Leadership and organizational ambidexterity

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Leadership and organizational ambidexterity Saša Baškarada

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Defence Science and Technology Group, Melbourne, Australia, and

Jamie Watson and Jason Cromarty Defence Science and Technology Group, Canberra, Australia

Received 14 January 2016 Accepted 20 April 2016

Abstract Purpose – The purpose of this paper is to answer calls for more research on how leaders may promote organizational ambidexterity (i.e. exploitation and exploration), and how such behaviors relate to transactional and transformational leadership styles. Design/methodology/approach – The findings presented in this paper are based on semi-structured interviews with 11 senior leaders in Australian Defence. Findings – This paper identifies three organizational mechanisms that leaders rely on to promote exploitation, and five behaviors that leaders rely on to promote exploration. These mechanisms and behaviors closely match transactional and transformational leadership styles, respectively. Originality/value – This paper provides support for the leadership ambidexterity construct, and for the thesis that transformational leadership is appropriate in the context of exploratory innovation, while transactional leadership is appropriate in the context of exploitative innovation. Keywords Ambidexterity, Exploration, Exploitation, Transactional Leadership, Transformational leadership Paper type Research paper

Journal of Management Development Vol. 35 No. 6, 2016 pp. 778-788 Emerald Group Publishing Limited 0262-1711 DOI 10.1108/JMD-01-2016-0004

Introduction Exploitation (incremental innovation) and exploration (discontinuous innovation) are critical to organizational prosperity and long-term survival (March, 1991). Ambidexterity refers to the ability of an organization to both exploit and explore (Tushman and Reilly, 1996). In other words, to deliver efficiency, control, and incremental improvements, while embracing flexibility, autonomy, and experimentation. Maintaining appropriate balance between exploitation and exploration is critical since too much innovation may produce an excess of immature technologies, whereas too much refinement may lead to a reduction in variability (increased reliability) at the expense of discovery of better alternatives (Yukl, 2008); i.e., a competency trap (Levitt and March, 1988). Achieving ambidexterity can be difficult as innovation and refinement compete for finite organizational resources (March and Simon, 1953) as well as stand in relative tension. For instance, short-term benefits may not necessarily be advantageous in the long term and vice versa (March, 1991). Given that ambidexterity was originally proposed as an abstract organizational construct (Tushman and Reilly, 1996), it is perhaps unsurprising that most of the scholarly research has so far taken place in the context of organizational theory. Thus, most frequently studied mechanisms for managing organizational ambidexterity include sequential ambidexterity (Duncan, 1976), where management systems shift over time, simultaneous/structural ambidexterity (Tushman and Reilly, 1996), where autonomous exploitation and exploration subunits operate in parallel, and contextual ambidexterity (Gibson and Birkinshaw, 2004), where individuals decide when to focus © Commonwealth of Australia

on exploitation and when on exploration. There has been limited research on how leaders may promote ambidexterity (O’Reilly and Tushman, 2013). Although some studies have indicated that transformational leadership behaviors promote ambidexterity (Li et al., 2015; Jansen et al., 2008; Nemanich and Vera, 2009), there has been virtually no research on the relationship between transactional leadership and organizational ambidexterity. One exception is a study by Jansen et al. (2009), which indicated that transformational leadership may be more appropriate in the context of exploratory innovation, while transactional leadership may be more appropriate in the context of exploitative innovation. Building on such insights, others have suggested that ambidextrous leadership involves either concurrent focus on exploration as well as exploitation, or the ability to seamlessly switch between the two approaches (Rosing et al., 2011; Li et al., 2015). Thus, while ambidextrous leaders encourage their followers to stretch objectives, they also enforce expectations, and create an environment where employees support and trust each other (Gibson and Birkinshaw, 2004; Zacher and Rosing, 2015). The aim of this paper is to further explore how leaders may promote organizational ambidexterity (i.e. exploitation and exploration), and how such behaviors relate to transactional and transformational leadership styles. Literature review Transformational leadership, the most frequently studied established leadership theory in recent times (Dinh et al., 2014; Marques, 2015), emphasizes the motivation and inspiration of followers (Von Krogh et al., 2012), and has been defined in terms of intellectual stimulation, individualized consideration, idealized influence, and inspirational motivation (Bass, 1999). Transactional leadership, on the other hand, focusses on leader-follower exchanges (Von Krogh et al., 2012), and has been defined in terms of contingent reward and active management by exception (Bass, 1999). From a contingency perspective, leadership requirements, responsibilities, and challenges are largely dependent on internal and external factors (Baškarada et al., 2014). Such contingency factors include the environment ( Jansen et al., 2006, 2009; Waldman et al., 2001; Osborn et al., 2002), prior organizational performance (March and Simon, 1953), and the stage of organizational life (Vera and Crossan, 2004). It is generally accepted in the literature (O’Reilly and Tushman, 2013) that organizations with mechanistic management systems (hierarchical relations and well-defined roles and responsibilities) are more effective in stable environments, whereas organizations with more organic systems (lateral relations and flexible roles and responsibilities) are more effective in dynamic environments (Burns and Stalker, 1961). This is because mechanistic management systems are thought to enable exploitation, which is rewarded in stable environments, while organic systems are thought to enable exploration, which is rewarded in dynamic environments (March, 1991; Tushman and Reilly, 1996; Jansen et al., 2009). Accordingly, transformational leadership has been associated with turbulent and uncertain environments, relatively poor organizational performance, and periods of organizational inception and decline/renewal, while transactional leadership is more suited to environments that are stable and predictable, satisfactory organizational performance, and mature organizations. As such, transactional leadership mainly applies to situations that require institutionalization, reinforcement, or refinement of existing knowledge, while transformational leadership is most appropriate for situations requiring change to the status quo ( Jansen et al., 2009). Nevertheless, empirical studies suggest that the relationship between transformational leadership and exploratory innovation may not be straightforward

