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How to counteract the suppression of exploration in publicly traded corporations
Abstract
Top management teams frequently overemphasize efforts to exploit the current product portfolio, even in the face of the strong need to step up exploration activities. This mismanagement of the balance between explorative R&D activities and exploitation of the current product portfolio can result in the so-called ‘success trap’, the situation where explorative activities are fully suppressed. The success trap constitutes a serious threat to the long-term viability of a firm. Recent studies of publicly traded corporations suggest the suppression of exploration arises from the interplay between the executive team’s myopic forces, the board of directors as gatekeeper of the capital market, and the exploitation-exploration investments and their outcomes. In this paper, system dynamics modeling serves to identify and test ways in which top management teams can counteract this suppression process. For instance, we find that when the executive board is suppressing exploration, the board of directors can still prevent the success trap by actively intervening in the exploitation-exploration strategy.
Supplementary resource (1)
... Misdirected attention to exploitation-exploration appears to have far greater negative performance implications in a recession than in a recovery. This finding resonates with the observation that adverse times provide extraordinary opportunities for firm revitalization and progress (Rosenblatt et al., 1993;O'Malley et al., 2011;Steenkamp and Fang, 2011), or alternatively, provoke and reinforce firm decline (Walrave et al., 2011(Walrave et al., , 2015. In this respect, we argued that decreasing levels of munificence make for a more severe external selection regime. ...
... Furthermore, the managerial failure to orchestrate EE during environmental disruptions can cause the firm to get trapped in a process of suppressing exploration (Walrave et al., 2011(Walrave et al., , 2015, a self-reinforcing process in which a decline in performance gives rise to more attention toward exploitation in an attempt to preserve shareholder value. Attentional mismanagement fuels this self-reinforcing retrenchment process. ...
Data appendix to the article "Managerial attention to exploitation versus exploration"
... Misdirected attention to exploitation-exploration appears to have far greater negative performance implications in a recession than in a recovery. This finding resonates with the observation that adverse times provide extraordinary opportunities for firm revitalization and progress (Rosenblatt et al., 1993;O'Malley et al., 2011;Steenkamp and Fang, 2011), or alternatively, provoke and reinforce firm decline (Walrave et al., 2011(Walrave et al., , 2015. In this respect, we argued that decreasing levels of munificence make for a more severe external selection regime. ...
... Furthermore, the managerial failure to orchestrate EE during environmental disruptions can cause the firm to get trapped in a process of suppressing exploration (Walrave et al., 2011(Walrave et al., , 2015, a self-reinforcing process in which a decline in performance gives rise to more attention toward exploitation in an attempt to preserve shareholder value. Attentional mismanagement fuels this self-reinforcing retrenchment process. ...
Managerial attention to exploitation and exploration has a strong influence on organizational performance. However, there is hardly any knowledge about whether senior managers need to adjust their distribution of attention to exploitation and exploration in response to major changes in demand patterns in their industry. Drawing on the analysis of a panel data set of 86 firms in the information technology industry exposed to an economic recession and recovery, we find that successfully navigating an economic downturn demands more managerial attention to exploration, while leveraging the subsequent upswing requires more attention to exploitation. As such, this study contributes to the literature by providing a dynamic perspective on ambidexterity: that is, senior managers need to redistribute their attention to exploration and exploitation, to effectively meet the changing environmental demands over time.
... Because so many systems and problems are characterized by dynamic complexity, the number of studies that apply system dynamics (SD) has increased accordingly (e.g., Repenning, 2001;Romme et al., 2010;Van Oorschot et al., 2013). Applications of SD range from global-level analyses (Meadows et al., 2004) to studies on the firm (Walrave et al., 2015) or individual (Repenning, 2001) levels. Of particular interest are intervention studies, which explore "the degree of change in model behavior as a result of alternative policies or scenarios" (Yücel and Barlas, 2015, p. 173). ...
... For such efforts, the intervention thresholds underlying such pattern change represent highly pertinent information. Walrave et al. (2015) calculate the intervention thresholds (i.e., months of managerial commitment) required to counteract an unanticipated self-reinforcing phenomenon (i.e., success trap) for all possible intervention moments (all t in the model). When an intervention size at a given moment is smaller than the intervention threshold, the outcome behavior is reinforced decline, but when the intervention size increases above the threshold the outcome behavior shifts to goal-seeking growth. ...
This paper details a semi-automated method that can calculate intervention thresholds—that is, the minimum required intervention sizes, over a given time frame, that result in a desired change in a system's output behavior pattern. The method exploits key differences in atomic behavior profiles that exist between classifiable pre-and post-intervention behavior patterns. An automated process of systematic adjustment of the intervention variable, while monitoring the key difference, identifies the intervention thresholds. The results in turn can be studied and presented in intervention thresholds graphs in combination with final runtime graphs. Overall, this method allows modelers to move beyond ad hoc experimentation and develop a better understanding of intervention dynamics. This article presents an application of the method to the well-known World 3 model, which helps demonstrate both the procedure and its benefits.
... We specifically looked at the unfolding innovation processes at TechLtd and the dynamics involved in managing ambidexterity at the interface between old (conventional) and new (green) businesses. We followed other ambidexterity scholars, including Walrave et al. (2014), Tripsas (2013) and Khanagha et al. (2014), who recently used this method for detailed field studies, but in contrast to them, we focus on an unsuccessful case. To investigate the innovation process, we adopted a qualitative approach suitable for process studies (Huber and Van de Ven, 1995) that enables a better understanding of the dynamics at multiple levels of analysis: ...
The importance of firms to participate in sustainable development has been widely discussed in the literature. Yet, progress is still slow in light of the size and the urgency of the challenge. In terms of sustainability management, the challenge is to engage firms in sustainable development. This includes all firms, also SMEs that represent globally about 70% of pollution but have so far received less attention.
Sustainability-oriented innovation (SOI) in the form of new products that lessen negative environmental impact, or even create a positive impact on the environment and positive value for society can play an important role, particularly at established SMEs who see business opportunities in sustainable development and consider possible diversifications into new sustainability markets. Whereas the extant literature discusses what SOIs are and why firms develop them, little is known about how they are developed. To enable firms to innovate for sustainability, it is essential to know more about how SOI are developed. This process is considered as a very difficult one, with many firms failing.
