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Innovation Streams and Ambidextrous Designs: On Building Dynamic Capabilities
Michael TushmanWendy Smith
George WestermanRobert Wood
Charles O’Reilly
Research Question:
What are the Strategic, Organizational, and Senior Team Roots of Dynamic Capabilities?
Building Dynamic Capabilities is Difficult? (Wiggins and Ruefli, 2002)
IBM(1993-2004) Firestone NCR
Kodak Kuhn Loeb Boeing
SSIH/Asaug Bausch & Lomb Philips
Sears U.S.Steel Levi Strauss
Kidder Peabody Oxford Health Polaroid
Ciba-Geigy Intertype/Varityper DEC
Worldwide Watch Production
1955
1977
1978
1979
1980
1982
1985
2,316
1,021
979
867
861
730
600
70,026
54,825
52,669
46,716
46,998
38,200
32,000
1945
1950
1960
1965
1970
1975
1976
Year
1,863
2,167
1,927
1,618
1,169
1,083
Number ofFirms
80,000
60,239
74,216
83,922
89,448
62,567
55,182
Employees
Number of Firms and Workers inthe Swiss Watch Industry,
1950-1985
2,500
Sources: Rubber Manufacturers Association, “Tire Shipments by Construction,” Tire Industry Facts(Akron, Ohio, 1990); Firestone Tire & Rubber Company, “Sales Forecasts,” Corporate Archives (Akron, Ohio, 1980).
Citation:Sull, Donald. “The Dynamics of Standing Still: Firestone Tire & Rubber and the Radial Revolution,” Business History Review, 1999, pp. 430-464.
Percentage of Tires Shipped by Construction Type: 1961-1989
1976 1981 1986 1991 1996
14”
8”
5.25”
3.5”
2.5”
Control Data, IBM, Memorex,Diablo, DEC, Ampex
Shugart, Micropolis,Priam, Quantum
Seagate, Miniscribe, Maxtor,Micropolis, Computer Memories
Conner, Quantum, Maxtor,Western Digital, Seagate
Prairietek, Quantum,Conner, Western DigitalMarket
Size
Disk Drive Industry Evolution146 firms founded; 125 failures
Disk Drive Industry Evolution146 firms founded; 125 failures
Henderson and Clark, ASQ, 1990.
– Photolithography Industry
– Contact aligners (Cobuilt, Kasper)– Proximity aligners (Canon)– Scanners (Perkin-Elmer)– Steppers– 2nd generation steppers (Nikon)
– Subsystems and linkage mechanismslightlensalignment systemmechanical system
Innovation Streams
Incremental change with existing product
Non-incremental defined by change in
technology markets
Innovation Streams
Incremental change with existing product
Non-incremental defined by change in
technology markets Markets
Current Customers
New Customers
Emerging Market
IncrementalInnovation
ArchitecturalInnovation
DiscontinuousInnovation
ExistingConventional Lens
Solution
InnovationDaily DisposibleExtended Wear
Process Innovation
Technology
InnovationPharmaceutical
(Visudyne)
InnovationFashion Lenses
CIBA VISION
Dynamic Capabilities and Innovation Streams
The Challenge:
March (1991), Levinthal (1997): Explore and Exploit
Weick (1979): Learn and unlearn, hypocritical
Thompson (1967): efficiency and flexibility
Abernathy (1978): productivity dilemma
The Response:Ecology/Selection:
Spin-outs (Christensen, 1997; Baghai et al, 1999)ICV, New Business Groups, Skunkworks
(Van de Ven, 1999; Burgelman, 2002)
Contingency and Punctuated Change:Romanelli and Tushman (1994)Siggelkow (2001)Miller (1990)
Switch Between Modes: Louis and Sutton (1989)Duncan (1976)- initiation vs implementationBrown and Eisenhardt (1998)-loose and tight
semistructures linked in time, incremental change, choreographed transitions, edge of
chaos
Plural, Dual, or Ambidextrous Designs: Explore and Exploit
Tushman and O’Reilly (1997), Nonaka (1988),Bradach (1998), Adler et al (1999), Sutcliffe et al (2000)
High Structural Differentiation: Intra Unit ContradictionsLimited/Tactical Structural IntegrationStrong Senior Team Integration
Not switch back and forth, but simultaneous exploit and exploreNot spin out, ICV, but internally contradictory architecturesNot semi structures, but ambidextrous designsNot induced and autonomous, but strategic innovationNot incremental or punctuated, but both
On Innovation Streams and Dynamic Capabilities
Products/Services As Systems: Subsystems and Linking Mechanisms
1860 1950s 1970 1980
Spring Battery Battery Battery Battery
Escapement Escapement Tuning Fork Quartz Quartz
Gears Gears Gears Gears Electronics
Analog Analog Analog Analog Digital
Gold Gold Gold/Plastic Gold Plastic
Energy
Oscillation
Linkage
Face
Case
Subsystems
Subsystems: Core and Peripheral
Henderson and Clark, ASQ, 1990.
