How do companies organize ambidexterity as a dynamic capability: a
single-case study of sustainable business model innovation
MSc. in Business Administration - Entrepreneurship & Innovation Date final submission: 23-06-2017
Supervisor: dr. I. Maris-de Bresser
Statement of originality
This document is written by Xander Koster who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been using in creating it.
The Faculty of Economics and Business is responsibly solely for the supervision of completion of the work, not for the contents.
Abstract
By conducting an in-depth single-case study, this master thesis is among the first studies to illustrate the actions, behaviours, design choices and perspectives of employees, while organizing ambidexterity as a dynamic capability. By moving away from the so far rather conceptual approach to ambidexterity and address this topic more realistically by adapting a process perspective, focussing on multiple types of ambidexterity and studying both senior management, middle management and operation level at the same company. The research question that guides this thesis is: how do companies engaged in sustainable business model
innovation organize ambidexterity as a dynamic capability? In order to answer this question
Eneco Group, a Dutch incumbent from the energy sector currently engaged in sustainable business model innovation in order to accelerate the energy transition, was studied. A qualitative case study was conducted including eight interviews and secondary data, these were subsequently analysed leading to the following results. 1. Companies use a combination of ambidexterity types on a continuous and changing basis. 2. Senior management has an important role in formulating strategy and vision, that justify both exploration and exploitation and they need to consistently emphasise this message. 3. Middle management has an important role in translating this strategy and vision by a diverse set of implementation and lobbying efforts. 4. The freedom to experiment and flexibility to cope with such freedom from middle management and operational level is essential for exploration. 5. A number of key elements for future change were identified that could improve the future balance between the company’s exploration and exploitation activities.
Table of Contents
1. Introduction 5
2. Literature review 10
2.1 Ambidexterity 10
2.2 Ambidexterity as a dynamic capability 18
2.3 Business model innovation and sustainability 27
2.4 The conceptual framework 30
3. Methodology 34 3.1 Qualitative research 34 3.2 Research design 35 3.3 Research method 37 3.4 Data analysis 44 3.5 Research quality 47 4. Results 49 4.1 Research objective 1 49 4.1.1 Ambidexterity type 49 4.1.2 Shift I ambidexterity 51 4.2 Research objective 2 53 4.2.1Ambidextrous leadership 53 4.2.2 Overarching strategy 54
4.2.3 Overarching vision & values 55
4.2.4 Ambidextrous capabilities of the team 56
4.2.5 Organizational architecture 57
4.2.6 Stimulating learning & knowledge sharing 58
4.3 Research objective 3 58
4.3.1 Ambidextrous leadership 59
4.3.2 Overarching strategy 60
4.3.3 Overarching vision & values 62
4.3.4 Ambidextrous capabilities of the team 63
4.3.5 Organizational architecture 64
4.3.6 Stimulating learning & knowledge sharing 66
4.4 Research objective 4 67
4.4.1 Ambidextrous leadership 67
4.4.2 Overarching strategy 68
4.4.3 Overarching vision & values 68
4.4.4 Ambidextrous capabilities of the team 69
4.4.5 Organizational architecture 69
4.4.6 Stimulating learning & knowledge sharing 70
4.5 Summary of results 71
5. Discussion 73
5.1 Theoretical shifts and relation to literature 74
5.2 Theoretical and practical implications 79
5.3 Research limitations and recommendations for future studies 80
5.4 Conclusion 81
6. References 83
1.0 Introduction
Many companies are interested in retaining or retrieving their innovative speed and flexibility as they mature (McKinsey, December 2015). In order to keep up with the fast pace of economic change, environmental dynamism and ever increasing competitiveness, companies now more than ever are looking at innovation as a key element for survival (Crossan & Apaydin, 2010). In ambidexterity literature, these sources of competitive advantage are considered a company’s exploratory activities. These are all the activities companies undertake to explore new business opportunities in order to stay relevant in changing environments. However, these activities are considered to be conflicting with the exploitation activities companies take to maintain and profit from their current business (O’Reilly & Tushman, 2013). How companies are able to resolve this tension is one of the golden grails to doing business and holds the answer to topics such as: long-term survival, company renewal and other more recent management topics such as agility (Gibson & Birkinshaw, 2004; McKinsey, December 2015).
Ambidexterity was framed by March (1991) as a way for companies to find the right balance in simultaneously exploring new possibilities and exploiting the current business. Since then ambidexterity literature has focussed on different types of ambidexterity such as structural and contextual (e.g. O’Reilly & Tushman, 1996; Gibson & Birkinshaw, 2004), its antecedents and outcomes (e.g. O’Reilly & Tushman, 2013) and the positive effect of ambidexterity on company performance (e.g. Junni, Sarala, Taras & Tarba, 2013). Relatively little however, has been written on what companies ‘actually’ do to become ambidextrous in increasingly dynamic environments (O’Reilly & Tushman, 2008).
In ambidexterity literature, there are a number of reoccurring requests and gaps in future research segments closely related to this issue, which will now briefly be addressed. For example, Raisch, Birkinshaw, Probst & Tushman (2009) argue how research on types of ambidexterity could use a process perspective instead of a static perspective by taking into
consideration that companies develop over time and are likely to combine or switch between types of ambidexterity. Although O’Reilly & Tushman (2013) and Benner & Tushman (2015) state companies indeed switch and/or combine different types of ambidexterity, they also argue how companies do this is still a question to be answered.
Another gap addressed by e.g. Birkinshaw & Gupta (2013) is the need to take a multi-level perspective by studying ambidexterity at multiple organizational multi-levels in the same company. It is argued that only by looking at multiple levels simultaneously, a study into ambidexterity is able to get an accurate picture of what is really going on.
Lastly O’Reilly & Tushman (2013) and many other authors (e.g. Raisch et al., 2009) propose to combine dynamic capability theory with ambidexterity theory, arguing that dynamic capabilities are the appropriate lens to study ambidexterity with. The concepts are closely related, as both try to explain how companies cope and survive in changing environments. According to Raisch & Birkinshaw (2008) and O’Reilly & Tushman (2008) ambidexterity as a dynamic capability are the actions, behaviours and design choices of managers that lead to a repeatable and intentional process of orchestrating company capabilities and resources. This enables a situation where companies can achieve a sustainable competitive advantage by simultaneously exploring new possibilities and exploiting the current business over a longer period of time (O’Reilly & Tushman, 2008).