The aim of this doctoral research project is to examine how SOIs dynamically unfold at SMEs and how they can be managed. Innovation processes at established SMEs are analyzed with the Fireworks innovation process model. The SOI specific challenges allow advances in the model to be achieved for this context.
The findings reveal that SOI unfolds is an emergent, somewhat chaotic way, that duration and outcome are uncertain, that the overall journey is composed of multiple intertwined innovation paths, of which several will likely lead to setbacks. Four practices can help manage this process: first, the creation of a dedicated organization unit for exploration, second intelligent learning for efficient exploration, third in-depth investigation of the related technological innovation system, and fourth careful planning of the integration into the core business for commercialization.
This research contributes to the SOI literature by advancing the Fireworks model and thereby proposing a model of how SOIs dynamically unfold. The model is both holistic and detailed, which opens several avenues for future research. Furthermore, the research contributes to management practice by providing a heuristic to manage SOI development at SMEs.
... We looked at the unfolding innovation processes at TechLtd and the dynamics involved in managing ambidexterity at the interface between old (conventional) and new (green) businesses and thereby followed the methodological approach of other ambidexterity scholars (e.g. Khanagha et al., 2014;Tripsas, 2013;Walrave et al., 2014). To understand the dynamics at multiple levels, our analysis cuts across value chain functions (R&D, production, sales and marketing), organizational levels (top management, units, individuals), and organizational boundaries (intraorganizational, interorganizational through alliances). ...
The ambidexterity literature suggests radical innovation is driven by preventing the undesirable spillover of routines and cognitive representations from the exploitative core business to the exploratory innovation space. This paper presents a longitudinal process study uncovering the anatomy of an unsuccessful exploration of green technologies by a medium-sized entrepreneurial firm. We investigated their innovation processes to understand how the managers configured and reconfigured the exploration-exploitation interface over time by using various modes of balance. The paper contributes to ambidexterity theory by identifying three separation pitfalls. First, a 'separation drift' from a textbook-like to a looser form of organizational separation allows for the undesirable spillover of routines which cannibalize the new business over time. Second, a mismatch can occur between the intended product-market strategy and the actual product-market exploration. A third pitfall increases management complexity due to the simultaneous use of several modes of balance originally perceived as a more resource-efficient alternative to a clear-cut organizational separation.
... Based on prior studies that relate firm differences in R&D investments and firm patenting to CEO characteristics (Carpenter et al., 2004;Cummings and Knott, 2018), we controlled for CEO tenure (the total number of years a CEO had held office), founder (dummy variable indicating whether a CEO was a founder of the focal firm), CEO ownership (the percentage of stock owned by the CEO), and insider (dummy variable indicating whether the current CEO had been hired from inside the company rather than from outside of it). We controlled for the board independence (the number of inside directors to the total number of directors on the board) because of inside directors' influence through their monitoring and advising roles (Walrave et al., 2014). At the firm level, we controlled for firm size (the logarithm of the number of employees) and financial performance (return on assets; net income divided by total assets) because these may influence a firm's innovation potential (Ahuja and Lampert, 2001). ...
This study develops and tests a comprehensive framework that explains what, when, and how CEO characteristics influence firms’ innovation outcomes in R&D‐intensive industries. Empirical evidence from 109 CEOs from 87 U.S.‐based pharmaceutical firms over the period 2001–2013 reveals that research‐oriented CEOs – those with ability and motivation for science and technology – increase their firms’ innovation outcomes. The results indicate that the CEO–innovation relationship strongly depends on the extent of CEOs’ managerial discretion, which is shaped by the organizational context. We contribute to a more comprehensive understanding of the role of CEOs in firms´ innovation performance differentials.
... However, the current business environment has become much more volatile and subject to rapid change, and firms need to be proactive in order to survive and thrive. Previous research has suggested that it is unlikely that organizations in today's business context are unaware of environmental uncertainty, and organizational complacency/myopia has limited explanatory power (Walrave et al., 2015). The characteristics of the biotechnology industry make it an industry with rapid changes, which suggests a need for proactive, effective ways of using resources. ...
Purpose
The purpose of this paper is to provide a better understanding of what drives firms’ choice between exploration alliances and exploitation alliances by examining the role of organizational slack and its interaction with market uncertainty.
Design/methodology/approach
An empirical study is conducted based on 1,614 alliances formed by 581 US biotechnology firms, and the hypotheses are tested using a zero-inflated multilevel Poisson model.
Findings
The results indicate that firms’ strategic choice to pursue exploration or exploitation alliances is a reflection of organizational intention and adaptation to environmental turbulence. More specifically, firms with more financial slack tend to form more exploration alliances and fewer exploitation alliances. However, under high market uncertainty, firms with financial slack tend to establish more exploitative partnerships and avoid exploration collaborations.
Originality/value
This paper contributes to the literature on exploration–exploitation alliances, which tends to fall short of providing an understanding of why organizations pursue such alliances. By identifying the impact of organizational slack and its interaction with market uncertainty, this study shows that organizations are able to respond to environmental change, and those with capabilities are likely to craft their strategic choice configurations based on their own characteristics.
Research Question/Issue
The strategy role of the board of directors is a contentious topic in both theory and practice and the debate on what boards should or should not do around firm strategy has intensified with changes in global corporate governance. Boards face interventionist regulatory developments, calls for changes in their composition, growing owner engagement, and societal questioning on the corporation's very purpose. With this review, we aim to assess how the research agenda in this area has evolved with these developments.
Research Findings/Results
Our analysis of 152 articles published in 45 high‐quality journals between 2008 and 2020 reveals that the board‐strategy literature remains dominated by traditional input–output approaches using archival data. There are, however, some green shoots opening up the debate by recognizing the importance of the firm's specific context, applying alternative or complementary theoretical lenses, exploring the underlying dynamics and processes, and using more sophisticated modeling techniques.
Theoretical implications
We identify three research directions with the potential to advance the research agenda, namely, untangling the complex, multilevel interplay between stakeholders involved in the strategy process, embracing the processual and temporal nature of the board‐strategy relationship, and unpacking the impact of social context to understand when boards matter for strategy.
Practical implications
Our results indicate that the strategy role of the board is evolving and broadening. Most notably the integration of CSR‐related themes into the board‐strategy debate, and the leveraging of board diversity in strategic decision‐making appear to be important issues for contemporary boards.