– Photolithography Industry
– Contact aligners (Cobuilt, Kasper)– Proximity aligners (Canon)– Scanners (Perkin-Elmer)– Steppers– 2nd generation steppers (Nikon)
– Subsystems and linage mechanismslightlensalignment systemmechanical system
FanSmall CopiersSmall Radio
ContactAligners
ProximityAligners
Architectural innovation
Rosenbloom and Christensen. Industrial and Corporate Change, 1994.
Disk drives industry: 14”, 8”…3.5”(Winchester, Seagate, Conner)
“Issue in disk drives may be relative abilities of incumbents to change strategies (value networks), not technologies.”
Markets
Technology
New
Existing
Incremental
Discontinuous
Disk Drives (8”… 3.5”)
14’’
Architectural
Innovation Streams and Dynamic Capabilities
New
Existing
Markets
Incremental Architectural
Discontinuous CD/Core NCA/Core
• Dynamic Capabilities Rooted in Innovation Streams.
Types of Innovation
Flat Bed ScannerConventional lensUSATodayBias Ply TiresContact AlignerMechanical WatchIBM Micro: ASIC
Proximity Aligner
HP/WandaFashion Lens
8” Disk DrivesIBM Micro: Network, Imaging
Radial TiresDisposable LensExtended Wear Lens
USAT.com
Quartz WatchVysodyneHP/Zorro
Organizational Architectures & Innovation Streams:Multiple Selection Environments
Selection
Exploration: Variation
General Managers and Senior
Team
mfg./salescompetencies
tight/formalorganization
arrangements
tightculture
tightprocesses
R&D/entrepr.competencies
looseculture
looseprocesses
looseorganization
arrangements
Exploitation:Retention
Ciba Vision /Vysodyne, Daily DisposablesSeiko/QuartzUSAToday.comIBM Network Tech/TransportHP Scanner/Zorro
Tasks
OrganizationArrangements
IndividualsInformal
Mgmt. Team
Mgmt. Team
Tasks
OrganizationArrangements
IndividualsInformal
Mgmt. Team
Strategic Re-orientations,Discontinuous Change
Executive TeamMultiple strategies
Single visionFew Core Values
Exploration: Multiple failures, experiments, variants
Ciba Vision/Conv. Lens, Seiko/Mechanical,USATodayIBM Network/ ASICHP Flat Bed Scanner
Exploitation: Consistency, incremental change, and continuous improvements
Ambidextrous Designs, Innovation Streams and Dynamic Capabilities
Ambidextrous Design
J. Kelley(Meta Manager)Group Executive
Mfg. Chris King (Ambidextrous Manger)Network Technologies
ASIC(Exploitation)
Network(Innovation Manger)
Transport(Innovation Manger)
Senior TeamTactical
Integration
Exploration
Wireless
Research Design
Multi Case Design (Van de Ven, 1999; Brown and Eisenhardt, 1997)Chose Sites Based on Innovation StreamsBusiness Unit as Level of AnalysisLongitudinal Data (Lewin et al, 1999)
Sample15 Business Units (9 Industries)24 non-incremental innovations36 Innovation Episodes 7 Business Units with multiple non-incremental innovations11 innovations with multiple innovation- episodes5 out of 6 types of non-incremental innovation