O’Reilly & Tushman (2008) combined both concepts into a theoretical framework for future studies. This framework contains five conditions that are shaped by the actions, behaviours and design choices of senior managers, allowing companies to organize ambidexterity as a dynamic capability. The conditions are: ‘a clear strategic intent’, ‘overarching vision & values’, ‘an aligned senior team’, ‘an organizational architecture’ and ‘ambidextrous leadership’. O’Reilly & Tushman’s (2008) article became highly acclaimed in subsequent ambidexterity literature, however since their inception these conditions, with the
exception of O’Reilly & Tushman (2011), have not been thoroughly studied empirically, making it an interesting and relevant topic of research. Furthermore, based on Crossan & Apaydin’s (2010) multi-dimensional framework for innovation that includes dynamic capability theory, a potentially missing sixth condition ‘organizational learning & knowledge management’ is added to the original five conditions.
In order to study ambidexterity as a dynamic capability, a company that is dealing with the tension between exploration and exploitation activities is required (O’Reilly & Tushman, 2013). According to O’Reilly & Tushman (2008) this is the case when a company is engaged in business model innovation.
Another topic that has gained a lot of attention from companies and academics alike is sustainability (Boons, Montalvo, Quist & Wagner, 2012). Nidumolu, Prahalad & Rangaswami (2009) go as far as to say sustainable innovation will be the next big source of competitive advantage. As Bocken, Short & Evans (2014) remark most sustainable efforts for now reside in corporate social responsibility and other similar activities. While important, to really make an impact and create long-term competitive advantage, more fundamental changes via business model innovation are required (Nidumolu et al., 2009; Bocken, 2014). Combining both concepts into sustainable business model innovation therefore allows ambidexterity as a dynamic capability to be studied in a meaningful context.
Following the research gaps, the subsequent call in literature to empirically study ambidexterity as a dynamic capability, and the appropriate context, the question that guides this research is: how do companies engaged in sustainable business model innovation organize
ambidexterity as a dynamic capability?
The four research objectives that build on the gaps mentioned above and will help to answer this research question are: 1. To understand what ambidexterity type companies use and if they use multiple types how they switch between and/or combine them. And 2., 3. & 4. to
obtain insight in how senior management, middle management and the operational level, respectively, organize ambidexterity as a dynamic capability.
Since ambidexterity is a broad concept there are still a lot of questions unanswered (Birkinshaw & Gupta, 2013). This study is relevant as it addresses several gaps in ambidexterity literature and uses a conceptual framework consisting of four objectives that presents a number of theoretical shifts. Firstly, taking a process perspective that acknowledges companies are changing continuously rather than focussing on a fixed ambidextrous outcome via a static perspective, allows for an insight in the ambidextrous design type(s) companies use over time. Secondly, moving away from a more ‘classic view’ on ambidexterity that only includes a structural design with a focus on senior management, by also including contextual and sequential ambidexterity with a stronger focus on individual employees across different organizational levels. A multi-level perspective is thus used to get a complete picture of the case, instead of focussing on an isolated level. Thirdly, by studying the actual actions, behaviours and design choices of individual employees, this study also presents a methodological shift away from a more conceptual approach typically used in most ambidexterity literature, that focussed on the complete company or business unit as level of analysis (Birkinshaw & Gupta, 2013). In doing so this thesis intends to increase our understanding of how companies ‘actually’ organize ambidexterity as a dynamic capability.
From a more practical perspective, it can be stated that using a sustainability context for this research is relevant, as many companies are or will be involved with sustainability (Nidumolu et al., 2009). And according to McKinsey (2015) resolving issues caused by tensions between exploration and exploitation will remain highly relevant for companies in the future.
The following sections of this thesis include: a literature review on ambidexterity and organizing it as a dynamic capability, sustainable business model innovation and a conceptual framework, followed by the methodology, a results section that systemically addresses the four
research objectives and finally a discussion of the results including theoretical and practical implications and a conclusion.
2.0 Literature review
Over the recent years an increasing number of articles and reports has been published on ambidexterity and closely related topics such as innovation, dynamic capabilities and conflicting business models. This reflects a strong interest from both practice and the academic field to understand how companies are able to survive and thrive in their dynamic environments for longer periods of time. However, despite the increasing wealth of studies, it has become apparent that ambidexterity literature lacks focus due to the wide applicability of this concept (Birkinshaw & Gupta, 2013). This literature review and its structure therefore serve multiple purposes; first ambidexterity is addressed, by defining the concept for this thesis and providing a focussed overview on ambidexterity literature so far. Then following O’Reilly & Tushman (2008) the concept of ambidexterity as a dynamic capability will be discussed, including a critical review. Followed by a section on the context, companies engaged in sustainable business model innovation, in which ambidexterity as dynamic capability is studied. By reviewing these concepts based on academic literature a theoretical foundation is created, while simultaneously making explicit a number of gaps and avenues for future research found in these articles. These gaps provide the starting point for a conceptual framework consisting of four research objectives that will guide the research conducted for this thesis towards an answer of the research question.
2.1 Ambidexterity
Innovation is widely considered to be the answer to the fast-changing environments companies are acting in today (Crossan & Apaydin, 2010). Both academics and businesses have found that in order to keep up with the economic pace and stay ahead of competition, companies are required to use their innovation capabilities (Kuratko, Covin & Hornsby, 2014). However in doing so there are always trade-offs to be made, because when companies are trying to explore
new possibilities but also exploit their current business, some degree of conflict between organizational tasks is certain to arise (Gibson & Birkinshaw, 2004). How companies deal with issues between exploitation and exploration has been an increasingly popular and central topic of ambidexterity literature for little over a decade (Birkinshaw & Gupta, 2013).
Although ambidexterity (within a business context) was first coined by Duncan (1976), it was not until March (1991) reframed it as exploitation versus exploration, or efficiency versus flexibility, that it gained more attention (O’Reilly & Tushman, 2013). Building on his work led Tushman & O’Reilly (1996) to be the first to link organizational ambidexterity to long-term company survival, which resonated strongly within the business field. Eventually Gibson and Birkinshaw (2004) published an article on contextual ambidexterity, which opened up ambidexterity to be used as a hook for research on how companies manage all kinds of tension between conflicting demands (Birkinshaw & Gupta, 2013). Since then a strong surge in ambidexterity literature has led to a very broad and somewhat chaotic field of research. Although a number of articles point out that the academic relevance of ambidexterity is in danger of becoming too generic, the same articles also strongly argue that ambidexterity is academically valuable when addressed in the right manner and is proven to lead to improved company performance, the resolving of tensions between exploration and exploitation and sustained competitive advantage in dynamic environments (Junni, Sarala, Taras & Tarba, 2013; O’Reilly & Tushman, 2007; O’Reilly & Tushman, 2013; Birkinshaw & Gupta, 2013). In order to make a clear contribution to academic literature, the next section will define and argue the specific use of ambidexterity for this thesis.