Sustainability is a key societal challenge and has become an opportunity for innovation. While start-ups are prone to enter such new territories, established companies are more hesitant to leave current trajectories and embrace uncertainty linked to sustainability-oriented exploration. We present a case of a conventional high-tech firm of an owner-manager whose strong values of universalism led him to initialize a sustainability-oriented diversification by exploring renewable energy technologies. Our longitudinal study uncovers how changes in ambidextrous organizational design and represented managerial values ultimately resulted in failed exploration. Our contribution is threefold: First, we link individual-level managerial values of universalism with organizational-level phenomena of sustainability-oriented exploration and diversification. Second, we contribute to bridging hitherto mostly separate bodies of literature on sustainability-oriented innovation and ambidexterity to better understand how conventional firms can deploy their technological capabilities for sustainability. Third, we conceptualize the "separation drift" as fading organizational separation resulting in exploration failure.
This paper investigates the relationship between firms’ transition towards upstream-R&D activities and the availability of R&D employees with PhD training. Doctoral trained employees have distinct motivations for research: some have stronger preferences for intellectual freedom and autonomy, while others reveal greater aspirations for targeted research and opportunities for development of new products and processes. These contrasting profiles among PhD trained employees lead to ambiguous predictions about whether a greater presence of employees with a doctoral training enhances the capacity of firms to initiate upstream-oriented R&D. We examine this question by studying a large sample of Spanish manufacturing firms which are active in development activities, and investigate the effect of PhD trained R&D employees on the propensity of firms to initiate upstream-oriented R&D. Our results show that a higher proportion of PhDs in R&D functions has a positive and significant influence on the firm’s initiation of an upstream-oriented R&D strategy.
In recent years, organizational project management (OPM) has emerged as a field focused on how project, program and portfolio management practices strategically help firms realize organizational goals. There is a compelling need to address the totality of project-related work at the organizational level, providing a view of organizations as a network of projects to be coordinated among themselves, integrated by the more permanent organization, and to move away from a focus on individual projects. This comprehensive volume provides views from a wide range of international scholars researching OPM at a cross-disciplinary level. It covers concepts, theories and practices from disciplines allied to management, such as strategic management, organization sciences and behavioural science. It will be a valuable read for scholars and practitioners alike, who are looking to enrich their understanding of OPM and further investigate this new phenomenon.
Introduction Leadership is an interpersonal, person-oriented, social influence (Endres & Weibler, 2016), which guides in direction, course, action, and opinion (Bennis & Nanus, 1985). To that end, it is different from management, which is task oriented in the sense of bringing about or accomplishing something, being responsible for, or conducting something (Bennis & Nanus, 1985). Leadership requires a leader, but leaders do not operate in a vacuum, nor do they need to be formal managers. For a long time, the terms “leader,” “leadership” and “manager” were used almost interchangeably, and only recently has there been a distinction in their use (Alvesson & Sveningsson, 2003; Crevani et al., 2010). The development of leadership research over the years has also focused on different aspects of leadership, ranging from an interest in the traits, characteristics, and competencies of individual leaders, to an interest in how leadership is practiced in social settings by leaders, co-leaders, and followers in interaction (Carroll et al., 2008). Recent years have brought much insight about the importance of leadership as a complement to management in projects and has added a variety of perspectives to leadership. Examples include the traditional view of project and program managers as leaders and their associated leadership styles. This person-centric perspective has addressed the particular leadership styles of these roles (e.g., Keegan & Den Hartog, 2004) as well as personal characteristics that bring about certain leadership styles (e.g., Dulewicz & Higgs, 2005). We call this the vertical leader and his or her leadership style. Other research has looked at leadership that emerges from teams or individuals in a team and complements the leadership of the vertical leader. Examples of this include the studies on shared leadership (Pearce & Conger, 2003; Crevani et al., 2007) and its related processes (e.g., Cox, Pearce, & Perry, 2003). We call this approach the horizontal leader and his, her or their leadership style. Most recently, researchers have started to investigate the balance and situational contingency of vertical and horizontal leadership in projects. They showed the particular circumstances under which vertical leaders in projects make way for horizontal leaders to temporarily partake in leading the project (e.g., Müller et al., 2016). We call this balanced leadership, i.e., a situation in which the balance between vertical and horizontal leadership is appropriate.
Currently there is no formal model describing the dynamics of technological innovation systems. This paper develops a system dynamics model that integrates the concept of ‘motors of innovation’, following the literature on emerging technological innovation systems, with the notion of ‘transition pathways’ that was developed as part of the multi-level-framework thinking. As such, the main contribution of this paper is a cross-over of two key-frameworks into a system dynamics model that can serve as underpinning for future research. The model’s behaviour is illustrated by means of analyses of TIS dynamics in the context of different transition pathways, under different resourcing conditions. The paper also provides a future research agenda, pursuable by means of experimentation and/or further development of the presented model.
Despite boards of directors’ prominent involvement in strategic alliance (SA) decisions in practice and reports from news media, there is relatively little academic research exploring the board's value for a firm's technical SA investments involving a technical transfer or R&D, which are characterized by a high level of uncertainty, information asymmetry, and extreme complexity. Anchored in the resource dependence theory, this study aims to address this important issue by examining how board of directors contribute their human capital, in the form of relevant strategic experience, may mitigate the core challenges managers face when pursuing technical SAs and thereby influencing their outcomes. Our empirical results show that when outside directors hold more extensive alliance experience, they can better execute their consulting function and improve the firm's technical alliance performance. In addition, directors with experience specifically related to technical alliances also have a positive effect on performance. Last, we find that the impact of alliance experience on technical alliance performance is positively moderated by the size of directors’ prior affiliated companies and their share ownership in the focal firm.
Prior literature stresses the importance for manufacturers to use formal and informal controls to coordinate collaborative new product development activities with suppliers. In doing so, the existence of trust between manufacturers and suppliers is believed to play a key role because it enables manufacturers to reduce investments in formal controls and rely more on less costly informal controls. Manufacturers and suppliers don't suddenly trust each other though: trust typically grows over time as the partners get to know each other. Trust may also decrease if manufacturers overuse formal controls or if suppliers underperform. These fluctuations in trust over the course of supplier–manufacturer relationships complicate the so‐called trust–control nexus and raise important questions about the impact of trust on the efficiency and effectiveness of formal and informal controls as coordination mechanisms. Therefore, this study examines how manufacturers should balance formal and informal controls over time to reap the full benefits of collaborative product development with suppliers. For that purpose, a conceptual and system dynamics model are developed, which incorporate the links among formal and informal controls, trust, and the supplier's development performance. In an empirical validation in the context of the shipbuilding industry, the results reject the notion that manufacturers must lessen formal controls and increase informal controls with trust. Instead, it is most efficient and effective to invest always in formal controls, particularly process control, to coordinate supplier involvement in new product development. These results have important theoretical and managerial implications: Informal controls are not as profitable as expected.