Data Collection6-12 Interviews per firm (106 in all): open ended and targetedMini-cases5 coders independently coding • differentiation (distinct unit, physical location, culture, rewards, competencies) .92
• strategic integration (general manager support, relationship, on senior team) .91
• innovation performance (technical, market, and commercial) .86
Methods
Table 1: Sample Description
# of Non-Incremental Innovations Innovation Episode
Perfor-
mance1Industry Dates
Number of Interviews
Handheld Scanner (A) 2.25 Jan 91 - Mar 96 Handheld Scanner (B) 4.75 Oct 96 - Mar 98 Handheld Scanner (C) 2.67 Aug 98 - Apr 99
News.com(A) 3.42 1995 - 1999 News.com(B) 2.33 1999 - 2000 CitySearch.com 4.67 1999 - 2000
Micro Display Chip (A) 1.63 1997 - 1999 Micro Display Chip (B) 3.42 1999 - 2000 Imaging Chip (A) 2.25 1997 - 1999 Imaging Chip (B) 4.00 1999 - 2000
Daily Disposable 5.00 1992 - 1997 Extended Wear 5.00 1992 - 1997
Visudyne (A) 5.00 1992 - 1997 Visudyne (B) 5.00 1997 - 2002
USAT.com (A) 3.42 1995 - 2000 USAT.com (B) 4.39 2000 - 2001 Direct (A) 1.67 1990 Direct (B) 4.25 2000 - 2001
1 On-Site Power Plants 4.56 Steady Energy 1986 - 1995 11
1 Color Ultra-Sound 4.78Managed Decline
Health Care 1986 - 1990 10
Continued on next page
Medical Imaging Div.
2
2 Semiconductor
Power PlantsUtility Company
10Eye Care
11
Newspaper
2 Media8
Improving
USA Today
7Electronics
Regional News
Ciba Vision
Turner Technologies
Newspaper
ASIC Chip
Steady
Declining to Improving
7
Conventional Lens
Existing Product Perfor-mance
Steady to Improving
1
HP ScannersFlat Bed Scanners
Company/Existing Product
Media
B&W Ultra-Sound
3
Declining to
Steady
# of Non-Incremental Innovations Innovation Episode
Perfor-
mance1Industry Dates
Number of Interviews
Medical Devices 1 Integrated Healthcare System 2.50 Steady Health Care 1994 - 1999 4
Transport Chip (A) 4.56 Mar 99 - Mar 00
Transport Chip (B) 4.56 Mar 00 - Sep 00
Network Chip (A) 4.56 Mar 99 - Mar 00
Network Chip (B) 4.56 Mar 00 - Sep 00
1 Web Based Middleware 4.83 Improving Software 1998 - 2000 11
Advanced Collaboration 2.67 Jun 00 - Dec 01 Knowledge Management 3.17 Jun 00 - Dec 01
E-Learning 2.00 Jun 00 - Dec 01
1 Radial Tires 4.22Managed Decline
1970 - 1976
1 Radial Tires 1.44 Declining 1970 - 1976
1 Radial Tires 2.78 Declining 1970 - 1976
Helios (A) (High Resolution Medical Imaging Film)
2.00 1986 - 1988
Helios (B) 1.67 1988 - 1996
Digital Camera (A) 2.00 1980 - 1989
Digital Camera (B) 2.33 1990 - 1996
15 24 36 9 106TOTALS:
3 Data for Polaroid innovations are principally from Tripsas and Gavetti (2000).
Software Co.
