Education An Important Aspect Of National Stability And...

Philosophy of Education Justin Graves Athens State University Abstract The education provided to United States students in grades kindergarten-12 is a valuable aspect of national stability and growth. Without strong school systems that provide proper opportunities for students to grow intellectually, technically and socially, the future U.S. society will not have citizens prepared to help the nation grow economically, industrially and politically. Because education is the foundation to a strong democratic society, teachers are the gatekeepers of the future. In the information provided, the educational philosophies that benefit today’s modern students are addressed. With a pragmatic approach to education, students are provided the proper guidance as they discover their roles in society. A pragmatic approach, while adopting the principles of other philosophical methods, allows students to be involved in the educational process, while helping students develop the academic, technical and social skills they need to fulfill their future roles in societ y. Introduction Education is an important aspect of a students’ personal development, both intellectually and socially. Through education, students acquire the necessary skills to eventually create a successful role in society. The role an educator plays is one of the most important parts of a student’s life. Because of that value, and a student’s eventual role in society, educators are tasked as theShow MoreRelatedCollege Education Is Necessary From The Perspective Of Personal Growth And National Development1265 Words   |  6 PagesCollege education is an optional formal learning that occurs after secondary education. College education offers all kinds of majors. Each person chooses their suitable majors according to their own preference. College education is necessary for teenagers because it is good for your future career as it can help you find decent jobs and fostering human capital and facilitating self-development in the view of life. What’s more, the high qualit y cultivated by college education will promote the developmentRead MorePest Analysis of Textile Industry1235 Words   |  5 Pagesdetermining the decline or growth of a particular market. What does PEST stand for? Political  Ã¢â‚¬â€œ this refers to the ways in which the government can intervene in an economy in terms of environmental and labor laws, tariffs, trade restrictions and tax policies. It also shows how a government can influence education and health and how it will affect the infrastructure of a country. Economic  Ã¢â‚¬â€œ this refers to how exchange rates, inflation rates, interest rates and economic growth will impact on aRead MoreThe Human Development Index Is Vast Improvement on Measures of Development in Terms of Income1058 Words   |  5 Pagestheir level of development. This model of economic growth was based on a very weak foundation that was not sustainable over the long-term politically, economically or ethically. Higher per capita income in a country does not always mean that its people are better off than those in a country with lower income, because there are many aspects of human well being that these indicators do not capture. Sometimes a country with a very high level of national income recorded a very high percentage of populationRead MoreEssay Business Analysis: Bargain Basement Books1555 Words   |  7 Pagesfocus on the financial and political aspects, as well as the societal considerations, of Panama City, Panama; Tokyo, Japan; and Helsinki, Finland. 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[O]ver 2.2 million Poles have left Poland for other EU countries in the past 12 years, and the ones who stayed behind are witnesses to a processRead MoreOutline Of A Day Midterm Exam1515 Words   |  7 PagesThe House Registration System. This system registered Chinese citizens as residing in a certain area to restrict the movement of people and keep them from moving around from the rural areas to the urban areas. This system was used by Mao to insure stability. This system is not very efficient because people illegally move and work in places that aren’t listed on their Hukou registration. Regional Ethnic Autonomy Law: Allows regions to have some form of self-government. This law protects the rightsRead MoreImproving The Standard Of Gross Domestic Product1201 Words   |  5 PagesTo keep the economy running smoothly, to maintain price stability and to alleviate poverty are the main goals for formulating policies around the world. The experiences of every country are various as different patterns of economic development. Although it is widely accepted that the reduction of poverty accompanies the economic growth of a country, which encourages many countries, especially some developing countries, to concentrate on improving the standard of gross domestic product (GDP), it isRead MoreLibya s Transition Of The Arab Uprising Essay1587 Words   |  7 Pagesmovement towards a more democratic state nearly impossible. After Gaddafi’s overthrow and death, The National Transitional Council was created in lack of any other government. Its goals included the unification of Libya, safety of citizens, and the facilitation of an election for an assembly to draft a new constitution. Citizens had the most freedom since 1970 during the ten months that The National Transitional Council governed. Political corruption decreased to 1.72 on V-Dem’s scale. Freedom of discussionRead MorePEST analysis investigations1735 Words   |  7 PagesPEST analysis investigates the important factors that are affecting the industry and influencing the companies operating in that sector. PEST is an acronym for political, economic, social and technological analysis. 