Organizational ambidexterity and the multi-generational workforce.

Author:Woods, Kathryn
Position::Report
 
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INTRODUCTION

As Birkinshaw and Gibson (2004) reported, economic instability experienced in the early 2000's solidified the idea that adaptability is paramount for an organization to succeed. However, moving quickly toward new opportunities and adjusting to unpredictable economic shifts are often not enough to carry an organization through a period of sustained success. Organizations must also focus on alignment, or developing a "clear sense of how value is being created in the short term and how activities should be coordinated and streamlined to deliver that value" (p. 47). Companies who master both important strategic initiatives--also known as adaptability and alignment, or exploitation and exploration--are often referred to as ambidextrous (Duncan, 1976). These researchers warn leaders that focusing too narrowly on adaptability will cause an organization to lose today's business at the expense of tomorrow's business. Conversely, focusing too narrowly on alignment will help business succeed today, but make it susceptible to inevitable industry changes.

The traditional "Ambidextrous Structure" that is widely accepted in research maintains that businesses should employ two completely separate units, one that focuses on core business, and one that focuses only on innovation. These units are encouraged to maintain their own separate identity, budget, culture, etc., and do not interact directly. In this model, the head of each unit reports to a common general or executive-level manager (O'Reilly & Tushman, 2004). Leaders in ambidextrous organizations must consider many different factors when planning how to balance their organization's efforts to exploit their core business and explore potential opportunities. When reviewing the necessary components that allow an organization to maximize both core business and innovation, Scott (2014) found that, "the ability to compete in current and new markets begins with the strategies and priorities that are responsible for the very nature of innovation capabilities" (p. 44). Aligning organizational strategies with innovative priorities is of paramount importance for businesses that desire to maintain success with core business while also innovating new products or services that go beyond the incremental innovations occurring in the core business unit.

Other researchers have highlighted the importance of examining the changing landscape of the workforce in a time when a new generation is gaining a majority representation in the workplace. The workforce has shifted from a composition of roughly half Baby Boomers in 2005 to about a third in 2015 (Fry, 2015). Millennials, a generation that outnumbers members of Generation X in population by nearly twelve million, have entered the workforce and surpassed the percentage of Baby Boomers and Gen Xers represented in the workplace in just under a decade's time (Pew Research Center, 2015). As new research about generational strengths and preferences emerges, business leaders are adapting to this generational shift in the workforce by updating policies on flexible work hours, changing the expectations for providing and receiving feedback, and implementing reciprocal mentorship programs (Bannon, Ford & Meltzer, 2011; Meister & Willyerd, 2010; Chaudhuri & Ghosh, 2012).

New research suggests that the ambidexterity of organizations--their ability to effectively innovate while still maintaining focus on their core business--is being impacted by the changing landscape of the generational mix represented in the workplace (Blackburn, 2011; Moon, 2014), although little direction in the literature exists to strongly connect this relationship. This author proposes that the development of an updated ambidextrous organization structure for businesses would contribute to the knowledge base of business strategy scholars and professionals for this topic. Constructing a model highlighting the need to encourage knowledge transfer while a generation that dominated the workforce ten years ago is rapidly replaced by one who dominates the others in tech skills and desire for constant feedback (Chaudhuri & Ghosh, 2012; Gibson, Greenwood & Murphy, 2009; Patterson, 2005; Stevens, 2010; Thompson & Gregory, 2012; Yu & Miller, 2005) could be a good initial step for many organizations in the move toward becoming a more innovative enterprise.

The aim of this paper is to broadly describe current considerations and suggestions regarding the basic structure for ambidextrous organizations as well as to contend that the recent shift in the generational representation of the workforce should be considered as a new model can be explored to help organizations assuage some of the challenges created by this generational shift. This article adds to the literature stream by focusing on two primary research questions:

(1) What are the current considerations regarding business structure for ambidextrous organizations?

(2) What are the emerging opportunities and challenges for ambidextrous organizations considering the shifting makeup of the multi-generational workforce?

LITERATURE REVIEW

Organizational Ambidexterity

Tushman, Smith, and Binns (2011) examined executives' tendencies to over-emphasize the now, or the alignment side of ambidexterity, especially when pressured to cut costs. These researchers found that some CEO's deferred the decisions about exploratory projects designed to foster the adaptability side of the equation to the department heads, without prescribing any kind of ideal ratio for spending on current versus exploratory projects. In other cases, they found that decisions to reduce spending on bringing innovative ideas to life were often made when an organization's top leaders did not fully understand side projects or new ventures, and therefore dismissed them as a threat to the company's core values or identity.

These researchers also concluded that a proper mix can be achieved when a CEO commits to several practices. First, engaging their senior team around a forward-looking strategic aspiration can lend a broader identity to an organization, and gives units permission to engage in opposing strategies. (For example, a wireless carrier could position itself as a communications organization instead of a cell phone company; an auto maker could position itself as a transportation organization instead of a car manufacturer. This broader definition of the core business allows for greater creativity and a wider scope.) Second, CEO's should be "holding the tension" between the demands of innovation units and core business at the top of the organization. The researchers contend that when conflicts about funding old and new businesses are resolved at lower levels, innovation usually loses out since it is more difficult to coordinate initiatives from the bottom up. Finally, CEO's are encouraged to embrace inconsistency by maintaining multiple and often conflicting strategic agendas. Innovation units should be held to different standards than existing units, and each unit should maintain independent schedules, cultures, etc. for maximum benefit (Tushman et al., 2011).

In their large-scale study of employees at multinational companies, Birkinshaw and Gibson (2004) found a strong, positive correlation between business performance and organizational ambidexterity. So, what fosters organizational ambidexterity? In the same study, these researchers also found a strong, positive correlation between a perceived supportive organizational context (regarding performance management and social support) and organizational ambidexterity. When ambidexterity and organizational context together were analyzed as predictors of performance, only ambidexterity had a significant influence. Thus, the influence of organizational context on performance only occurs through the creation of ambidexterity. In other words, a supportive organizational context enables individual employees' ambidexterity, which leads to high performance. The findings of this study also indicated that ambidextrous employees possess some common qualities including taking initiative, being alert to opportunities beyond the constraints of their own jobs, seeking out opportunities for collaboration, multitasking, and maintaining many different responsibilities and roles within their organization.

Wang, Li, and Mobley (2011) found that managers seeking to promote ambidextrous work teams should not only focus on selecting creative team members, but also members who are sensitive to the rules and regulations of the current business operation and those who are focused on the details of carrying out innovation. They found that in some cases, creative types must be balanced by more organized minds in order for a project to reach its full potential.

A number of factors will affect the potential ambidexterity of organizations, including industry climate, available resources, strategic plans, and company culture. Organizations that are thriving in core business may ultimately fail (in a project, or sometimes as a business) if improper resources or planning are put toward innovation, just as companies can struggle if too much is invested in the future and not enough in the present. Ideally, all business executives will see the value of working toward placing the maximum possible emphasis on both areas, and no business will minimize efforts in both areas (Krakovsky, 2013).

One example of an organization that ultimately folded altogether due to a lack of ambidexterity is Blockbuster Video. In 2004, this movie-rental giant operated more than 9,000 stores nationally. In just over a decade, that number shrunk to about fifty stores. The organization was focused on their core business of in-store video rentals, and realizing multimillion dollar profits in doing so, but invested almost nothing into innovation, or exploration (Taylor, 2013). Many attribute the company's demise to the introduction of more forward...

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