In this study, we draw upon literature in technology and innovation management to theorise about how process improvement efforts in organisations can drive the exploratory activity that is generally associated with more radical forms of innovation. We develop a set of propositions on how process improvement efforts might directly and indirectly drive exploration and more radical forms of organisational innovation. These propositions are organised into four categories: (1) ‘Direct’ – how exploratory forms of process improvement can directly drive innovativeness; (2) ‘Resource Capacity’ – how process improvement can increase the resource capacity that drives innovativeness; (3) ‘Knowledge’ – how process improvement efforts can strengthen knowledge resources that drive innovativeness; and (4) ‘Management Vision’ – how process improvement efforts can influence the managerial vision that moderates the effect of process improvement efforts on innovativeness.
Data from the EU’s Large Holdings Directive (88/627/EEC) allow detailed analyses of the control of European corporations to be undertaken for the first time. This paper reports results from an international study of these data by members of the European Corporate Governance Network. It records high levels of concentration of control of corporations in many European countries with single blockholders frequently controlling more than 50 % of corporate votes. In contrast, a majority of U.K. listed companies have no blockholder owning more than 10 % of shares and a majority of U.S. listed companies have no blockholder with more than 6 % of shares. Distributions of voting blocks reveal that control is concentrated in forms in which regulation confers particular advantages : shareblocks are concentrated at levels at which there are significant control benefits. This suggests a relation between regulation and the structure of ownership of companies that goes beyond existing "over-", "under-" or "optimal-regulation" theories. The paper discusses an alternative view that ownership is largely irrelevant in the face of dominant management control. It also considers a contending thesis that the technology driven project realisation periods are relevant to the period for which corporate control needs to be exerted.
Classification JEL : G31, G34
We conducted a longitudinal process study of one firm's failed attempt to develop a new product. Our extensive data analysis suggests that teams in complex dynamic environments characterized by delays are subject to multiple "information filters" that blur their perception of actual project performance. Consequently, teams do not realize their projects are in trouble and repeatedly fall into a "decision trap" in which they stretch current project stages at the expense of future stages. This slowly and gradually reduces the likelihood of project success. However, because of the information filters, teams fail to notice what is happening until it is too late.
Exploration and exploitation have emerged as the twin concepts underpinning organizational adaptation research, yet some central issues related to them remain ambiguous. We address four related questions here: What do exploration and exploitation mean? Are they two ends of a continuum or orthogonal to each other? How should organizations achieve balance between exploration and exploitation-via ambidexterity or punctuated equilibrium? Finally, must all organizations strive for a balance, or is specialization in exploitation or exploration sometimes sufficient for long-run success? We summarize the contributions of the work in this special research forum and highlight important directions for future research.
Sustained organizational performance depends on top management teams effectively exploring and exploiting. These strategic agendas are, however, associated with contradictory organizational architectures. Using the literature on paradox, contradictions, and conflict, we develop a model of managing strategic contradictions that is associated with paradoxical cognition-senior leaders and/or their teams (a) articulating a paradoxical frame, (b) differentiating between the strategy and architecture for the existing product and those for innovation, and (c) integrating between those strategies and architectures. We further argue that the locus of paradox in top management teams resides either with the senior leader or with the entire team. We identify a set of top management team conditions that facilitates a team's ability to engage in paradoxical cognitive processes.
What distinguishes between success and failure as organizations respond to turbulent environments? This article demonstrates that the most successful firms evolve through periods of incremental change, punctuated by discontinuous, organization-wide transformations. While the most successful firms initiate these strategic reorientations prior to competition, mediocre firms initiate these changes only after performance crises, and failing firms are caught by inertia and never initiate reorientations. This article discusses the roots of organization inertia, the necessity for both convergent and frame-breaking change, and the role of the senior management team in initiating and implementing frame-breaking change.
Organizational learning has many virtues, virtues which recent writings in strategic management have highlighted. Learning processes, however, are subject to some important limitations. As is well-known, learning has to cope with confusing experience and the complicated problem of balancing the competing goals of developing new knowledge (i.e., exploring) and exploiting current competencies in the face of dynamic tendencies to emphasize one or the other. We examine the ways organizations approach these problems through simplification and specialization and how those approaches contribute to three forms of learning myopia, the tendency to overlook distant times, distant places, and failures, and we identify some ways in which organizations sustain exploration in the face of a tendency to overinvest in exploitation. We conclude that the imperfections of learning are not so great as to require abandoning attempts to improve the learning capabilities of organizations, but that those imperfections suggest a certain conservatism in expectations.
This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
While exploration and exploitation represent two fundamentally different approaches to organizational learning, recent literature has increasingly indicated the need for firms to achieve a balance between the two. This balanced view is embedded in the concept of ambidextrous organizations. However, there is little direct evidence of the positive effect of ambidexterity on firm performance. This paper seeks to test the ambidexterity hypothesis by examining how exploration and exploitation can jointly influence firm performance in the context of firms' approach to technological innovation. Based on a sample of 206 manufacturing firms, we find evidence consistent with the ambidexterity hypothesis by showing that (1) the interaction between explorative and exploitative innovation strategies is positively related to sales growth rate, and (2) the relative imbalance between explorative and exploitative innovation strategies is negatively related to sales growth rate.
Organizational survival represents a vital objective for firms, managers, and owners. Most organizational theories regard survival as the ‘correct’ outcome for firms whose managers successfully navigate across a hostile competitive landscape. On the other hand, when a firm ‘disappears,’ scholars, managers, and owners ask, What went wrong?' Failure, exit, bankruptcy, liquidation, hostile takeovers, are largely viewed as results of managerial ‘bungling.’ Many theories about performance, competitive advantage, legitimacy, and leadership rest upon a core assumption that firms, at least some of them, have long, perhaps limitless, life-spans. Long-term survival is not seen as merely a random outcome or an unattainable goal. This paper surveys a broad set of empirical findings about firms' life-spans. It is consistently revealed in the empirical literature that the VAST majority of firms, even large firms, survive relatively short periods. Some themes and their implications are discussed. Copyright © 2006 John Wiley & Sons, Ltd.