3.3.1 Political Factors: The economic landscape in Oman is continuously improving due to the development plans and tighter regulation. Along with relatively low penetration levels compared to counterparts in the Gulf Cooperation Council (GCC) and a limited product offering, Oman’s bankingRead MoreFactors Affecting The Business Operations And Decision Making Of The Organization Essay1399 Words   |  6 Pagestechnological, legal and environmental) It is a strategic tool for understanding market growth or decline, business position, potential and direction for operations. The PEST is an analysis done to an organization but can also be related to several departments altogether. PEST analysis includes four factors: †¢ Political factors are basically how the government intervenes in the economy. Specifically, political stability, tax policy, employment and labor law, environmental regulations, trade restrictions

The Theory Of Motivation As Forces Within An Individual

It Is Not Fair Case Study This case study discusses the theory of motivation as forces within an individual that account for the direction, level, and persistence of a person’s effort used at work. According to Schermerhorn, Osborne, Uhl-Bien, and Hunt (2012), the research of Motivational Theories is divided into two types of theories, content and process theories. Content theories focus on physiological and psychological deficiencies while process theories of motivation to focus on how cognitive processes as thoughts and decisions with the minds of people influence their behavior. In this case study we will focus on the process theories (p. 102). We begin with a woman named Mary Jones, while she was in the last year of college, she was interviewing for jobs. Mary graduated in the upper part of her class and she was highly respected by her instructors. Being in the top one percent of her class she was offered positions in every corporation she had an interview with. After thinking over several offers , she began working for Universal Products, which was a global company. Along with Mary, Susan Stevens was a recent hire, also working for the same manager. Despite both had the same qualifications, Sue somehow had the advantage. Mary had a great attitude before she met Sue, she held the company in respect and was actually proud of working for Universal. Moreover, her contribution in the company was being valued and she was given inspiring projects whichShow MoreRelatedEvaluate The Theory Of Motivation From Humanistic Perspective Essay1624 Words   |  7 PagesEvaluate the theory of motivation from the Humanistic perspective. By Marialena Posteraro Throughout this paper evaluation of motivation from a Humanistic perspective will be examined. Motivation is the drive within humans that makes us act, it is a process that influences goal directed behavior. Drives are considered internal factors that push an organism into action. Throughout our lives, we have certain drives within us that motivate us to behave and act in a certain way to fulfill ourRead MoreThe Impact Of Expectancy Theory On The Individual Values1649 Words   |  7 Pagesmotivating if it leads to rewards that the individual values†, before considering the statement it is first important to understand motivation. Motivation is a broad, decision-making concept in which behaviour can be commenced and conducted, by a desire for fulfilment (Huczynski and Buchanan, 1991). Having a motivated workforce is vital for a firm’s productivity and growth, however how best to motivate employees is subject to much debate, with many theories providing conflicting opinions. In this essayRead MoreTheories on Motivation Essay1645 Words   |  7 PagesIntroduction: Motivation can be defined as the inner power or drive that pushes one towards taking a particular course of action. It is much related to desire and ambition and they all work in tandem (Sasson, 2001). 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If we analyze from theories such as Alderfer s ERG theory, Abrahan Maslow s hierarchy of needs or McClelland s Achievement Need Theory if we fulfillRead MoreMotivation of Employee in Lic1357 Words   |  6 Pages] Intrinsic and extrinsic motivation Motivation can be divided into two types: intrinsic (internal) motivation and extrinsic (external) motivation. Intrinsic motivation Intrinsic motivation refers to motivation that is driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on external pressures or a desire for reward. Intrinsic motivation has been studied since the early 1970s. Students who are intrinsically motivated are more likely to engageRead MoreThe Classical Theories Of Motivation1393 Words   |  6 PagesEMPLOYEE MOTIVATION INTRODUCTION Gone are the days when employees were regarded as merely one of the supporting features of organizational success. 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Managers Explore and Exploit Free Essays