O’Reilly & Tushman (2013) suggest to return to the original definition of organizational ambidexterity. They use March’s (1991) definition in which companies use ambidexterity to form a balance between the exploitation of existing assets and the exploration of future possibilities. The first is associated with efficiency and control, while the latter is about
innovation and flexibility. According to March (1991) both activities are depended on each other; for exploring a company will need resources generated by its current exploitative activities. Yet, without exploration a company might have no assets to exploit in the future. It is therefore necessary to form a balance between the two activities, but as companies are mostly biased towards short-term successes, exploitative activities are often favoured over explorative activities. It is not only this bias that makes it difficult to reconcile both activities, the underlying mechanisms for both activities have often been described as opposites, or even impossible to coexist within the same company (Raisch & Birkinshaw, 2008). It is clear from March’s (1991) perspective that achieving the right balance is very important to be successful at ambidexterity. It is also stated by Crossan & Apaydin (2010) that innovation (thus exploration) is seen as one of the most important sources for sustainable competitive advantage in increasing dynamic environments. This thesis will therefore focus on the balance between both activities, but it will also focus specifically on how the exploratory activities are organized.
Over the years several constructs for ambidexterity have been proposed by different authors, in which the different ways companies deal with this tension are described (O’Reilly & Tushman, 2013). The first type was based on punctuated equilibrium theory and coined sequential ambidexterity, a type in which companies switch between exploitation and exploration over periods of time based on environmental requirements (O’Reilly & Tushman, 2013). Although this type of ambidexterity seems to be applicable in some situations, it is also anchored in the assumption that companies can predict and quickly adapt to the pace of change in the environment (O’Reilly & Tushman, 2008). Since this pace is ever increasing Tushman & O’Reilly (1996) argue that it might be ineffective.
Raisch, Probst & Tushman (2009) in similar fashion see a trend in the majority of academic literature that indeed focuses on the simultaneous pursuit of both activities, not on sequential switching. It is however argued by Raisch et al. (2009) that sequential ambidexterity
does incorporate a dynamic element to ambidexterity theory that is often neglected by research into the other types of ambidexterity. Raisch et al. (2009) also state that sequential switching between activities could occur not at corporate level, but within work efforts and decisions of individual employees. In an overview on ambidexterity Simsek, Heavey, Veiga & Souder (2009) comment on sequential ambidexterity to be suited for companies in technological industries, since it is especially helpful in product innovation. Jansen, van den Bosch and Volberda (2006) on the contrary argue that product innovation, as a type of exploration is not always enough to cause a tension, because these are often mere improvements for products or service in a declining market.
Simsek et al. (2009) however point out several cases in which sequential ambidexterity has resulted in both innovation and financial performance. For example, they present a study by Winter & Szulanski (2001) in which companies engage in exploration to discover and create new business models, followed by a period of exploitation in which the new models reap large-scale benefits and are stable. In conclusion, a strong focus on other types of ambidexterity has gained more interest based on the reasoning of O’Reilly & Tushman (1996). But in academic literature it is also mentioned that sequential ambidexterity might provide interesting insights into a more dynamic perspective and ambidexterity occurring at individual level in the organization.
As environmental change is increasingly rapid and complex, Tushman & O’Reilly (1996) argue that companies should pursue another type of ambidexterity called structural ambidexterity, the simultaneous achievement of exploration and exploitation via different sub-units. This can be accomplished by structural and clear architecture with a different reward system, sub-culture and business model for the specific exploratory sub-unit. While also having a common strategic vision, shared values, ambidextrous managers and synergies to benefit from the different activities performed simultaneously (O’Reilly & Tushman, 2013). Research on
structural ambidexterity and its antecedents has been extensive and has largely been found to have a positive effect on firm performance, although results have not always been consistent (O’Reilly & Tushman, 2013; He & Wong, 2004).
Critique on structural ambidexterity states that finding the right level of integration between exploration and exploitation remains a very difficult challenge (O’Reilly & Tushman, 2013; Simsek et al., 2009). Birkinshaw & Gibson (2004) argue that the reason for this challenge originates from a too-traditional view of organizations. First, because only the top management team, without frontline employee involvement, has the decision right on the level of integration versus separation of the different sub-units. And second because it only focusses on how the top management team chooses a fixed structure, while ignoring the need for a behavioural context via processes and systems to resolve the tension (Birkinshaw & Gibson, 2004). Raisch et al. (2009) also points out that several scholars have criticised structural ambidexterity for making synergies between both activities, which is at the core of being ambidextrous, too difficult to occur because of the structural separation. So although structural ambidexterity allows companies to explore and exploit simultaneously, this ambidextrous solution also causes issues with establishing the right level of integration versus separation across units and with the role of the top management team in creating an ambidextrous organization.
The third type, contextual ambidexterity, was coined by Gibson & Birkinshaw (2004). They conceptualize and test a construct in which companies create a context that enables ambidextrous behaviour in individuals at lower levels in the company. This organizational context consists of an ambidextrous business unit, an ambidextrous organizational culture and climate. These attributes of context are reinforced by hard elements (discipline and stretch) and soft elements (support and trust). By decentralizing the decision-making process to the individual level Gibson and Birkinshaw (2004) put less emphasis on the role of the leader, as is the case for structural ambidexterity (O’Reilly & Tushman, 2013). Gibson and Birkinshaw
(2004) argue that benefits of contextual ambidexterity include: employee involvement, empowerment and less coordination issues between business units, as can be the case for structural ambidexterity.
However also contextual ambidexterity has been critiqued, as O’Reilly & Tushman (2013) argue that the way in which the context should actually be created in companies remains rather vague and only roughly describes its elements. Another partial critique proposed by the authors themselves is that contextual ambidexterity can be expensive to execute, but will be outweighed by the benefits. Strikwerda (2012) takes an interesting organisational design perspective on the importance of company processes. He suggests that currently companies still focus on ‘structure follows strategy’, but in the 21st century will increasingly need to focus on
‘process follows proposition’. It is argued that due to our changing environment, structure will become less relevant to organization design and processes will become more important.
After having described the general outline, benefits and critiques of the different types of organizational ambidexterity, the focus will now shift towards a number of central questions and suggestions that are mentioned in academic literature concerning ambidexterity and its different types. The first suggestion is that, although contextual and structural ambidexterity are driven by a different reasoning, respectively processes and systems versus dual structures, a number of authors provide initial empirical evidence or hint at the idea that both concepts are complementary (Birkinshaw & Gibson, 2004; Raisch, Probst & Tushman, 2009; O’Reilly & Tushman, 2013). Markides (2013) states that it remains unclear when, what type or combination of types is most useful for companies to resolve the tension between exploitation and exploration. Benner & Tushman (2015) state that contextual and structural ambidexterity are definitely complementary and that companies vacillate between different constructs as industries evolve, but no empirical evidence is provided. O’Reilly & Tushman (2013) refer to an unpublished longitudinal study by Jansen, Andriopoulos & Tushman (2012), in which
evidence was found that successful incumbent companies first use a structural design and then continue switching between designs over time. Both of these articles and other articles (e.g. Birkinshaw & Gibson, 2004) mention that sequential, structural and contextual designs are complementary. There is however a lack of empirical evidence, if and how companies are combining the different types of ambidexterity or are switching between them.