2 Data for Goodyear, Firestone and Goodrich innovations are principally from Sull (1999).
2
1 Performance = a composite scale (1 - 5) based on Technology Learning; Market Learning; and Commercial Success.
IBM Network Technology
2 Semiconductor 10
Medical Products Co.
Sample (cont.)
Company/Existing Product
Existing Product Perfor-mance
Analog Camera
Integrated Collaboration
Bias Ply Tires Tires
Declining to Improving
COBOL / CICS
ASIC
IBM Middleware:
Goodyear2
Firestone2
Declining
4
3 Software 12
Polaroid3
Steady to Declining
Photography
1
BF Goodrich2
Secondary Sources
Item/Factor ICC IRRChron. Alpha N Mean
Std. Dev.
Structural Diff.
Strategic Integ.
Distinct Unit N/A N/ASeparate Physical Location N/A N/ADistinct Culture .83 .84Distinct Reward System .82 .90Human Resource Capabilities .91 .90 Structural Differentiation 0.87 351 N/A2 N/A2
Ambidextrous Manager Support .75 .91AM-IM Relationship .79 .94 Senior Team Integration 0.92 35 N/A2 N/A2 .34*
Market Learning .81 .86Technology Learning .77 .82Market Success .91 .85 Performance 0.90 35 3.4 1.22 .38* .79***
1 We did not code Visudyne B as we did not have full information about the organization during this innovation episode. 2 Structural Differentiation and Strategic Integration are both standardized with mean = 0, SD = 1.
*p < .05, ***p < .001
Descriptive Statistics Correlations
Table 2: Item Reliability and Descriptive Statistics
Item Reliability
Non-Incremental Technological Change
Results: Innovation Streams
RESULTS
Innovation Streams exist
No performance difference by:
• technology (t=.87, ns)
• markets (F=2.14, ns)
RESULTS
Innovation Streams exist
No performance difference by:
• technology (t=.87, ns)
• markets (F=2.14, ns)
Software Co: E-Learning
Regional News: City Search.com
HP Scanner: Handheld Scanner B, C
Regional News: News.com A, B
USA Today: USAT.com A
Ciba Vision: Visudyne A, B
Firestone: Radial TiresGoodyear: Radial TiresBF Goodrich: Radial TiresUtilityCo: On Site Power PlantsCiba Vision: Extended WearCiba Vision: Daily Disposable
IBM Middleware: WebsphereMedical Imaging: Color
UltrasoundMedical Products: Integrated
Healthcare System
HP Scanner: Handheld Scanner A
Turner Technology:Imaging Chip A, BMicro Display Chip A, B
IBM Network Technology:Network Chip A, BTransport Chip A, B
Incremental Architectural Discontinuous
Current Customers
New Customers
Emerging Market
USA Today: Direct A, BUSA Today: USAT.com B Software Co: Knowledge ManagementSoftware Co: Advanced CollaborationPolaroid: Helios A, BPolaroid: Digital Camera A, B
Polaroid: Analog CameraSoftware Co: ICEIBM Software: COBOLMed. Imaging: B&W UltrasoundUtilityCo: Power PlantsCiba Vision: Conventional LensIBM Network Tech: ASICTurner Technology: ASICGoodyear: Bias Ply Tires Firestone: Bias Ply Tires BF Goodrich: Bias Ply Tires Regional News: NewspaperHP Scanners: Flatbed ScannersUSA Today: NewspaperMed. Product: Medical Devices
Target Market
3.48 3.243.80
0
1
2
3
4
5
1 2 3GoodyearFirestoneBF GoodrichUtilityCoMedical ImagingIBM MiddlewareHP ScannerMedical Products
Regional NewsTurnerUSA TodayIBM Network TechnologyPolaroid
CIBA VisionSoftware Co.
Innovation Performance
(N=8) (N=5) (N=2)
RESULTS
No difference in performance by number of innovations in innovation stream:
One vs. Multiple (t= .21, n.s.)