string(57) " capabilities is a central task of executive leadership\." Organizational Ambidexterity in Action: How Managers Explore and Exploit Author(s): Charles A. O’Reilly III and Michael L. Tushman Reviewed work(s): Source: California Management Review, Vol. We will write a custom essay sample on Managers Explore and Exploit or any similar topic only for you Order Now 53, No. 4 (Summer 2011), pp. 5-22 Published by: University of California Press Stable URL: http://www. jstor. org/stable/10. 1525/cmr. 2011. 53. 4. 5 . Accessed: 27/11/2011 04:22 Your use of the JSTOR archive indicates your acceptance of the Terms Conditions of Use, available at . http://www. jstor. org/page/info/about/policies/terms. sp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor. org. University of California Press is collaborating with JSTOR to digitize, preserve and extend access to California Management Review. http://www. jstor. org Organizational Ambidexterity in Action: How Managers explore and exploit Charles A. O’Reilly III Michael L. Tushman he life span of the average American is 79. Japanese can expect to live to age 83, Liberians to only 46. The average age of a large company is much less than any of these. Research has shown that only a tiny fraction of firms founded in the U. S. are likely to make it to age 40, probably less than 0. 1 percent. 1 In this study, for firms founded in 1976, only 10% survived 10 years later, leading the authors to conclude that â€Å"Despite their size, their vast financial and human resources, average large firms do not ‘live’ as long as ordinary Americans. 2 While this is partly understandable because of the high mortality rates among newly founded companies, other research has estimated that even large, well-established companies can only expect to live, on average, between another 6 to 15 years. 3 Ormerod, in a study of firm failure, noted that â€Å"Over 10 percent of all companies in the U. S. , the largest and most-successful e conomy in the history of the world, fail every single year. 4 In a study of the world’s largest companies between 1912 and 1995, Hannah reported that only 20 firms remained on her list for the entire period— and many of those were in industries like natural resources without disruptive change. In her study, the modal large firm failed. 5 Why this should be is a puzzle, since when firms are doing well they have all the resources (financial, physical, and intellectual) to continue to be successful. Yet the evidence is that most organizations do not survive for long periods of time. In addressing this conundrum, James March notes that central to the ability of a firm to survive over time is its ability to exploit existing assets and positions in a profit-producing way and simultaneously to explore new technologies and markets—to configure and reconfigure organizational resources to capture existing as well as new opportunities. In March’s terms, this is the fundamental tension at the heart of an enterprise’s long-run survival. â€Å"The basic problem confronting an organization is to engage in sufficient exploitation to ensure its T CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 5 Organizational Ambidexterity in Action: How Managers Explore and Exploit current viability and, at the same time, devote enough energy to exploration to ensure its future viability. †6 March also notes that this requires not the blind variation-selection-retention process of biological evolution but what he refers to as â€Å"evolutionary engineering† in which organizational experience and memory are used to strengthen exploitation and exploration rocesses and adapt to changed environmental conditions. 7 Hannah, struggling to explain the survival of a comparatively small number of the world’s largest companies, suggests that a plausible explanation for the survivors is that â€Å"they had some distinctive architecture which enabled them—but not others—to constantly replicate their early success [and that] such corporate architectures must be complex and difficult to ident ify, describe and copy, for, if that were not the case, their value would be competed down by emulators. 8 In the past decade, a growing body of research has examined how organizations can both explore and exploit. 9 One promising stream of research has focused on how dynamic capabilities may underpin the ability of firms to sense, seize, and reconfigure organizational assets to adapt to changed environmental conditions. 