Not only has the use of different types of ambidexterity remained somewhat unclear, the level at which ambidexterity occurs or should occur is also still in need of further research (Raisch et al., 2009; O’Reilly & Tushman, 2013; Gupta et al., 2006). Or as these authors claim there is a need for a multi-level analysis of ambidexterity. Birkinshaw & Gupta (2013) explain that ambidexterity can be resolved at the organizational level, which then causes new issues at lower levels, or in other words the ambidextrous tension is passed down through the company. Raisch & Birkinshaw (2008) also mention this and therefore argue that only looking at the corporate level or business unit level, often does not tell the complete story about ambidexterity. It is further stated by Raisch & Birkinshaw (2008) and Birkinshaw & Gupta (2013) that future research should explicitly mention the levels at which they have researched ambidexterity and would benefit from looking at multiple levels simultaneously. For example, ambidexterity within top management teams and their decision making has been researched more often (e.g. Smith & Tushman, 2005; Carmeli & Halevi, 2009), however companies now also choose for contextual designs in which ambidexterity resides at lower levels. Since this thesis will study ambidexterity as a dynamic capability which can occur at different levels in the company and because of the academic demand for an empirical multi-level study, doing so will likely generate useful insights into organizational ambidexterity (Raisch et al., 2009; Birkinshaw & Gupta 2013; Gupta et al., 2006).
Gupta et al. (2006) agree with March’s (1991) conclusion that exploration and exploitation are two ends on a continuum as company resources are inherently finite. But Gupta
et al. (2006) also extend this conclusion by commenting that resources have become more infinite, because information and knowledge have become widely accessible and companies can now also use resources from their external networks. The effect of the external environment on organizational ambidexterity is often mentioned in literature and can roughly be divided into two categories.
The first is the internal versus external scope on organizational ambidexterity, as both Raisch et al. (2009) and O’Reilly & Tushman (2013) mention most research has focussed on the internal company, while leaving out the influences of the external environment or larger ecosystem via partnerships, open-innovation and social networks. Although outside the scope of this research to examine the larger ecosystem, it is however useful to distinguish the context in which companies are being ambidextrous. I.e. what is driving companies to simultaneously explore and exploit. The context that is studied for this thesis is sustainable business model innovation and will be elaborated upon in paragraph 2.3.
The second category of the ‘external’ view on ambidexterity is the effect of the environment on how companies deal with the tension between exploration and exploitation. Both Jansen, Van den Bosch & Volberda (2005) and O’Reilly & Tushman (2013) found that ambidexterity will thrive under uncertain environmental conditions, partially as it might otherwise be too expensive to implement. Based on the idea that ambidexterity can help companies in increasingly dynamic environments and the notion that it is used by companies to be able to learn and adapt, O’Reilly and Tushman (2008) published an article in which they argue ambidexterity can be seen as a dynamic capability. This article is the starting point of this thesis.
2.2 Ambidexterity as a dynamic capability
Over the past years there has been a search in ambidexterity literature to find the right lens to research ambidexterity with. Many authors have argued that dynamic capability theory is suited to do so and requires more extensive research (Tushman, Smith, Wood, Westerman, O’Reilly, 2005; Simsek et al., 2009; Raisch & Birkinshaw, 2008; Raisch et al., 2009; O’Reilly & Tushman 2011; O’Reilly & Tushman 2013). Based on Teece’s (2007) seminal work on dynamic capabilities, O’Reilly & Tushman (2008) describe how sensing, seizing and reconfiguring have a similar approach to adaptation as ambidexterity does. Dynamic capabilities are a company’s ability to recombine and integrate resources, via sensing, seizing and reconfiguring, to adapt to changing environments with a strong emphasis on strategic leadership (O’Reilly & Tushman, 2008). Sensing opportunities and exploring new possibilities requires long-term thinking and commitment by senior management, which can be difficult due to a company’s short-term goals and threats. Guided by strategic insight senior management then needs to make decisions regarding the allocation of resources and assets and strategically execute these seizing decisions. The new exploratory adaptations should then be integrated with the older exploitative alignment via reconfiguration. This is not a static process, as companies should use their dynamic capabilities to constantly recombine and reconfigure their organizational structure and processes to cope with environmental changes. Depending on the speed of environmental change, these capabilities can occur sequentially or more simultaneously (Teece, 2007). Teece (2007) then states that specific skills, processes, procedures, organizational structures, decision rules and disciplines should enable strategic leaders to sense, seize and reconfigure opportunities and threats.
Raisch & Birkinshaw (2008) mention how ambidexterity literature so far has often taken a static perspective by looking at the outcome of ambidexterity, while ambidextrous companies are actually continuously reconfiguring their activities to cope with a changing environment.
Raisch & Birkinshaw (2008) therefore state that taking a process perspective on ambidexterity by combining dynamic capability theory and ambidexterity could improve future research. They argue that since dynamic capability theory supplies a dynamic element to cope with environmental change, applying this to the interaction between exploration and exploitation activities of an ambidextrous company, could provide an interesting dynamic or process perspective. O’Reilly & Tushman (2008) further remark that the concepts are closely related, as both concern organizational adaptation in dynamic environments. They also claim that what is missing in the literature so far is the identification of the specific actions senior management can take to organize ambidexterity as a dynamic capability. O’Reilly & Tushman (2008) ask what dynamic capabilities in the form of actions, behaviours and design choices from senior management are needed, that will allow a company to explore and exploit simultaneously over time. By answering this question dynamic capabilities theory can assist future ambidexterity research to clarify more precisely how companies actually deal with tension between exploration and exploitation (O’Reilly & Tushman, 2011).
Since several researchers have connected different types of ambidexterity to company performance (e.g. He & Wong, 2004; Junni et al., 2013), there has been a strong demand in future research segments to further elaborate on how ambidexterity is actually implemented and many perceive dynamic capability theory as a suitable means for accomplishing this (e.g. Raisch et al., 2009; O’Reilly & Tushman, 2008). The next section will therefore discuss ambidexterity as a dynamic capability.