RESULTS
No difference in performance by number of innovations in innovation stream:
One vs. Multiple (t= .21, n.s.)
Innovation performance by number of non-incremental innovations
HP Scanners: Handheld Scanner BUSA Today: USAT.com BUSA Today: Direct BRegional News: City Search.comRegional News: News.com ATurner Technology: Micro Display ATurner Technology: Imaging BIBM Middleware: WebsphereUtilityCo: Power PlantsIBM Network Tech: Network Chip BIBM Network Tech: Transport Chip BCIBA Vision: Extended WearCIBA Vision: Daily DisposableCIBA Vision: Visudyne A Polaroid: Helios B
Structural Differentiation
LOW
HIGH
Senior Team
Integration
LOW HIGH
Cross-Functional Teams
HP Scanners: Handheld Scanner ARegional News: News.com BTurner Technology: Micro Display ATurner Technology: Imaging AFirestone: Radial TiresBF Goodrich: Radial TiresSoftware Co: E-LearningSoftware Co: Knowledge ManagementSoftware Co: Advanced Collaboration
USA Today: USAT.com APolaroid: Digital Cameras BUSA Today: Direct A HP Scanners: Handheld Scanner C
Medical Imaging: Color UltrasoundGoodyear: Radial TiresIBM Network Tech: Network Chip AIBM Network Tech: Transport Chip A Medical Products: Integrated Health
Care SystemPolaroid: Helios APolaroid: Digital Cameras A
N=9
Unsupported Teams
Functional Design Ambidextrous Design
N=7
N=4
N=15
Results: Does Ambidexterity Exist?
Characteristics of Ambidexterity
J. Kelley(Meta Manager)Group Executive
Mfg. Chris King (Ambidextrous Manger)Network Technologies
ASIC(Exploitation)
Network(Innovation Manger)
Transport(Innovation Manger)
Senior TeamTactical
Integration
Exploration
Wireless
Characteristics of Ambidextrous Forms
• Structural differentiation of explore/exploit units
• Integration at senior team level
• Investment by ‘Meta Manager’
• Targeted integration of functional resources
• Common fate rewards system
• Overarching vision of senior team including both explore and exploit
• IM internal/external, staff external
Characteristics of Ambidextrous Forms
• Structural differentiation of explore/exploit units
• Integration at senior team level
• Investment by ‘Meta Manager’
• Targeted integration of functional resources
• Common fate rewards system
• Overarching vision of senior team including both explore and exploit
• IM internal/external, staff external
VISION: # 1 Supplier of Network Technology chips by 2000
Table 4: Characteristics of Ambidextrous Organizational Forms
Healthy Eyes for Life
Inside
Inside
Inside
Yes
Yes
Yes
GM & Head of R&D / Inside
Ciba VisionExtended Wear Daily DisposableVisudyne (A)
A value creating, respected public
utilityOutsideYesGM / Outside
Utility Co.
On-Site Power Plant
“Beat BEA” InsideYesGM / InsideIBM Middleware
Web Middleware
#1 supplier of Network Tech by
2000Outside
Outside
Yes
Yes
GM / Inside
IBM Network Tech
Network (B)
Transport (B)
Be in top 10 manufacturers of semiconductors within 3 years
Inside
Inside
Yes
Yes
GM / OutsideTurner Technology
Micro (B)Imaging (B)
Primary information
source for city
Outside
Outside
Yes
YesPublisher / Inside
Regional NewsCity Search.comNews.com (A)
Local paper for global village Inside
Outside
Yes
Yes
GM / InsideUSA Today
.Com (B)Direct (B)
NONE InsideYesGM / OutsideHP Scanner
Handheld (B)
Overarching
AspirationInnovation Manager1
DistinctUnit
Ambidextrous Manager1
None OutsideYesCEO / InsidePolaroid
Helios (B)
Yes
Yes
Yes
Yes
No
Yes
Yes
No
Yes
Yes
No
Yes
Yes
Yes
Innovation Manager on
Sr. Team
Yes
R&D / Mkt.
