Ambidexterity. Operations Management for New Ventures Contents

Transcription

1 1 Ambidexterity Operations Management for New Ventures Contents o Patel, P., Messersmith, J. and Lepak, D. (2013), Walking the tightrope: an assessment of the relationship between highperformance work systems and organizational ambidexterity. o Reflection Contradicting findings Similar concepts

2 2 Organizational Ambidexterity o The ability of an organization to efficiently take advantage of existing market opportunities EXPLOITATION while creating and innovating to meet the challenges of future markets EXPLORATION o Structural ambidexterity Separate organizational units tasked with the dissimilar goals associated with exploitation or exploration activities Temporal separation in the sequencing of organizational activities o Contextual ambidexterity Creating a behavioral context that requires the integration of different activities at lower organizational levels What is needed to allow the meta-capabilities of alignment and adaptability to simultaneously flourish? Elements of Contextual Ambidexterity o Alignment the capability to develop a clear sense of how value is being created in the short term and how activities should be coordinated and streamlined to deliver value Discipline clear performance standards and expectations, swift and open feedback systems, and consistency in management Stretch members voluntarily and actively push their own standards and expectations to higher levels o Adaptability ability to move quickly toward new opportunities, to adjust to volatile markets and to avoid self-admiration Support the resources, care, and autonomy provided to employees Trust influenced by perceptions of equity within the organization, the competence of organizational leaders, and the level of involvement offered to employees

3 3 High-Performance Work Systems (HPWS) o Emphasize alignment and adaptability via separate HR practices that work in concert The practices themselves do not produce competitive advantage; rather, performance gains arise from the human resources that are developed by an HPWS system o Describes a system of horizontally and vertically aligned employment practices designed to affect both the ability and the motivation of employees o Guide human resources toward the completion of organizational goals by creating a fit between the knowledge, skills, and abilities of a person and the tasks, duties, and responsibilities required by a job. Practices to Support Alignment o Job analysis Job descriptions & specifications Selection instruments to identify people with the proper skill profile (wolt, optofidelity) Training programs to transfer the correct pieces of knowledge necessary to do the job Form performance appraisal mechanisms, and to fairly compensate individuals o Environment encouraging the attainment of more ambitious goals When properly aligned with other organizational practices, incentive systems work to motivate employees to reach defined objectives (ownership) o Consider the role of Management Control Systems (MCS)

4 4 Practices to Support Adaptability o Trust internal advancement and job security Multiple advancement opportunities Employees feel empowered & motivated to try new approaches. Job security promote risk taking, which may lead to more innovative outcomes for the firms o Support information sharing & participation programs. Employees see themselves as part of a larger group seeking broader goals and outcomes Task autonomy, flexible work, delegation of authority, employee empowerment Combined Effect & Performance o Not a clear trade-off btw. alignment and adaptability practices By carefully matching individuals to jobs and training employees to perform their tasks efficiently, an organization can help to free up more time for exploratory activities In addition to added time resources, the promotion of advancement opportunities, job security provisions, participation, and information sharing elements of an HPWS allows for a greater sense of trust and support Selective staffing practices that closely match individual skill sets to job requirements does not preclude the organization from also utilizing participation programs and information sharing practices. Individuals who are provided with incentives to meet challenging goals (stretch) but who are given some assurance that risk taking will not result in the loss of employment (trust) are more likely to proactively seek new opportunities without fear of being dismissed if the risk fails to bear fruit

5 5 Measuring Ambidexterity o Perceptions Statements with Likert scale o More objective measures Patents, new products Labor productivity o Level of exploitation o Level of exploration o Ambidexterity level Exploitation + Exploration / 2 o Ambidexterity congruence Exploitation Exploration Results of the Study

6 6 Post Hoc Analysis Contrasting Findings o In accordance with Ebben and Johnson (2005), the present study s results indicate: young entrepreneurial firms are better off choosing exploitation or exploration route than mixing the two. Lack sufficient resources, capabilities, and experience to handle the tension of maintaining exploration and exploitation simultaneously o Implementing ambidexterity may exacerbate managerial challenges in dynamic environments characterized by rapid shifts in technological capabilities, new entry, and demand uncertainty. If firms concentrate on the wrong environmental changes or new technologies, they fail to manage ambidexterity successfully (Kollmann et al. 2009). Contrast with previous research on ambidexterity in more mature firms, which indicate that in dynamic environments firms pursuing ambidexterity outperform firms that practice only exploration or exploitation Parida, Lahti and Wincent (2016) International Entrepreneurship and Management Journal