As has been mentioned before the organizational alignment that makes exploitation a success, has been described as fundamentally different from the alignment related to exploration (O’Reilly & Tushman, 2008). Although both are essential to long-term survival, companies are generally biased towards exploitation of their current practice (O’Reilly & Tushman, 2008). Therefore the chance of long-term survival for most companies resides in an
ability to continuously explore and also to adjust their core capabilities and routines towards new markets and technologies accordingly (O’Reilly & Tushman, 2008). Other than the ambidexterity described in paragraph 2.2 exploring new innovations and adjusting core capabilities do not occur in a single moment in time after which a company is ‘ambidextrous’. Companies need to be continuously, or i.e. dynamically, ambidextrous and re-evaluate their choices and actions in order to exploit and explore at the same time (O’Reilly & Tushman, 2008), which is also argued by Raisch et al. (2009) by proposing a process perspective is suitable for ambidexterity studies.
In doing so senior management has the complex task of constantly finding the right level of differentiation between units that explore and units that exploit, while also providing the right amount of tactical integration between these units (O’Reilly & Tushman, 2008). Raisch et al. (2009) also mention how differentiating between units can help companies overcome the inertial forces from an exploitative mind-set, but caries the risk of a lack of synergies. Conversely too much integration between units can cause a lack of focus within employees, because they are confronted with contradictory activities. Since the right balance between integration and differentiation is effected by the relative importance of exploration and exploitation activities over time, ambidexterity as a dynamic capability, instead of a more static ambidexterity perspective, seems to be an apt construct for senior management to cope with this issue (Raisch et al., 2009).
Raisch & Birkinshaw (2008) remark that ambidexterity within a company can only become a dynamic capability when management is able to repeatedly and intentionally orchestrate their capabilities and resources. O’Reilly & Tushman (2008) further argue that ambidexterity as dynamic capability in itself is not a source of competitive advantage, however it does enable a situation in which a sustainable competitive advantage via exploration and exploitation activities can occur. Both Smith et al. (2010) and O’Reilly and Tushman (2008)
emphasise the dominant role of leaders and senior management teams in implementing ambidexterity as a dynamic capability. O’Reilly and Tushman (2008) propose five conditions, consisting of senior team actions, behaviours and design choices that enable organizing ambidexterity as a dynamic capability. When senior management creates these five conditions, it is argued that a company can be successfully ambidextrous over time. This thesis will therefore study these five conditions and their actual implementation in a single-case study.
In order to have a better understanding of these five conditions the following section will explain each of them more into depth, followed by benefits and criticisms found in academic literature.
According to O’Reilly & Tushman (2008) condition one provides an intellectual rationale for managers and employees to perform both exploration and exploitation. Without a strategic intent also explicitly focussing on exploration, company focus and resources will be directed towards the less risky exploitative activities. Condition two provides emotional engagement, whereas the first condition is anchored in strategy and logic. The goal of this condition is to
ensure employees across units with different strategies will nonetheless establish a common identity through vision and values. A vision will generate more long term thinking by employees and promote collaboration, while shared values will help them form a common identity. The third condition concerns a senior management team that is not only in consensus regarding the ambidextrous form, but also consistently communicates this message. The success of this happening is contingent on a number of factors such as: experience within the team, diversity within the team, a common incentive system and a willingness to eliminate those who do not support the ambidextrous form. The fourth condition touches upon the integration versus differentiation issue mentioned previously. The exploratory unit should be separate enough via organizational architectures to be able to thrive and innovate without being pushed out by exploitative-minded forces. Yet there should be enough tactical integration for both activities to benefit from each other via synergies and experimentation. As explained before, creating the balance has proven to be difficult. The last condition concerns the ability of senior management to deal with multiple alignments simultaneously and resolve inevitable conflict that arises. Short-term efficiency and control versus long-term innovation and uncertainty is bound to cause conflicts within employees, managers, business units or the company. Senior management should be able to resolve this, for example by letting go of counter-productive, but strongly embedded routines.
What is helpful about these five conditions is that they are clear and researchable within companies. The conditions have been conceptualized based on secondary empirical data from companies such as IBM, USA Today and others (O’Reilly & Tushman, 2008). O’Reilly & Tushman (2011) published a follow up study in which they have conducted interviews with 15 companies to verify the conditions. The methods used in their study will be discussed later on, after a summary of O’Reilly & Tushman’s (2011) key-findings.
O’Reilly & Tushman (2011) arrived at the conclusion that the result of their study is largely consistent with Teece’s (2007) observation that dynamic capabilities reside at the top management team. It is also claimed that ambidexterity as a dynamic capability is indeed a successful way for companies to cope with changing environments. These conclusions are drawn based on the results of 15 companies, of which eight were successful by being ambidextrous, three failures and four companies that initially failed but then transitioned to success via ambidexterity. Via interviews with senior management and other key informants the actions, behaviours and design choices from senior management proposed in the five conditions were tested. The results showed that all conditions were beneficial for simultaneous exploration and exploitation activities. Interestingly O’Reilly & Tushman (2011) discovered that a clear strategic intent (condition 1) and overarching vision (half of condition 2) were not decisive in becoming a successful ambidextrous organization. Their interpretation of this outcome is that the implementation appears to be more important than strategy formulation. They argue, formulating strategy is likely easier for managers then the hard choices they face when implementing it. Also the difficulty and importance of condition four is emphasised, after which it is concluded that the ambidextrous design appears to benefit from the set of all conditions interacting together as dynamic capabilities. These results provide a rather positive picture about ambidexterity as a dynamic capability, even more so regarding the conceptualized conditions by O’Reilly & Tushman (2008).
Based on other academic theory a number of considerations need to be made about the conditions. Based on the scientific methods used by O’Reilly & Tushman (2011) the results of their study should also be looked at critically.
O’Reilly & Tushman’s (2011) publication involves a study with large and well renowned ambidextrous companies such as IBM, SAP, HP, USA Today and Cisco. Since the researchers had access to interview the senior management teams of these companies, it can be
argued they had access to highly interesting data. Unfortunately their article also raises some questions due to poor rigor. According to Gibbert & Ruigrok (2010) in order for researchers to ensure a case study has rigor there are four criteria to consider: construct validity, internal validity, external validity, and reliability. Due to the absence of a method section providing a clear chain of evidence and choices, O’Reilly & Tushman’s (2011) study is not transparent nor easily replicable and therefore ensures little validity nor reliability (Gibbert & Ruigrok, 2010). Although having e-mailed both authors for further insights regarding this study, to date no answer has been received.