Marketing
Software R&D
Mfg./
Sales
Mfg.
HR/Finance
EditorialAdvertising
Editorial
MIS/HR/Finance
TargetedStructuralIntegration
Sales
Joint /
Common Fate
Company based stock
options
Common team Incentives
Joint
Common Fate
No Data
Individual Incentive and
Joint Bonus
Joint Bonus / Common Fate
Joint Bonus
Senior Team Incentives
No Data
YES
YES
YES
YES
YES
N/A
NONE
YES
MetaManager
N/A
1 Inside & Outside refers to whether the manager came from inside or outside the business unit.
Figure 1: Innovation Space
Software Co: E-Learning
Regional News: City Search.com
HP Scanner: Handheld Scanner B, C
Regional News: News.com A, B
USA Today: USAT.com A
Ciba Vision: Visudyne A, B
Firestone: Radial Tires
BF Goodrich: Radial Tires
UtilityCo: On Site Power Plants
Ciba Vision: Extended Wear
Ciba Vision: Daily Disposable
[ Goodyear: Radial Tires ]
IBM Middleware: Web Based Middleware
Medical Products: Integrated Healthcare System
[ Medical Imaging: Color Ultrasound ]
HP Scanner: Handheld Scanner A
Turner Technologies:Imaging Chip A, BMicro Display Chip A, B
IBM Network Technology:Network Chip A, BTransport Chip A, B
Incremental Architectural Discontinuous
Non-Incremental
ExistingMarket
New Customers /
Defined Market
EmergingMarket
USA Today: Direct A, BUSA Today: USAT.com B Software Co: Knowledge ManagementSoftware Co: Advanced CollaborationPolaroid: Helios A, BPolaroid: Digital Camera A, B
IBM Network Tech: ASICHP Scanners: Flatbed ScannersCiba Vision: Conventional LensPolaroid: Analog CameraSoftware Co: Integrated Collab.IBM Middleware: Cobol / CicsUtilityCo: Power PlantsTurner Tech: ASICFirestone: Bias Ply Tires BF Goodrich: Bias Ply Tires Regional News: NewspaperUSA Today: NewspaperMed. Product: Medical Devices
[ Med. Imaging: B&W Ultrasound ][ Goodyear: Bias Ply Tires ]
NOTE: Ambidextrous Designs are in Bold
Product Substitutions are in [ ]
Target Market
Technological Change
HP Scanners: Handheld Scanner BUSA Today: USAT.com BUSA Today: Direct BRegional News: City Search.comRegional News: News.com ATurner Technology: Micro Display ATurner Technology: Imaging BIBM Middleware: WebsphereUtilityCo: Power PlantsIBM Network Tech: Network Chip BIBM Network Tech: Transport Chip BCIBA Vision: Extended WearCIBA Vision: Daily DisposableCIBA Vision: Visudyne A Polaroid: Helios B
Structural Differentiation
LOW
HIGH
Senior Team
Integration
LOW HIGH
Cross-Functional Teams
HP Scanners: Handheld Scanner ARegional News: News.com BTurner Technology: Micro Display ATurner Technology: Imaging AFirestone: Radial TiresBF Goodrich: Radial TiresSoftware Co: E-LearningSoftware Co: Knowledge ManagementSoftware Co: Advanced Collaboration
USA Today: USAT.com APolaroid: Digital Cameras BUSA Today: Direct A HP Scanners: Handheld Scanner C
Medical Imaging: Color UltrasoundGoodyear: Radial TiresIBM Network Tech: Network Chip AIBM Network Tech: Transport Chip A Medical Products: Integrated Health