Organizational ambidexterity

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( Jaussi and Dionne, 2003; Keller, 1992; Shin and Zhou, 2003; Elenkov et al., 2005; Jung et al., 2003; Jansen et al., 2009; Rosing et al., 2011; Schweitzer, 2014). By focussing on standardization, formalization, control, and training, transactional leaders can have a positive impact on both feed-forward and feedback learning that reinforces institutionalized learning (Vera and Crossan, 2004). Such leaders tend to prefer closed cultures, mechanistic structures, and rigid systems and procedures. For instance, transactional leadership has been associated with bureaucratic learning systems that comprise sophisticated procedures and rules for controlling the flow of information (Vera and Crossan, 2004; Shrivastava, 1983). Transformational leaders may facilitate exploration by providing their staff with contextual support to develop their ideas (Berson et al., 2006). By encouraging individuals to be creative, embrace change, question assumptions, take calculated risks, and participate in strategy development, transformational leaders can have a positive impact on both feed-forward and feedback learning that challenges institutionalized learning (Vera and Crossan, 2004). Such leaders prefer open cultures, organic structures, adaptable systems, and flexible procedures. Method While most previous research on leadership has relied on questionnaires (usually administered to subordinates), given the complexity of the problem, it has been argued that a qualitative approach with multiple leaders may be able to provide a richer insight (Yukl, 2009). Accordingly, in order to explore how leaders may promote organizational ambidexterity (i.e. exploitation and exploration), and how such behaviors relate to transactional and transformational leadership styles, qualitative data were collected through semi-structured interviews with the Chief of Defence Force and ten other senior leaders in Australian Defence (see Table I). The semi-structured approach provided the authors with the flexibility to refocus questions, or prompt for more information, when an interesting or novel topic emerged (Baškarada, 2014). All interviews were transcribed and reviewed for accuracy by the respective interviewees. The constant comparative method was employed to identify constructs, group them into themes, find patterns, negative evidence, and the like (Tesch, 1990). Domain and taxonomic analyses were used to identify cover terms (i.e. domains), included terms, semantic relationships (e.g. location, inclusion, causation, rationale, function, sequence), and concepts that had different meanings and distinct connotations for different people (Spradley, 1979). Finally, the draft paper was critically reviewed by all interviewees as well as several peers with relevant subject matter expertise. Results How leaders promote exploitation The analysis identified three key organizational mechanisms (training, performance management, and knowledge management) that leaders use to promote exploitation. As the focus is on reducing variation, reinforcing institutionalized learning (the status quo), reliability, refinement, efficiency, selection, implementation, and execution, the mechanisms deal with how these objectives may be accomplished. Training. With respect to promoting exploitation among his staff, an interviewee suggested that within his organization it is almost expected by default, noting that the training continuum encourages exploitation. Another interviewee noted that, similar to other professionals who must undergo continual training and certification, warfighters must also maintain currency in their domain. Training programs are built on lessons