However O’Reilly & Tushman (2011) do provide some insights into their qualitative methods. Interviews with both senior management and key-informants have been conducted and claims about ambidextrous success are supported by financial statistics from each company. Since this thesis will also take a qualitative approach by conducting interviews, the results and conclusions by O’Reilly & Tushman (2011) discussed above will be taken into account and studied thoroughly. As will be further explained in paragraph 2.4 this thesis partially builds upon the approach of O’Reilly & Tushman (2011) by using their conditions as part of a conceptual framework, that allows insight in the actions, behaviours and design choices of employees in a single-case study. However, unlike O’Reilly & Tushman (2011) the original conditions will be adjusted, different perspectives based on more recent literature will be applied and section three of this thesis will provide an extensive methods section ensuring rigor. Other considerations regarding O’Reilly & Tushman’s (2011) study that need to be made based on ambidexterity literature, can be divided into three categories. The first and second category are closely related and are most clearly defined by Raisch & Birkinshaw (2008) and Raisch et al. (2009). It is mentioned in both these articles that ambidexterity research has often favoured a more structural perspective on ambidexterity, with a stronger emphasis on senior management as the source of ambidexterity. The five conditions by O’Reilly & Tushman
(2008) exactly reflect this critique since they are focussed on a more structural approach and are only focused on senior management. Benner & Tushman (2015) argue that the context in which innovation occurs has changed, because it has become less dependent on hierarchal structure. Raisch et al. (2009) mention how a contextual design and resolving ambidexterity at lower levels in the organization might be a way to overcome some of the difficulties encountered with a structural design that is more top-down focused. As explained before and as requested by many authors (e.g. Birkinshaw & Gupta, 2013) a multi-level analysis could help by providing better insights in how ambidexterity is actually managed at different levels in the company. The third consideration is based on the multi-dimensional framework for innovation by Crossan & Apaydin (2010).
Although exploration and innovation are not conceptually the same (Crossan & Apaydin, 2010), innovation is often used as a synonym for exploration by O’Reilly & Tushman (2008)
and considered at the core of innovation by Crossan & Apaydin (2010). Therefore this model and specifically the managerial levers from a dynamic capabilities perspective are helpful to gain further insight into the five conditions. Crossan and Apaydin (2010) make a stronger separation between leadership and managerial levers than O’Reilly & Tushman (2008), but Crossan and Apaydin (2010) perceive both as determinants of business model innovation. This is similar to the perspective of O’Reilly & Tushman (2008) who see the senior management actions, behaviours and design choices (leadership and managerial levers) as the determinants for making exploration (innovation) a success, while simultaneously exploiting.
When comparing Crossan & Apaydin’s (2010) elements to the five conditions it becomes clear they are quite similar. Mission, goals & strategy are a combination of condition one and two. Structure & system and organizational culture are part of condition four. Resource allocation, although not explicitly mentioned, is considered an outcome of condition five (O’Reilly & Tushman, 2008). Interestingly, organizational learning & knowledge management is not mentioned in the five conditions, neither is it mentioned in the rest of the article as an important factor for companies to use ambidexterity as a dynamic capability. Crossan & Apaydin (2010) describe their managerial levers as enablers of core-innovation processes that lead to exploration via searching, developing and extracting value from new opportunities. Organizational learning & knowledge management, being a key element of dynamic capability theory, is thus an essential managerial lever for exploration and is summarized as shown below. Taking this element into consideration could be a valuable addition to O’Reilly & Tushman’s (2008) original five conditions.
The last useful aspect of Crossan & Apaydin’s (2010) model for this thesis are the dimensions of innovation. Crossan & Apaydin (2010) constructed innovation as a process (focus on how) and as an outcome (focus on what). Using these process elements will help to achieve the right perspective on sustainable business model innovation by following calls from Raisch et al. (2009) and O’Reilly & Tushman (2013) to focus on ambidexterity as a dynamic capability as a process, not as a static outcome. It is also important to clearly distinguish the context in which companies are organizing ambidexterity as a dynamic capability, therefore business model innovation and sustainability are discussed in the next section.
2.3 Business model innovation and sustainability
Several academic articles mention how business model innovation is suitable to study ambidexterity with. Markides (2013) emphasises that ambidexterity is especially helpful when companies execute two different business models simultaneously as a result from business model innovation. Markides (2013) states that new business models are driven by exploration activities, while the current business model is driven by exploitation activities. O’Reilly & Tushman (2008) also use business model innovation as a key concept in their studies on
ambidexterity. They distinguish between incremental, architectural and radical innovation and identify the latter two as more useful circumstances to explore ambidexterity with.
Architectural innovation is described as a new integration of existing components. Often only minor improvements occur but by changing how these components interact, existing offerings can be changed completely. Radical innovation is being described as a discontinuous change to the existing offering, often via advances made with new technologies. O’Reilly & Tushman (2008) use these, because incremental product innovation in itself is often not enough to cause a tension in a company that requires ambidexterity as a solution (see also Jansen et al., 2006). When companies innovate architectural or radical these new opportunities may require different competencies and a different organizational alignment to support a new exploratory business model (O’Reilly & Tushman, 2008). Markides (2013) calls this the disruptiveness of the new business model and further contributes that the level of disruptiveness might affect choices made regarding ambidexterity. O’Reilly & Tushman (2008) explain this more clearly by arguing that choosing an ambidextrous design (versus a non-ambidextrous designs) makes most sense when the new innovation is both high in strategic importance and high in operational leverage. In order to study ambidexterity as a dynamic capability, this thesis thus needs a company engaged in architectural and/or radical innovation that causes it to explore a new business model, while exploiting their current one.
Crossan & Apaydin (2010) provide six elements for innovation from a process perspective: level, driver, direction, source, locus and nature. These elements will be helpful in analysing the context in which companies are using ambidexterity as dynamic capability. Most of these elements already have been addressed in this literature review. The level is focussed upon senior management, middle management and operational level. The direction is presumed by O’Reilly & Tushman (2008) to be top-down, but as explained could also be more bottom-up or at the middle-level (Raisch et al., 2009; Birkinshaw & Gbottom-upta, 2013). The locus will be
the firm itself, without looking at the larger ecosystem. The nature will be explicit, since O’Reilly & Tushman (2008) argue for ambidexterity to be a dynamic capability it should be an explicit and repeatable process. The driver and source as elements of innovation will now be discussed by looking at sustainability, a topic so far rarely combined with ambidexterity.
As there are many different drivers and sources of innovation, it is therefore both interesting and necessary due to the limitations of this thesis, to focus on a specific form of innovation. In order to do so, this thesis will follow Nidumolu et al.’s (2009) statement, that there is no alternative to sustainable innovation. Nidumolu et al. (2009) state that sustainability is a new frontier for innovation. The competitive landscape is changing quickly and those who act before their competitors will develop capabilities that are likely to provide an important competitive advantage in the future. As Boons et al. (2013) mention most companies so far have been driven by an economic logic and have largely seen governmental or societal norms as a restriction. However, Nidumolu et al. (2009) argue that the more pro-active and thus internally driven companies explore opportunities for sustainable innovation, the more likely they will succeed in taking advantage of these opportunities before their competitors do. The sustainable demand of customers and the golden standard of compliance can thus actually serve as both economic and sustainable opportunities (Nidumolu et al., 2009).