Care SystemPolaroid: Helios APolaroid: Digital Cameras A
N=9Innovation Performance = 2.27
Unsupported Teams
Functional Design Ambidextrous Design
N=7Innovation Performance = 3.12
N=4Innovation Performance = 2.52
N=15Innovation Performance = 4.27
Design Choices and Innovation OutcomesRESULTS
Ambidextrous designs more effective than other designs:
• Main Effect of Senior Team Integration (F = 14.11, p < .01)
• Main Effect of Differentiation (F = 18.67; p < .01)
• No interaction Effect
Other forms not employed:• No skunkworks, VC
firms, spin outs
RESULTS
Ambidextrous designs more effective than other designs:
• Main Effect of Senior Team Integration (F = 14.11, p < .01)
• Main Effect of Differentiation (F = 18.67; p < .01)
• No interaction Effect
Other forms not employed:• No skunkworks, VC
firms, spin outs
Structural Differentiation
LOW
HIGH
SeniorTeam
Integration
LOW HIGH
Cross-Functional Teams
USA Today: USAT.com APolaroid: Digital Cameras BUSA Today: Direct A HP Scanners: Handheld Scanner C
Unsupported Teams
Functional Design AMBIDEXTROUS Design
HP Scanners: Handheld Scanner ARegional News: News.com BTurner Technology: Micro Display ATurner Technology: Imaging AFirestone: Radial TiresBF Goodrich: Radial TiresSoftware Co: E-LearningSoftware Co: Knowledge ManagementSoftware Co: Advanced Collaboration
Medical Imaging: Color UltrasoundGoodyear: Radial TiresIBM Network Tech: Network Chip AIBM Network Tech: Transport Chip A Medical Products: Integrated Health Care
SystemPolaroid: Helios APolaroid: Digital Cameras A
HP Scanners: Handheld Scanner BUSA Today: USAT.com BUSA Today: Direct BRegional News: City Search.comRegional News: News.com ATurner Technology: Micro Display ATurner Technology: Imaging BIBM Middleware: WebsphereUtilityCo: Power PlantsIBM Network Tech: Network Chip BIBM Network Tech: Transport Chip BCIBA Vision: Extended WearCIBA Vision: Daily DisposableCIBA Vision: Visudyne APolaroid: Helios B
Designs Shift Over Time
RESULTS
Net migration of designs over time to ambidextrous designs
• 6 move to ambidextrous form
• 3 move out of ambidextrous form
Net performance improvement for designs migrating to ambidextrous form:
(t =5.67, p<.03)*
IBM Network Technology.
* Note: Small sample size
RESULTS
Net migration of designs over time to ambidextrous designs
• 6 move to ambidextrous form
• 3 move out of ambidextrous form
Net performance improvement for designs migrating to ambidextrous form:
(t =5.67, p<.03)*
IBM Network Technology.
* Note: Small sample size SPIN OUT
Novartis Pharma Div: Visudyne B
β1Std. Err. t p<
Unsupported Teams -1.14 0.40 -2.86 0.01
Cross-Functional Teams -1.83 0.39 -4.62 0.01
Functional Design -0.29 0.43 -0.66 ns
Intercept 2.43 0.40 6.14 0.01
R 2 = .87
F(15,17) = 7.83 (p< .01)
Organization Designs and Innovation Outcomes (with firm dummies) (N = 33).
Table 6
1 β's describe the effects of alternative design choices compared to Ambidextrous Designs.