Role

Description

CDF has primary responsibility for the command of the Australian Defence Force (ADF) and is the principal military adviser to the Minister of Defence on matters that relate to military activity, including military operations Chief Joint Operations (CJOPS) CJOPS is responsible for the integration of strategic and operational military objectives with tactical activity by planning, and controlling the conduct of military campaigns, operations, joint exercises and other activities Deputy Chief Joint Operations DCJOPS deputizes to CJOPS, convenes and chairs the joint (DCJOPS) operational lessons board and assumes the role of acting CJOPS when required Chief Defence Scientist (CDS) CDS is the primary adviser to the Defence Secretary and the CDF on science and technology issues and is the Chief Executive Officer of the Defence Science and Technology Group Commander Border Protection COMBPC is responsible for the security of Australia’s maritime Command (COMBPC) domain utilizing resources from both the ADF and the Australian Border Force Commodore Warfare (COMWAR) COMWAR commands both the Fleet Battle Staff and the Australian Maritime Warfare Centre Deputy Chief of Army (DCA) DCA is responsible for coordinating and monitoring Army policy and governance (in terms of commitments, preparedness, personnel and capability development), and administration of Army Headquarters, Army Commands and Army Staff overseas Director General Defence Learning DGDLB has responsibility for education and training across the Branch (DGDLB) ADF and Australia’s Defence civilian community Head Joint Capability HJCC is responsible to the Vice Chief of Defence Force for strategic Coordination (HJCC) and joint capability planning and integration, simulation and preparedness Director General Support (DGS) DGS is responsible for the development of joint operational support plans and the delivery of operational support effects to meet CJOPS’ requirements Commander 1st Division (C1DIV) C1DIV commands the Army 1st Division which is Australia’s large scale option as a deployable Joint Force Headquarters


Chief of Defence Force (CDF)

that have been learned and reinforce what is known to work. Ultimately, the training process is about encouraging people to exploit previous lessons. Through training, people can appreciate the level of investment needed to achieve a particular outcome and be confident of achieving that goal. Performance management. Leaders’ expectations and standards for the workforce may be enforced through performance management. To do things well, to do things diligently, to make sure processes are appropriately followed, a leader needs to project the understanding that it is implicit that certain approaches will be followed. An interviewee noted that difficult conversations sometimes need to be had, and stressed that performance management should be taken seriously. However, another interviewee noted that a leader also needs to have empathy with relatively inexperienced junior staff. Furthermore, given that exploitation may be considered mundane and process orientated, it was noted that leaders also need to be able to motivate and encourage their staff; for instance, by explaining the significance of their work. Knowledge management. With respect to promoting exploitation, an interviewee noted that Australian Defence has very rigorous knowledge management processes

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Table I. List of interviewees

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involving the capture of information from current operations. So, when presented with a situation that is similar to one previously encountered, the interviewee directs his staff to identify what happened and what was learned in similar situations, adopting the approach based on this feedback. This is consistent with March and Simon’s concept of “satisficing” (March and Simon, 1953), i.e., looking for a good enough rather than the best possible solution. For instance, in addressing planning for any new activity, the first thing the interviewee asks his team to do is to identify what worked and what did not work the last time the organization undertook a similar activity. The relative effectiveness of the current knowledge management processes is due to sufficient resourcing and sustained operational momentum. Conversely, such processes were significantly less effective in the past when they were under-resourced and fragmentary in nature (i.e. being exercise driven). One of the interviewees described implementing a register for ad hoc tasks and requests, so that “out of the ordinary” issues can be recorded and tracked. As new issues arise they can be compared to a database of previous issues and people can check if the same thing has been dealt within the past. Another interviewee described a recent establishment of an electronic lessons forum. He noted that he is attempting to get a tool that is accessible, so that junior leaders can get involved. In other words, he wanted the officers involved to widely share knowledge electronically rather than have it filtered and changed during regular social interactions. He concluded by noting that he is intimately involved in the lessons forum and provided an example where he, as a senior leader, actively contributed his knowledge and observations of certain activities. How leaders promote exploration The analysis identified five leadership behaviors/attributes (commitment, vision, risk comfort, empowerment, and inclusivity) that leaders use to promote exploration. As the focus is on increasing variation that challenges institutionalized learning, risk taking, experimentation, flexibility, discovery, and innovation, the behaviors do not comprise processes specifying how these objectives may be accomplished, but rather address requisite factors underpinning organizational conditions suitable for exploration. Commitment. A key finding was that any discontinuous innovation should be leader driven. In other words, the culture of exploration is associated with a leader who participates, makes it clear that he or she has a desire for innovative outcomes, and leads with a constructive tone/approach. The involvement of the leader is a way of ensuring that the output is of value to and owned by the leader (Caldwell et al., 2015). Conversely, in the absence of leaders’ direction, there is not likely to be strong ownership of the outcomes. Thus, in order to promote exploration, senior leaders need to demonstrate their personal commitment to, and belief in, discontinuous innovation. Such commitment is usually underpinned by an ability to see the organization from a discomforting/external position (from a novel perspective), humility, and openness to learning. By continually questioning the status quo and asking exploratory questions several interviewees sought to create an environment that is critical, flexible, and innovative. One interviewee explained how he takes ownership and sponsorship of discontinuous innovation by specifically dedicating time for exploratory discussions within his senior leadership meetings. As a further example of a personal commitment to exploration, he cited his recent participation in a five day conference where he deliberately decided to remain fully engaged for the duration of the conference rather than delegate. Given a leader’s personal commitment to exploration, people within the organization respond

