linear trends, but never 1
We acknowledge financial support from the University of Manitoba Graduate Fellowship for André O. Laplume.