Organization Designs Over Time:HP Greeley, HP MicroelectronicsToronto StarIBM Network Technology
Meta Manager (eg Kelly at IBM Microelectronics, Bradley at Ciba Vision)
Boundary Conditions:Product Substitution (Goodyear, HP Medical)
Spin Outs: HP Handheld Scanner C Ciba Vision, Vysodyne (B)
Table 7: Existing Product Performance by Organization Form
• HP Scanner:Handheld Scanner (B)
• Turner Technologies : Micro Display (B), Imaging (B)
• CIBA Vision: Extended Wear,Daily Disposable, & Visudyne (A)
• IBM Middleware: Web Based Middleware
• IBM Network Tech: Network Chip (B), Transport Chip (B)
• HP Scanner: Handheld Scanner (C)
Am
bid
extr
ous
Des
ign
Non
-Am
bid
extr
ous
Des
ign
Fisher’s Exact Test, p = .05
• Regional News: News.com (A), City Search.com
• USA Today: USAT.com (B), Direct (B)
• UtilityCo: On-Site Power Plants
• HP Scanner:Handheld Scanner (A)
• Regional News: News.com (B)
• Medical Products: Integrated Health Care System
• Polaroid: Helios (A), Digital Cameras (A)
Declining• Polaroid: Helios (B)
• Turner Technologies : Micro Display (A), Imaging (A)
• USA Today: USAT.com (A), Direct (A)
• IBM Network Tech: Transport Chip (A), Network Chip (A)
• Software Co: Adv. Collab., Knowledge Mgmt., E-Learning
• Firestone: Radial Tires
• BF Goodrich: Radial Tires
• Polaroid: Digital Cameras (B)
7
1
Improving or Steady
13 8 21
12
9
Total5
8
• Multiple Inconsistent Alignments– Structure – Culture – Process– Competencies – Physical Location
• Tactical Integration (eg USAT editorial meetings) • Strategic Integration
– Integration at General Manager level– Ambidextrous Senior Teams and common fate– Consequences of strategic integration being too high or too low.
GM Too High Too LowCiba Vision/Disp HP/Handheld(C) HP/Handheld(A)USAT.com USAT/Live(A) Ancona/PolaroidHP/Handheld (B) Software Co./e
LearnToronto Star (A) Regional News (B)
Ambidextrous Organizations
Executive Teams, Innovation Streams
and Strategic Reorientations
Executive Team– Challenging, emotionally engaging (yet equivocal) vision– Stretch objectives– Continuity in CEO, heterogeneous, young senior team– Create variation, selection, project book, even with continuous
improvement– Autonomous teams report to general manager– Proactive reorientations
Ciba Vision:
Markets
Technology
Vysodyne
Daily DisposiblesExtended wearDiscontinuous Process Innovation (10¢ vs. 40¢)
Fashion lens
Conventional Lens
Size, shape, packaging
Organizational Evolution
• Through incremental change in exploitative unit coupled with proactive discontinuous change in exploratory unit (eg. Ciba Vision, IBM Middleware, USAToday)
• Or, periods of convergence with increasing congruence
punctuated by re-orientations, often requiring
new top management teams (eg. HP Handheld Scanners, IBM Network Technology, Goodyear)
How do organizations evolve?
Patterns in Organizational Evolution
Magnitude ofChange
Incremental Change
Discontinuous Change
Time
• Organization Evolution: Incremental and punctuated change or Periods of incremental change punctuated by discontinuous change
• Executive team succession often associated with discontinuous organizational change.
In Sum:
Innovation Streams Exist: Business Units Explore and Exploit Simultaneously
Ambidextrous Designs:Stable Organizational FormCan Be Learned Over TimeSet of Interrelated Dimensions—High Differentiation
Tactical Structural Integration Senior Team Integration
Role of General Manager Meta Manager
Ambidextrous Designs Permit Exploitation and Exploration:More Effective Than Other Designs and seems to facilitate
performance of existing product
Dynamic Capabilities not through:semi structurestight/loose couplingchoreographed transitionsspin outs, ICV, skunk works
Dynamic Capabilities through embracing contradictions through:High Differentiation-contradictory architecturesTargeted IntegrationSenior Team Integration: roles, processes, incentives, visionGeneral ManagerMeta Manager
On Organizational Evolution:Targeted incremental and punctuated changeOr, Organization-wide punctuated change
Boundary conditions:
Product SubstitutionProcess innovation?Service innovation (IGS/Canada)?
Senior Team Characteristics, Processes and Behaviors
Corporate Ambidexterity (EBO’s)
Next Steps
Markets
EXISTING
Innovation
Technology
InnovationSenior TeamSenior Team