This paper identifies a practice turn in current strategy research, treating strategy as something people do. However, it argues that this turn is incomplete in that researchers currently concentrate either on strategy activity at the intra-organizational level or on the aggregate effects of this activity at the extra-organizational level. The paper proposes a framework for strategy research that integrates these two levels based on the three concepts of strategy praxis, strategy practices and strategy practitioners. The paper develops implications of this framework for research, particularly with regard to the impact of strategy practices on strategy praxis, the creation and transfer of strategy practices and the making of strategy practitioners. The paper concludes by outlining the distinctive emphases of the practice perspective within the strategy discipline.
Considers structural inertia in organizational populations as an outcome of an ecological-evolutionary process. Structural inertia is considered to be a consequence of selection as opposed to a precondition. The focus of this analysis is on the timing of organizational change. Structural inertia is defined to be a correspondence between a class of organizations and their environments. Reliably producing collective action and accounting rationally for their activities are identified as important organizational competencies. This reliability and accountability are achieved when the organization has the capacity to reproduce structure with high fidelity. Organizations are composed of various hierarchical layers that vary in their ability to respond and change. Organizational goals, forms of authority, core technology, and marketing strategy are the four organizational properties used to classify organizations in the proposed theory. Older organizations are found to have more inertia than younger ones. The effect of size on inertia is more difficult to determine. The variance in inertia with respect to the complexity of organizational arrangements is also explored. (SRD)
Two competing models of corporate boards are presented. Management control proposes that the board is a rubber stamp for management, and plays a minor role in strategic management, while resource dependence asserts that the board is a tool used to manage environmental uncertainty. A structural model was developed to determine whether corporate boards respond to different types of environmental uncertainty, using data on 147 companies from nine industry groups. It was found that boards tended to be smaller in a more uncertain environment, while having an increased number of interlocks. This relationship was stronger in high-performing firms.
Research on how managers control R&D activities has tended to focus on the performance measurement systems used to exploit existing knowledge and capabilities. This focus has been at the expense of how broader forms of management control could be used to enable R&D contextual ambidexterity, the capacity to attain appropriate levels of exploitation and exploration behaviors in the same R&D organizational unit. In this paper, we develop a conceptual framework for understanding how different types of control system, guided by different R&D strategic goals, can be used to induce and balance both exploitation and exploration. We illustrate the elements of this framework and their relations using data from biotechnology firms, and then discuss how the framework provides a basis to empirically examine a number of important control relationships and phenomena.
This article empirically explores the relations between alternative organizational designs and a firm's ability to explore as well as exploit. We operationalize exploitation and exploration in terms of innovation streams; incremental innovation in existing products as well as architectural and/or discontinuous innovation. Based on in-depth, longitudinal data on 13 business units and 22 innovations, we describe the consequences of organization design choices on innovation outcomes as well as the ongoing performance of existing products. We find that ambidextrous organization designs are relatively more effective in executing innovation streams than functional, cross-functional, and spinout designs. Further, transitions to ambidextrous designs are associated with increased innovation outcomes, while shifts away from ambidextrous designs are associated with decreased innovation outcomes. We describe the nature of ambidextrous organizational designs--their characteristics, underlying processes, and boundary conditions. More broadly, we suggest that the locus of integration and degree of structural differentiation together affect a firm's ability to explore and exploit. We suggest that the senior team's ability to attend to and deal with contradictory internal architectures is a crucial determinant of a firm's ability to exploit in the short term and explore over time. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.
This article presents a simulation model of the development of knowledge, operating routines and dynamic capability in organizations at varying levels of environmental dynamism. We draw on system dynamics modeling to explore trade-offs and ambiguities in the decision to invest in deliberate learning processes to enhance the development of dynamic capabilities. The model incorporates mindfulness and tool utility (positive) effects as well as experience and inertia (negative) effects on dynamic capability. The simulation experiments conducted with the model suggest that the impact of deliberate learning on dynamic capability is non-linear, complex, and in some instances counter-intuitive. This is evident from the thresholds (tipping points) that arise from the differential effects of articulated knowledge, codified knowledge and operating routines on dynamic capability at different levels of environmental dynamism.
The erosion of service quality throughout the economy is a frequent concern in the popular press. The American Customer Satisfaction Index for services fell in 2000 to 69.4%, down 5 percentage points from 1994. We hypothesize that the characteristics of services---inseparability, intangibility, and labor intensity---interact with management practices to bias service providers toward reducing the level of service they deliver, often locking entire industries into a vicious cycle of eroding service standards. To explore this proposition we develop a formal model that integrates the structural elements of service delivery. We use econometric estimation, interviews, observations, and archival data to calibrate the model for a consumer-lending service center in a major bank in the United Kingdom. We find that temporary imbalances between service capacity and demand interact with decision rules for effort allocation, capacity management, overtime, and quality aspirations to yield permanent erosion of the service standards and loss of revenue. We explore policies to improve performance and implications for organizational design in the service sector.
Research on exploration and exploitation is burgeoning, yet our understanding of the antecedents and consequences of both activities remains rather unclear. We advance the growing body of literature by focusing on the apparent differences of exploration and exploitation and examining implications for using formal (i.e. centralization and formalization) and informal (i.e. connectedness) coordination mechanisms. This study further examines how environmental aspects (i.e. dynamism and competitiveness) moderate the effectiveness of exploratory and exploitative innovation. Results indicate that centralization negatively affects exploratory innovation while formalization positively influences exploitative innovation. Interestingly, connectedness within units appears to be an important antecedent of both exploratory and exploitative innovation. Furthermore, our findings reveal that pursuing exploratory innovation is more effective in dynamic environments whereas pursuing exploitative innovation is more beneficial to a unit’s financial performance in more competitive environments. Through this richer explanation and empirical assessment, we contribute to a greater clarity and better understanding of how ambidextrous organizations coordinate the development of exploratory and exploitative innovation in organizational units and successfully respond to multiple environmental conditions.