7 7 Ambidexterity at the Individual Level Volery et al o Ambidextrous managers must manage contradictions and conflicting goals, engage in paradoxical thinking and fulfil multiple roles. o Growth-oriented entrepreneurs show an ability to pursue both exploration and exploration, although the vast majority of activities are related to exploitation. o The lack of any formal job description and different requirements from external and internal actors challenge entrepreneurs to consciously decide how to spend their time. Prioritize, delegate, communicate o Behaviourally integrated top management teams as a forum in which senior managers can exchange contradictory ideas, resolve conflicts and create a set of shared perceptions ambidexterity Entrepreneurial Crisis o The company reaches a certain scale and moves to a higher growth stage The entrepreneur has to become a manager Not enough time for informal communication Founders burdened with unwanted responsibilities o Founders may resists stepping aside even though they may be temperamentally unsuited for the job The company remains at the size that can be managed through a personal style but below its business potential Management chaos Davila, Foster and Jia (2010)

8 8 High-Reliability Organizing o Another way to resolve the tension between control and flexibility (tension between safety and service) Firefighters, nuclear power plants, air traffic control systems, and space shuttle o Essential elements strategic focus on safety, careful attention to procedures, limited trial-anderror learning, continuous training, and strong safety cultures Under-specification of structures refers to the subordination of hierarchical authority structures during critical events, such that decisions can be made by whoever has the expertise rather than whoever has the highest rank. Flexibility is enabled by the structure that develops at the scene. The incident commander is the first person to arrive, and this individual builds the structure from that point. Wearing multiple hats Trade-offs o Porter s Three Generic Strategies Competitive Target & Competitive Advantage Cost Leadership, Differentiation, Focus o Supply Chain Fit o Operations Strategy A manufacturing plant cannot simultaneously provide the highest levels among all competitors of product quality, flexibility, and delivery, at the lowest manufactured cost.

9 9 Performance Frontiers o A performance frontier is defined by the maximum performance that can be achieved by a manufacturing unit given a set of operating choices. o Frontiers are formed by choices in plant design and investment Asset frontier choices in plant operation Operating frontier o New technology is providing new opportunities faster than manufacturers can identify and learn how to implement them. In such a highly dynamic world, manufacturers, even leading ones, are not constrained by the rapidly shifting performance frontier, and therefore do not experience tradeoffs. Next Friday o Patel, P., Terjesen, S. and Li, D. (2012), Enhancing effects on manufacturing flexibility through operational absorptive capacity and operational ambidexterity.

10 10 Operational Slack & Venture Survival Azadegan et al o Organizational slack resources in excess of what is needed Buffer unexpected disturbances and ensure business continuity Excessive slack resources can limit competitiveness o Operational slack e.g. maintaining surplus production capacity, slack labor, or spare physical inventory o Operational slack can help the venture to be prepared in taking advantage of opportunities, thereby lowering its chance of failure Multi-purpose resources that are useful in the face of a variety of environmental demands o The role of operational slack in venture survival under increased dynamism and complexity and decreased munificence Empirical results confirm that operational slack enhance venture survival Job descripitons

11 11 Job Descripitons The package of management controls Devices and systems managers use to ensure that the behaviors and decisions of their eimployees are consistent with the organization s objectives and strategies

12 12 Disruptive technologies o A sustaining innovation gives customers something more or better in the attributes they already value targets demanding, highend customers with better performance than what was previously available o A disruptive technology Initially performs worse than the dominant technology Looks unattractive to established companies Adapted from Bower & Christensen 1995 Approaches for Established Companies o Companies can create new prioritization criteria, or values, only by setting up new business units with new cost structures. Our research suggests that the geographical separation from the core business is not a critical dimension of autonomy. Nor is ownership structure. There is no reason why a disruptive venture cannot be wholly owned by its parent. The key dimensions of autonomy relate to processes and values. o Every time one company acquires another, it buys its resources, its processes, and its values. If the acquired company s processes and values are the real drivers of its success, then the last thing the acquiring manager wants to do is to integrate the company into the new parent organization. A better strategy is to let the acquired business stand alone. Bower & Christensen 1995