Conclusively, sustainable innovation is considered to be an important source of competitive advantage for upcoming years (Nidumolu et al., 2009). Sustainable innovation also has an impact on a company’s value proposition, therefore the business model is considered to be a useful concept to study sustainability with (Boons et al., 2013). Since this is also the case for ambidexterity (e.g. Markides, 2013; O’Reilly & Tushman, 2008), companies engaged in sustainable business model innovation are likely to experience tension between exploration and exploitation activities. These companies therefore provide a practically relevant and appropriate context for this thesis to study how companies organize ambidexterity as a dynamic capability.
2.4 The conceptual framework
This thesis answers a call found in many future ambidexterity-research segments; to deepen the existing knowledge on ambidexterity as a dynamic capability (O’Reilly & Tushman, 2011; O’Reilly & Tushman, 2013; Simsek et al., 2009; Raisch et al., 2009). Although there has been a lot of interest in ambidexterity in a relative short period of time, the field of research is still developing and trying to define and organize all antecedents, processes and outcomes related to ambidexterity (Birkinshaw & Gupta, 2013). This thesis builds upon previous research, and aims to extend our understanding of ambidexterity as a dynamic capability in the context of sustainable business model innovation. It does so by exploring and examining a conceptual framework consisting of four research objectives with a qualitative study.
The first research objective is: ‘what ambidexterity type do companies use and if they use multiple types how do they switch between and/or combine them?’ The first research objective is based on two critiques by Raisch & Birkinshaw (2008) and Raisch et al. (2009). They argue that ambidexterity research needs to have a broader focus including contextual ambidexterity and company processes, driven by bottom-up initiatives. Benner & Tushman (2015) add to this argument that companies today switch between and/or combine three types of ambidexterity: structural, contextual and sequential. Since this thesis will conduct a cross-sectional study, it will be difficult to obtain a comprehensive view on this longitudinal issue. It is however argued by Raisch et al. (2009) that taking a process perspective, instead of a static one, is nonetheless more useful for gaining insights when conducting a study into ambidexterity as a dynamic capability, while engaged in sustainable business model innovation.
The remaining three objectives will focus on the actions, behaviours and design choices of senior managers, middle managers and operational level employees, by examining the six conditions that allow companies to organize ambidexterity as a dynamic capability based on O’Reilly & Tushman (2008) and Crossan & Apaydin (2010). As explained the actions,
behaviours and design choices of employees shape these six conditions: ‘a clear strategic intent, overarching vision & values, an aligned team, an organizational architecture, ambidextrous leadership and organizational learning & knowledge management.
The second research objective is: ‘how does senior management organize ambidexterity as a dynamic capability?’ Following the earlier mentioned critique this thesis will not only focus on senior management; see objective three and four. However senior management does have an important role in organizing ambidexterity as a dynamic capability (O’Reilly & Tushman, 2008), when engaged in sustainable business model innovation. As explained, except for O’Reilly & Tushman’s (2011) study the five conditions have not been extensively studied. Thus this thesis will repeat, but also extend upon their original study by examining specifically what actions, behaviours and design choices senior management takes to formulate and implement the conditions that allow to organize ambidexterity as a dynamic capability. Based on Crossan & Apaydin (2010) a sixth condition: ‘organizational learning & knowledge management’ will be added and following O’Reilly & Tushman’s (2011) results, their conclusion that the implementation of these conditions is more important than formulating strategy will also be studied.
The third research objective is: ‘how does middle management organize ambidexterity as a dynamic capability?’ This objective is formulated based on the argument by e.g. Birkinshaw & Gupta (2013) that ambidexterity is to be studied at multiple levels simultaneously, as ambidexterity issues are often passed down and resolved at ‘lower’ levels. Besides this argument, middle management, being involved with both senior management formulating strategy and implementation at operational level, are likely to provide useful insights into what actually happens to organize ambidexterity as dynamic capability (O’Reilly & Tushman, 2011), when engaged in sustainable business model innovation. The same six conditions will therefore be studied in terms of what actions, behaviours and design choices
middle management takes to implement them and to translate the formulation of these conditions to the operational level.
The fourth research objective is: ‘how does the operational level organize ambidexterity as a dynamic capability?’ This objective is based on the critiques mentioned in objective one, the demand for a multi-level perspective and the conclusion by O’Reily & Tushman (2011) that implementation if more important than strategy formulation. Answering research objective four, by studying what actions, behaviours and design choices from operational level employees shape the six conditions, will provide insights into the actual implementation of ambidexterity as a dynamic capability, when engaged in sustainable business model innovation.
The conceptual framework allows to study ambidexterity as a dynamic capability in a new way and presents a number of theoretical shifts. First, a shift from a static to a process perspective by looking into switching and/or combining of types. Acknowledging that companies are continuously changing allows an insight in the ambidextrous design type(s) companies use over time. Although this insight is unlikely complete, given the cross-sectional nature of this thesis, it will provide a foundation for the subsequent questions regarding ambidexterity as a dynamic capability. Mostly because it allows the researcher to gain a better understanding of the company’s specific and complex ambidextrous processes and structures.
The second shift, closely related to the first, is from a classic structural ambidexterity perspective only focussing on top-down senior management, towards a perspective including other types of ambidexterity that also focuses on middle management, operational level and a bottom-up approach. By asking employees at different organizational levels how they organize exploratory and exploitative activities, it is expected that the more ‘classical view’ on ambidexterity (e.g. O’Reilly & Tushman, 2008) is no longer completely valid. In order to do so a multi-level study, including a new revisited set of conditions, based on the original
conditions by O’Reilly & Tushman (2008), will be conducted. The purpose of these revisited conditions is to improve upon O’Reilly & Tushman’s (2011) study.
The third methodological shift is researching what dynamic capabilities in the form of actions, behaviours and design choices from individual employees at multiple levels in the company are needed to create the conditions that allow a company to organize ambidexterity as a dynamic capability. Whereas most ambidexterity studies only conceptualize how companies or business units are being ambidextrous (Birkinshaw & Gupta, 2013), this thesis can assist practice and future ambidexterity research by clarifying how employees at multiple levels actually deal with the tension between exploring and exploiting simultaneously over time.
The last contribution of this thesis is that it takes place in the relatively unexplored, in the case of ambidexterity, yet increasingly relevant academic and practical context of sustainable business model innovation.