The paper considers the impact of multiple shareholder-oriented governance practices on R&D decisions. Based on a sample of 5,528 firms belonging to 110 large French listed business groups, our results substantiate the idea that shareholder-oriented governance practices and a lower position in a control pyramid are better for R&D investment. The introduction of any additional shareholder oriented practice is found to result in more R&D. We show however that this Anglo-Americanization of the French corporate governance system is only partial. We provide evidence of the co-existence of an old French system of corporate governance with a hybrid model of corporate governance. The lack of concrete results on complementarity among shareholder oriented governance practices casts doubt on the stability of this hybrid model in the French context.
A central theoretical problem in organizational evolution is how organizations acquire new capabilities. Organizational exploitation
of current capabilities often reduces exploration of new capabilities, resulting in a short-term bias in organizational adaptation
(March, 1991). In addition, problemistic search and slack search have different consequences for exploration and exploitation
because exploration has greater risk and less routinization. Exploration and exploitation are also affected by organizational
momentum (Kelly and Amburgey, 1991) and direct competition from exploitation to exploration (March, 1991). These propositions
are tested using data on innovations in shipbuilding between 1972 and 2000.
In this article, a social theory framework is developed to explain the common themes of recursive and adaptive practice underpinning the existing strategic management literature. In practice, there is a coexistent tension between recursive and adaptive forms of strategic action that spans multiple levels from macro-institutional and competitive contexts to within-firm levels of analysis to individual cognition. This tension may be better understood by examining how management practices are used to put strategy into practice. Such practices span multiple levels of context and are adaptable to their circumstances of use, serving to highlight both general characteristics and localized idiosyncrasies of strategy as practice. The article develops the concept of management practices-in-use into a research agenda and nine broad research questions that may be used to investigate empirically strategy as practice.
This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
Despite a growing sense that speed is critical to organizational success, how an emphasis on speed affects organizational processes remains unclear. We explored the connection between speed and decision making in a 19-month ethnographic study of an Internet start-up. Distilling our data using causal loop diagrams, we identified a potential pathology for organizations attempting to make fast decisions the "speed, trap." A need for fast action, traditionally conceptualized, as an exogenous feature of the surrounding context, can also be a product of an organization's own past emphasis. on speed. We explore the implications for research on-decision making and temporary pacing.
Boards of directors serve two important functions for organizations: monitoring management on behalf of shareholders and providing resources. Agency theorists assert that effective monitoring is a function of a board's incentives, whereas resource dependence theorists contend that the provision of resources is a function of board capital. We combine the two perspectives and argue that board capital affects both board monitoring and the provision of resources and that board incentives moderate these relationships.
Organizations evolve through periods of incremental or evolutionary change punctuated by discontinuous or revolutionary change. The challenge for managers is to adapt the culture and strategy of their organizations to its current environment, but to do so in a way that does not undermine its ability to adjust to radical changes in that environment. They must, in other words, create an ambidextrous organization—one capable of simultaneously pursuing both incremental and discontinuous innovation.
In this paper we introduce a new antecedent to the strategic change literature by examining the effect of media coverage on the extent of strategic change. Specifically, we examine how negative media coverage may prompt firms to make changes to their resource allocations and then explore how the makeup of the board and firm performance can moderate this relationship. We develop a theoretical framework to explain why media coverage may affect strategic change and then test our theory with a longitudinal analysis of 250 firms over a four-year period. The empirical results lend support to our theory of media influence on strategic change and suggest that the evaluations of firms by outside constituents may influence the decision making of executives.
Technological transition requires serious management decisions because it essentially means withdrawing from an existing technology, in which the company has been successful, and shifting management resources to a new technology with a high degree of uncertainty. We will analyze in detail an example of a successful transition to a new technology and draw key factors for success.
The subject of our analysis is the transition made by M atsushita E lectric G roup ( MEG ), a large corporate group representative of Japanese companies, at the time of its commercialization of plasma display panel ( PDP ) TV s. During commercialization process, Matsushita made a successful transition from accumulated direct current‐plasma display panel ( DC PDP ) to alternating current‐plasma display panel ( AC PDP ) through incorporating AC PDP technology from P lasmaco, V enture C ompany established in 1987.
Key conceptual contributions are as follows. Old and new technology can differ in their knowledge base. According to existing literature, when the knowledge base is radically different, incumbent firms have a difficulty adapting to the technological change. On the other hand, when the knowledge base is very similar, incumbent firms have no trouble adapting to the change. Beyond these established existing understandings, this paper argues that when the knowledge base is moderately different, managers can increase the likelihood of successful transition by implementing a set of organizational strategies. Among these strategies, a particularly insightful one is that through the parallel development process of both existing and new technologies, managers can eventually integrate the advantages of both technologies by implementing a flexible resource allocation mechanism to overcome the dichotomy between old and new through creation of a ‘ B a’, J apanese concept offering shared context for knowledge creation.
Research on organizational decline suggests that some organizations cope with decline by becoming more rigid, while others become more flexible and risk taking. Few studies have examined the specific managerial activities that lead to the more flexible course. This study reanalyzes a case of organizational decline in a small midwestern school district that coped successfully by implementing a carefully structured participation process. Administrative leaders in the district, in particular the superintendent, “opened a conversation” through a carefully arranged and supported task force with a broad group of citizens, staff, teachers and students about the goals and priorities of the district. The citizens' committee efforts continued for six months and resulted in a strong consensus for action (a tax levy, closing a school, restatement of program priorities and staff rollbacks).
The case points to managerial actions that other organizations could follow to remain flexible and vitalized during decline. Critical steps included: shaping the perceptual fields of participants through information and disclosure in order to help participants recognize a serious and urgent problem without introducing crisis; careful management and operational support of task formats for broadened participation, with minimal influence on the substance of their recommendations; leadership through coaching of submanagers who facilitated the process indirectly; anticipating and dealing directly with conflicts by balancing views and channeling different interests into shared governance opportunities where heterogeneity was valued and institutional knowledge could be gained.
The authors advance a political model, based on management as a process of governance, to explain how the leadership in this organization conceptualized its role. Management acted as a steward for decisions about organizational goals and legitimacy that others would make. By surrendering the power to shape reality for others and instead allowing them through discourse to establish a coherent policy out of heterogeneity, the superintendent created commitment to the organization during a time of stress and eventually a robust consensus which became the basis for action. A model of shared governance that was in harmony with the community's history and values and that reflected the superintendent's personal philosophy was implemented through specific activities.