positively to challenges and soon learn to expect to be asked questions that seek greater understanding and explore risks. Vision. A leader who seeks discontinuous innovation should lead with a constructive tone and approach in order to shape the vision and help people move beyond an individual agency approach; i.e., transform individual problems into a shared vision. For instance, one of the interviewees highlighted the importance of working on “big issues.” Since exploratory approaches involve a shared problem, they also involve shared risk. Shared vision and a common understanding of risk are likely to lead to cooperation, and provide a way of achieving buy-in. Articulating and confirming a common language associated with the problem is critical to creating a shared vision, and being a good listener is critical to ensuring that a presupposed solution or outcome is not inadvertently introduced. An interviewee noted that he saw it as his responsibility to actively set the scene for any exploratory activities; in situations where he could not be present he expected the same from his representatives. Risk comfort. As an inherent understanding and articulation of risk underpins exploratory culture, the leadership needs to be consistently demonstrating risk comfort (i.e. a suitable level of risk appetite). Risk comfort is essential as any exploration of new ways of doing business will bring in the unknown and introduce risk; exploitation naturally engenders less risk. As such, the challenge with new ways of doing things is to identify and mitigate risks. A leader with the ability to rationally accept risk may inculcate a culture of exploration within his or her staff. Empowerment. A leader also needs to empower people and let them know they have the leader’s authority and confidence to move beyond the here and now and explore new ways of doing business (Hayes et al., 2015; Friedman and Westring, 2015). For instance, reflecting on his role, an interviewee recalled that he chose to keep himself “one step removed from combat” in order to “do the job of a General,” and suggested that reaching down too far, and getting involved in areas where a leader does not necessarily have to, is time consuming and damaging. He also highlighted the importance of creating an independent spirit and giving “young people space.” From a cultural perspective, a leader needs to promote and praise innovation and be very careful not to criticize failure, as having their leader put confidence in them and move forward with their recommendation is rewarding for staff. This is consistent with existing research, which has shown that verbal rewards (i.e. positive feedback) can have a significant positive effect on intrinsic motivation for interesting tasks, and that tangible rewards can, under certain conditions, have a negative effect (Deci et al., 1999; Deci, 1971; Kruglanski et al., 1971; Calder and Staw, 1975). As such, several theories on employee motivation (Nohria et al., 2008) may be of relevance, including the equity theory (Adams, 1965), the expectancy theory (Vroom, 1969), the two-factor theory (Herzberg, 1959), and various theories of needs (Maslow, 1943; McClelland, 1961). In particular, the leader needs to avoid the situation where no one is willing to do anything until the leader provides direction. A cultural complication within the military (that is amplified in an operational context) is that there is a tendency for the majority to look to their seniors for the “big ideas.” Such environment may stifle innovative thought, and people may hold back on suggesting ideas, even if they know a better way of doing things. An interviewee explained that he has built upon the common background and experience of his senior leadership group to develop and engender “trust and comfort” as precursors to discussion and exploration of new ways of doing business.