3.0 Methodology
This section discusses all relevant methodological choices for this thesis. Zhang & Shaw (2012) argue that providing a clear and detailed account on how and why data is collected and analysed, is important for the quality of academic work. In order to do this, first the research method will be discussed, followed by the research design, data collection, data analysis and a critical review on the research quality of this thesis. The methodologic choices in these sections follow from the research question and subsequent conceptual framework and are supported by literature.
3.1 Qualitative research
The goal of this thesis is to understand how companies organize ambidexterity as a dynamic capability, within the specific and relatively unexplored context of sustainable business model innovation. In order to do so a qualitative approach is used as Strauss & Corbin (1990) mention how qualitative methods can help to discover the underlying nature of a phenomenon when little about it is known. Pratt (2009) and Eisenhart & Graebner (2007) further support this by stating that when studying such a complex situation, without the presence of previous empirical evidence, a researcher is likely to gain more relevant insights by conducting an inductive qualitative study.
Since the purpose of this thesis is to extend upon existing ambidexterity literature, by studying what companies ‘actually’ do to organize ambidexterity as a dynamic capability, the study takes an interpretative approach with a relativist assumption about reality (Gephart, 2004; Merriam, 2002). This involved studying multiple social actors (employees) and asking them how they organize ambidexterity as a dynamic capability. This approach allowed the researcher to describe and understand the use of ambidextrous design types and the different actions, behaviours and design choices of individual employees in real settings (Gephart, 2004).
Further following Merriam (2002), taking an interpretative qualitative design for this thesis had a number of other benefits. Firstly, it allowed the researcher to obtain an in depth understanding of how the company organizes ambidexterity as a dynamic capability. Secondly, in qualitative research the researcher himself is the most important instrument for collecting data. This was valuable, because the researcher was able to interact with the respondents while conducting interviews in order to have a better understanding of ambidexterity as a dynamic capability. Thirdly, the results from this inductive qualitative study consist of a rich description of how companies organize ambidexterity as a dynamic capability and are supported by descriptions of the company context, respondents, secondary data, quotes and memos.
The benefits mentioned by Merriam (2002) not only show why a qualitative approach is more appropriate for this thesis, it also depicts what a quantitative approach in such as study would lack. Gephart (2004) explains this clearly by stating that quantitative studies do not allow for detailed descriptions of actual actions and settings in a real-life context. Since the purpose of this thesis is to answer the research question by obtaining detailed descriptions of the use of ambidextrous design types and the actual actions, behaviours and design choices of individual employees, a qualitative approach is preferred over a quantitative approach.
Another reason to take a qualitative approach is to empirically extend upon O’Reilly & Tushman’s (2011) original study.
3.2 Research design
This thesis used a case study design in order to extend upon theory about ambidexterity as a dynamic capability by inductively answering four research objectives via empirical evidence (Esisenhardt, 1989; Edmondson & McManus, 2007), in an unexplored context of sustainable business model innovation over which the researcher has little control (Yin, 2003), by using an
in-depth qualitative approach in the form of interviews allowing for rich empirical descriptions of the studied phenomenon (Merriam, 2002; Yin, 1994).
Furthermore, since the researcher was allowed unusual access to highly relevant respondents (section 3.3) and internal secondary data (e.g. Appendix IV) at a company perceived as the frontrunner in sustainability amongst Dutch energy sector incumbents (WISE Nederland, 2017) using a single-case study was an appropriate choice (Eisenhardt & Graebner, 2007). Siggelkow (2007) argues that dominantly conceptual theory, such as ambidexterity, can be greatly helped by cases that illustrate underlying mechanisms, that otherwise remain more speculative.
When selecting a company to conduct a case study at, a technique called purposeful sampling, it is important to choose a strategy that fits the research (Maxwell, 2008). Following Flyvbjerg (2006) the researcher chose to select the case based on an ‘information-oriented selection’. Flyvbjerg (2006, p. 230) states that: “to maximize the utility of information from small samples and single cases, cases are selected on the basis of expectations about their information content”.
Eneco Group was selected because it has a clear sustainable mission and is trying to accelerate the energy transition by innovating and finding new sustainable business models to achieve this (Eneco Group, 2017). However, Eneco Group currently also still meets the energy needs of about 2.1 million Dutch households that generate about 99% revenue of Eneco Group’s business unit Consumers (respondent E). This situation fits the context of this thesis well, as Eneco Group is still exploiting its current business, yet is also heavily emphasizing and executing exploration in the form of sustainable business model innovation.
Eneco group was therefore selected as a single-case study based on the following criteria: currently engaged in sustainable business model innovation, actively using the new sustainable business models and consisting of at least three organizational levels. Access to the
company was acquired via an acquaintance (respondent B) who works at Eneco Group and helped to set up the first round of interviews. An extensive company description and explanation of the two studied business units: Consumers and Smart Energy, is provided in the appendix I on page 87.
3.3 Research method
According to Gibbert & Ruigrok (2010) it is important to use multiple data sources, such as interviews, secondary data and observations. Due to the competitive-sensitivity the researcher was not able to get access to internal memos or e-mails. However, other internal documents were acquired concerning the organization structure, innovation criteria and innovation method. These have been added in this section and appendix IV on page 108. Also other external documents, such as yearly reports and the company’s website have been used to supplement data from the interviews. Observations have not been possible due to limited access and time restrictions. Surveys were not useful for this study, because of a lack of prior in-depth knowledge about the companies and because this study is trying to understand, not prove, complex concepts with an interpretative approach (Gephart, 2004; Merriam, 2002).
Interviews were thus used as the main source of data collection, because the researcher wanted to gain insight from the respondents in the used ambidexterity type(s) and actions, behaviours and design choices of employees, which shape the conditions that allow ambidexterity to be organized as a dynamic capability (Patton, 2002). According to Patton (2002) the quality of information resulting from an interview is largely dependent on the interviewer himself, particularly the organization of the interview and the quality of the interview questions. The following section discusses how the researcher made an effort to increase this quality.
Semi-structured interviews were conducted, because when a researcher needs to address certain topics, but also wants to leave room to explore complex emerging topics this is the best choice (Patton, 2002). The topics that have been discussed with each respondent are: type of ambidexterity, switching and/or combining types, strategic intent, overarching vision & values, aligned senior team, organizational architecture, ambidextrous leadership and organizational learning & knowledge management. These topics are closely related to ambidexterity literature and the previously mentioned conditions that allow to organize ambidexterity as a dynamic capability. The related interview questions were thus focussed on understanding what actions, behaviours and design choices the respondents take to establish these conditions and different ambidexterity types. Figure 4 shows how the topics were operationalized.