The shared governance model provides a unified conceptual explanation for why the superintendent acted as he did, and it highlights the specific functions managers might perform if the organization is to respond flexibly during decline. The political interpretation extends and refines current theoretical models of organizational decline processes and suggests approaches that are potentially applicable to other organizations.
The paper examines the contribution to strategy by chairmen and non-executive directors in large UK companies. The collective label of 'part-time board member' is used to refer to individuals performing these roles. The paper asks 'how, if at all, do part-time board members influence strategy in UK plc's'?. Using data gathered from interviews with 108 company directors, the paper suggests that part-time board members do not simply ratify decisions made by all-powerful executives. A conceptual model is developed to show that part-time board members are able to influence processes of strategic choice, change and control by shaping both the ideas that form the content of company strategy and the methodologies and processes by which those ideas evolve. Their involvement in strategy is conditioned by factors such as: changing norms about corporate governance; the history and performance of the company; the process and conduct of board meetings and informal dialogue amongst company directors between board meetings.
Jim March's framework of exploration and exploitation has drawn substantial interest from scholars studying phenomena such as organizational learning, knowledge management, innovation, organizational design, and strategic alliances. This framework has become an essential lens for interpreting various behaviors and outcomes within and across organizations. Despite its straightforwardness, this framework has generated debates concerning the definition of exploration and exploitation, and their measurement, antecedents, and consequences. We critically review the growing literature on exploration and exploitation, discuss various perspectives, raise conceptual and empirical concerns, underscore challenges for further development of this literature, and provide directions for future research.
There is empirical evidence that established firms often have difficulty adapting to radical technological change. Although prior work in the evolutionary tradition emphasizes the inertial forces associated with the local nature of learning processes, little theoretical attention has been devoted in this tradition to understanding how managerial cognition affects the adaptive intelligence of organizations. Through an in-depth case study of the response of the Polaroid Corporation to the ongoing shift from analog to digital imaging, we expand upon this work by examining the relationship between managers' understanding of the world and the accumu- lation of organizational capabilities. The Polaroid story clearly illustrates the importance of managerial cognitive representations in directing search processes in a new learning environ- ment, the evolutionary trajectory of organizational capabilities, and ultimately processes of organizational adaptation. Copyright © 2000 John Wiley & Sons, Ltd.
The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.
We investigated contextual organizational ambidexterity, defined as the capacity to simultaneously achieve alignment and adaptability at a business-unit level. Building on the leadership and organization context literatures, we argue that a context char- acterized by a combination of stretch, discipline, support, and trust facilitates contex- tual ambidexterity. Further, ambidexterity mediates the relationship between these contextual features and performance. Data collected from 4,195 individuals in 41 business units supported our hypotheses. A recurring theme in a variety of organizational literatures is that successful organizations in a dy- namic environment are ambidextrous—aligned and efficient in their management of today's busi- ness demands, while also adaptive enough to changes in the environment that they will still be around tomorrow (Duncan, 1976; Tushman & O'Reilly, 1996). The simple idea behind the value of ambidexterity is that the demands on an organi- zation in its task environment are always to some degree in conflict (for instance, investment in cur- rent versus future projects, differentiation versus low-cost production), so there are always trade-offs to be made. Although these trade-offs can never entirely be eliminated, the most successful organi- zations reconcile them to a large degree, and in so doing enhance their long-term competitiveness. Authors have typically viewed ambidexterity in structural terms. According to Duncan (1976), who first used the term, organizations manage trade-offs between conflicting demands by putting in place "dual structures," so that certain business units—or groups within business units—focus on alignment, while others focus on adaptation (Duncan, 1976).
Environmental imperatives are seen by many business leaders to represent a major issue for the 1990's and beyond. The debate about the environmental sustainability of economic activity has important implications for the development of business and places considerable emphasis on the need for planned corporate change. The strategic significance of the environment is particularly critical to R&D as this is characterised by long planning horizons and provides the setting for the development of future products and processes.
The purpose of this paper is to examine the connections between environmental imperatives, strategic change and R&D management. To this end the paper reviews the strategic nature of environmental pressures on business. From this base, consideration is given to the responses required by business, in meeting these pressures. The paper concludes by suggesting that the application of management techniques in concert with organisational change is needed for R&D management to build environmental considerations effectively into innovation. These suggestions can be used to gauge how far individual businesses have developed the systems and structures to enable them to move towards sustainability. The implication of the paper is that R&D management will not only need to apply new management techniques but will have to play a leading role in innovative organisational structures in order to fulfil the full potential of environmentally sensitive products and processes.
A system dynamics model of its R & D organization has been developed by Battelle Northwest to serve as a basis for improved management planning and policy making. This model was designed to be applied in an interactive man–model environment. Thus far, the model has proven useful in forecasting future resource demands under various contingencies; and, importantly, it has improved management's understanding of the structure and dynamics of its organizational environment.
Examines the correlation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. Also discusses the difficulty in balancing resource management between gaining new information about alternatives to improve future returns (i.e., exploration) and using information currently available to improve present returns (i.e., exploitation). Two models which evaluate the formation and use of knowledge in organizations are developed. The first is a model of mutual learning in a closed system having fixed organizational membership and stability. The second is a model which considers the ways in which competitive advantage is affected by knowledge accumulation. The analysis indicates that the choice to rapidly develop exploitation over exploration might be effective in the short term, but is potentially detrimental to the firm in the long term. (SFL)
Given industry competitiveness, how do firms' new product development (NPD) process designs differ when responding to an innovation mandate? How do NPD design elements differ across firms when implementing NPD processes? These design elements are strategic business unit (SBU) senior management involvement, business case content, customer interactions, and cross-functional integration. What are the consequences of different combinations of NPD process design elements for innovation productivity? We explore these questions via a collective case study of newly implemented NPD process designs at three different SBUs of a major US-based international conglomerate, 1 year after receiving the mandate to grow through innovation. Our analysis suggests that industry competitiveness and firm characteristics influence the NPD process design as SBUs employ distinct combinations of NPD design elements. The differential emphasis on design elements leads to variation in process design and divergence in innovation productivity.