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Inclusivity. As consultation is an essential component of exploration, leaders also need to listen to their staff and learn from their experiences. One of the interviewees noted that during his role as a commander his superior was very attentive to the views of commanders in the field and argued that this relationship/dynamic was a significant factor in developing an exploratory culture. In particular, a leader also needs to encourage people with alternate views as this is needed to counteract the fear associated with stepping outside governance and process boundaries. An interviewee noted that a great diversity within his leadership team has enabled the group to trigger ideas for exploration. Another interviewee agreed that it all comes down to a culture of respect, conversation, and inclusivity. As such, a leader needs to make it clear that the team is an inclusive one, and needs to demonstrate that everyone’s opinion is valid. If people feel they are included then the solutions they bring back for consideration by the leader are more likely to be “outside the box.” One of the interviewees noted that he has always relied on professional networks as a means of promoting exploration results through collaboration. Bringing together a group of people from various backgrounds and services has been a key enabler for creating new insights. He works at understanding how the various team members work together and encourages them to see how they can be more effective with positive engagement. The interviewee noted that it was about developing the various teams he has in his organization, and helping them see that they cannot work in isolation. Another interviewee noted that, within his teams, he is keen to develop a high degree of awareness of what is going on across the organization. In order to do this, he meets with his senior reports every day to share what is happening and uses that forum to explore opportunities for innovative approaches. He is focussed on creating an environment where the senior leadership is able to “bounce ideas off each other” and where people are not “tunnel visioned” in outlook. Finally, an interviewee suggested that people are more likely to accept changes, even when such changes are difficult, if they have been involved in the change process. If buy-in is achieved through consultation, and people are provided with an opportunity to give feedback, they are more likely to own the solution. Discussion Exploitation and exploration have traditionally been associated with management and leadership, respectively (Bass, 1985; Zaleznik, 1977). This paper provides further support that different leadership styles (transactional and transformational) may also be associated with exploitation and exploration, respectively. Accordingly, ambidextrous leadership may promote organizational ambidexterity. The three organizational mechanisms identified in this paper that leaders use to promote exploitation closely match the characteristics of transactional leaders described by Bass (1985). The strong emphasis on performance management agrees with transactional leaders focus on contingent reward. Training and knowledge management, which are used to reinforce what is known to work, underpin transactional leader’s ability to manage by exception; i.e., identify deviations from rules and standards. Similarly, five leadership behaviors/attributes identified in this paper that leaders use to promote exploration closely match the characteristics of transformational leaders described by Bass (1985). For instance, vision may roughly be associated with inspirational motivation, commitment with idealized influence, empowerment with intellectual stimulation, and inclusivity with individualized

consideration. Risk comfort, which is frequently discussed in the literature in relation to transformational leadership, underpins most of the other characteristics, including vision, commitment, and empowerment. As most of the interviewees agreed that effective leadership requires a balance between transactional and transformational approaches, this study did not find support for sequential ambidexterity where exploitation and exploration shift over time (Duncan, 1976). Instead, simultaneous/structural ambidexterity where autonomous exploitation and exploration subunits operate in parallel (Tushman and Reilly, 1996), and contextual ambidexterity where individuals decide when to focus on exploitation and when on exploration (Gibson and Birkinshaw, 2004) were the preferred mechanisms for promoting organizational ambidexterity. As an example of simultaneous/structural ambidexterity, several interviewees explained how they mitigate transactional pressures by delegating such responsibilities to relevant deputies or chiefs of staff. Others described a number of processes and/or organizational capabilities specifically dedicated to exploration. For instance, an interviewee suggested that the ADF’s Joint Military Appreciation Process provides a formal process that, if done correctly, should encourage exploration. Another interviewee explained that he conducts “futures studies” and “red teaming” (war gaming) in order to explore potential “black swans” (significant unexpected events) and emerging disruptive technologies. With regard to creating the environment in which innovative processes can survive and flourish, another interviewee cited his sustained support for the operational analysis capability that resides within his organization. The interviewee suggested that, in the future, as the external environment changes, his organization will also change, and more areas will need to take on a reflective role. The Defence Science and Technology Group was highlighted as a key organizational capability supporting exploration across a number of areas. Conclusion This paper answered calls for more research on how leaders may promote organizational ambidexterity and how such behaviors relate to transactional and transformational leadership styles. Based on semi-structured interviews with 11 senior leaders in Australian Defence, this paper identified three organizational mechanisms that leaders rely on to promote exploitation and five behaviors that leaders rely on to promote exploration. It was shown that these mechanisms and behaviors closely match transactional and transformational leadership styles, respectively. As a result, this paper provides support for the leadership ambidexterity construct and the thesis that transformational leadership is appropriate in the context of exploratory innovation, while transactional leadership is appropriate in the context of exploitative innovation. References Adams, J.S. (1965), “Inequity in social exchange”, in Berkowitz, L. (Ed.), Advances in Experimental Social Psychology, Academic Press, New York, NY, pp. 267-299. Baškarada, S. (2014), “Qualitative case study guidelines”, The Qualitative Report, Vol. 19 No. 40, pp. 1-25. Baškarada, S., Watson, J. and Cromarty, J. (2014), “Senior leadership and lessons learned in the Australian defence organisation”, in Mcintyre, S., Dalkir, K., Paul, P. and Kitimbo, I. (Eds), Utilizing Evidence-Based Lessons Learned for Enhanced Organizational Innovation and Change, IGI-Global, Hershey, PA, pp. 234-266.


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Corresponding author Saša Baškarada can be contacted at: [email protected]

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