Organisations are being implored to “innovate or perish” but that is easier said than done. One of the challenges of innovation in organisations is ensuring that the quest for innovation is balanced between improving existing offerings where the company has a strategic advantage (known as exploitation), whilst also striving for the big, new ideas that prove game-changers (exploration). The ability of an organisation to balance between these two endeavours is often referred to as ambidexterity.
Previous research suggest that there are two types of ambidexterity; structural or contextual. Structural ambidexterity involves either giving the task of improving existing processes or products to one part of the team, and exploring new opportunities to others, or by separating these two activities within the team, where the entire team focusing on one activity in a set period of time before switching to the alternate. Contextual ambidexterity on the other hand requires the organisation to create an environment in which the team simply moves between exploration and exploitation in their everyday activities as a normal part of doing business.
Given the growing emphasis on teams in the workplace, we asked the question, “how can we facilitate ambidexterity in teams?” In a recent paper we reported on research conducted in two Danish software development firms known for their excellence in innovation. The organisations studied produced very similar, and sometimes identical, products and services, had both received similar recognitions for innovative excellence, and shared many of the same customers and clients (e.g. municipalities and other public institutions).
A total of 52 individual interviews and two focus groups were conducted at each firm. We looked at how these organisations enable their teams to balance exploring and exploiting, and found that the types of explorative and exploitative activities occurring in the two firms were quite similar – they spoke of identifying how they strive to improve what they are doing in their current work but also were conscious of looking for new opportunities.
In this way what they were doing and achieving was identical. However, our results demonstrate there is not one way to achieve this. In fact, the two organisations would be considered to be at opposite ends of a spectrum on a range of approaches taken to achieve ambidexterity: one organisation used a permanent team structure and they used practices that were built around the importance of engendering trust, cohesion, knowledge sharing and learning; a relationship-centric approach. For example, they hired people for their teams based on their future potential and on their “fit” with the team. They relied on internal promotion as a “grow your own” strategy. They had a heavy emphasis on socialisation within the team and offered incentives for the team as a whole to develop new skills and achieve positive outcomes.
In stark contrast, the other organisation had temporary teams drawn together for their expertise for a particular project. They focused on hiring staff for specific roles and for their particular expertise to be applied to particular problems. They focused on and rewarded individual performance and there was limited emphasis on development of additional skills in their staff. In this way, they were setting up teams of individual experts and were not relying on the socialisation of the team to achieve outcomes, but rather on drawing together excellence for a particular purpose; an expert-centric approach.
Although adopting very different approaches, the message was clear – your approaches must align with the way you want to manage your teams and your overall business strategy. These findings emphasise the importance of considering how to structure teams and manage them in a way that will enable ambidexterity that will benefit the company and aligns with its overall business ethos. This means that when an organisation chooses to implement a team structure that focuses on building long term relationships to foster exploration and exploitation within the team, staffing needs to facilitate the inclusion of a range of individuals with broad knowledge who have a clear fit with the team and its approach. In addition, the development of these individuals on an ongoing basis is of key concern, and likewise emphasising the importance of the team over individuals when designing remuneration structures and reward approaches.
In contrast, when the organisation determines that using teams of specialists on project-specific outcomes for limited time periods is most appropriate, then the accompanying practices will need to emphasise acquiring this expertise through staffing and then recognising and remunerating these individuals appropriately.
In short, there is no one best way to manage teams to achieve a balance of exploring and exploiting in your teams, but it is by no means ad hoc; indeed there must be considerable thought given to designing an environment and managing staff in a way that fosters innovation.
- This blog post is based on the authors’ paper The role of HRM in facilitating team ambidexterity, April 2017, Special Issue: HRM and Innovation.
- The post gives the views of its author, not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Innovation, by jarmoluk, under a CC0 licence
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Frances Jorgensen is a Professor of Organizational Behaviour, Human Resource Management, and Change Management at Royal Roads University, Victoria, BC, Canada. Her research interests include employee attitudes and their influence on innovative work behaviours, the role of human resource management in supporting positive employee behaviours and performance, and employee driven change. Her research has been published in numerous international journals and presented in a variety of forums.
Karen Becker is an Associate Professor of Human Resource Management at the QUT Business School, Queensland University of Technology. Her research focuses on workforce development, unlearning, innovation and change in the workplace, looking at these issues in individual organisations and across industries. Karen is widely published in international journals and presents her work at both academic and industry conferences.