The literature suggests that established firms need to balance their exploration and exploitation activities in order to achieve superior performance. Yet, previous empirical research has modeled this balance as the interaction of orthogonal activities. In this study, we show that there is a trade-off between exploration and exploitation and that the optimal balance between exploration and exploitation depends upon environmental conditions. Using a novel methodology to measure the relative exploration versus exploitation orientation, we find an inverted U-shaped relationship between the relative share of explorative orientation and financial performance. This relationship is positively moderated by the R&D intensity of the industry in which the firm operates. Copyright © 2008 John Wiley & Sons, Ltd.
abstractThe benefits of strategically balancing exploitation and exploration are well documented in the literature. Nonetheless, many firms tend to overemphasize exploitation efforts, a situation commonly referred to as the ‘success trap’. Previous studies have attributed this behaviour to managerial incompetence or myopia. However, some management teams appear to adequately recognize the exploration need, while not being able to bring about the required strategic change. We draw on system dynamics modelling to investigate this phenomenon. A simulation model is developed and then the behaviour of a selected firm is replicated to uncover the underlying processes. As such, we develop a process theory of the success trap at the managerial level, coined the ‘suppression process’. This process theory describes and explains how the interplay between top managers, board members, and exploitation–exploration activities can trap the firm in the suppression of exploration.
This study examines the antecedents of explorative and exploitative learning of technological knowledge from external corporate ventures. We compare different forms of external corporate venturing, namely corporate venture capital investments, alliances, joint ventures, and acquisitions, as alternative avenues for interorganizational learning. Furthermore, we test the effects of multiple relational characteristics on the type of learning outcomes. Our empirical analysis is based on citations in patents filed by a sample of 110 largest U.S. public information and communications technology companies during the years 1992–2000. We find that corporate venturing mode and technological relatedness have significant effects on the likelihood of explorative learning.
There has been considerable research in the field of system dynamics over the last decade concerned with defining generic structures and templates by which to classify structures and behavioural insights in dynamic systems. These have appeared both in stock/flow and causal loop terms. This article focuses on generic causal loop structures more commonly known as system archetypes, a profusion of which have now been defined. The purpose of the article is to improve the usefulness of system archetypes both as free standing devices to aid model conceptualisation and as a means of disseminating insights arising from models. In order to achieve this three postulates are made: First, that system archetypes can be usefully condensed down to a more understandable core set of four totally generic archetypes, consisting of the four ways of ordering a pair of reinforcing and balancing feedback loops. These are described, named and current archetypes mapped onto them with specific examples. Second, that for every “problem” archetype there exists a closed loop “solution” archetype. It is suggested that some misunderstandings with current archetypes arise from the fact that they often combine problem and solution links in the same diagram. Third, that each archetype has important characteristics, which are vital to understanding the role of archetypes in assisting systemic thinking. The particular characteristic introduced and highlighted is the concept of organisational boundaries. The article concludes by discussing the importance of the reduced set of archetypes, and organisational boundaries in particular, in explaining some barriers to implementing systemic thinking, using a range of examples encountered by the author in recent consulting practice. Copyright © 2003 John Wiley & Sons, Ltd.
Based on a survey study of 155 U.S. firms, we conducted a firm-level assessment of the impact of different kinds of structures (i.e., functional versus cross-functional) in different kinds of new product development (NPD) processes (i.e., incremental versus radical) on different kinds of firm innovation performance (i.e., derivative versus breakthrough). We observe that most firms opt for similar structures for their incremental and radical NPD processes. At the same time, though, we find strong evidence that (1) firms that apply a cross-functional structure for the radical NPD process perform significantly better in terms of breakthrough innovation performance than firms that apply a functional structure for the radical NPD process and (2) firms that apply a functional structure for the incremental NPD process perform significantly better in terms of derivative innovation performance than firms that apply a cross-functional structure for the incremental NPD process. These latter findings point to the relevance of adopting structural ambidexterity, where firms make an explicit distinction between incremental and radical NPD processes and organize them in a different way.
This paper is concerned with the image of two large engineering firms, both based in the UK, but with global ambitions rapidly being realized. In both cases, the firm's image had conveyed the impression of a Midland's ‘metal-basher’, a traditional engineering firm manufacturing a wide range of uncomplicated products. In neither case was this image an accurate reflection of the firm's businesses, and in neither case was the image deliberately cultivated. However, in one case senior management saw the metal-bashing image to be so incompatible with global aspirations that it was deliberately expunged. In the other, the same image was deemed less damaging to international aspirations and no specific efforts were made to change it. The paper examines some of the strategic implications of making such a change, and considers some of the lessons that might be derived for organizational change in general. Senior managers in both companies were interviewed over a two-year period and their views are recorded in quotation throughout the paper.
This article maps the development of strategic thinking since the 1960s and identifies an emerging perspective on strategy as ‘practice’. The practice perspective on strategy focuses on strategists and strategizing, rather than organizations and strategies. Implications for practitioners, teachers and researchers are developed.
The empirical evidence is that only a tiny fraction of organizations live to age 40. Why this should be is a puzzle, since when firms are doing well they have all the resources (financial, physical, and intellectual) to continue to be successful. Yet the evidence is that most organizations fail. Drawing on recent advances in evolutionary theory, this paper illustrates how multi-level selection processes help organizations adapt in the face of technological and market changes. We show how this process, along with the concepts of organizational ambidexterity and dynamic capabilities, may help organizations survive over long time periods. We illustrate how one deliberate and repeatable version of this process enabled IBM to generate more than $15 billion in growth between 2000 and 2005.
No one executive is immune from that difficult-to-distinguish line that divides the self-confidence required of a successful CEO from the hubris seen at the root of so many corporate scandals today. We can count Warren Buffett, Steve Jobs, Martha Stewart, and Jack Welch among the business leaders who have been infected with hubris at various stages of their careers – and seen their lives and companies suffer as a result. Every executive is vulnerable to hubris when they become dependent on wealth, status, and other extrinsic rewards for their sense of worth; when they embark on ventures that cross beyond their capabilities; when they unduly rely on the advice and input of others to execute their vision; and when they simply assume that their plans for the future will be realized without obstacle. Understanding these four key dynamics and the mistakes made as a result of falling prey to them will pave the road for business professionals to understand how they can guard against their own hubris while still building upon their unparalleled will to reach even greater levels of success. (Summary)