10 With dynamic capabilities, sustained competitive advantage comes from the firm’s ability to leverage and reconfigure its existing competencies and assets in ways that are valuable to the customer but difficult for competitors to imitate. In this view, dynamic capabilities are embedded in organizational processes or routines around coordination, learning, and transformation and allow a firm to sense opportunities and then to seize them by successfully allocating resources, often by adjusting existing competencies or developing new ones. These capabilities underpin the organization’s ability to maintain ecological fitness and, when necessary, to reconfigure existing assets and develop the new skills needed to address emerging threats and opportunities The Roots of Organizational Ambidexterity O’Reilly and Tushman argue that the ability of a firm to be ambidextrous is at the core of dynamic capabilities. Ambidexterity requires senior managers to accomplish two critical tasks. 11 First, they must be able to accurately sense changes in their competitive environment, including potential shifts in technology, compeCharles A. O’Reilly III is the Frank Buck Professor of Management at the Graduate tition, customers, and regulation. Second, they School of Business at Stanford University. must be able to act on these opportunities and threats; to be able to seize them by reconfigurMichael L. Tushman is the Paul Lawrence ing both tangible and intangible assets to meet MBA Class of 1942 Professor of Business new challenges. 12 As a dynamic capability, ambiAdministration at the Harvard Business School. dexterity embodies a complex set of routines including decentralization, differentiation, targeted integration, and the ability of senior leadership to orchestrate the complex trade-offs that the simultaneous pursuit of exploration and exploitation requires. Developing these dynamic capabilities is a central task of executive leadership. You read "Managers Explore and Exploit" in category "Papers" 6 NIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit Although theoretically compelling, research on dynamic capabilities and ambidexterity is still at an early stage. Conceptually, the need for organizations to both explore and exploit is convincing, but how do managers and firms ac tually do this? At an operating level, how do the challenges of ambidexterity present themselves—and what differentiates the more successful attempts at ambidexterity from the less successful? To develop a more granular sense for the managerial challenges presented by ambidexterity, consider the following three examples. Mike Lawrie at Misys In 2007, Mike Lawrie was appointed CEO of Misys, a $1B FTSE 100 global supplier of software and services to banking and health care customers. Although Misys had been a star performer earlier in its history, by 2006 the firm was in trouble with margins and growth rates far below their competitors. It had grown through acquisitions and was a loose federation of 34 separate business units with 6,000 employees spread across 79 countries. Part of Lawrie’s turnaround strategy was straightforward: to install common practices across the business units to reduce costs and drive productivity. As a 27-year veteran of IBM and former CEO of Siebel Systems, Lawrie knew how to do this. More problematic was the potential disruptive challenge posed by open source software, which threatened the proprietary products from which Misys derived most of its current revenue. However, given the poor financial position of the company, Lawrie’s senior team was focused on cutting costs and getting through the immediate crisis. With their legacy business and their powerful business unit managers under cost, quality, and growth pressures, open source experiments were seen as a needless distraction and a $300M cost. They questioned whether the company should divert scarce resources to fund an uncertain new initiative that, if successful, could undermine their current business model? In addition, if they were to do this, how should the new venture be organized and led? Ganesh Natarajan at Zensar Technologies Zensar Technologies is one of India’s top 25 business process outsourcing companies proving services to 300 of the Fortune 500 firms. In 2005, its business was growing but Ganesh Natarajan, the CEO, saw the opportunity to implement a potentially radical software process innovation (Solution Blue Prints or SBP). SBP was a revolutionary way to do software development that, if implemented, would require a more collaborative relationship with clients, a different product development framework, and a different sales process. Zensar’s existing customers, its top team, its sales force and its product development staff were not enthusiastic about SBP. Like Mike Lawrie’s team at Misys, Natarajan’s senior team and business unit leaders were preoccupied with their current business and saw little need to explore an approach that would require them to alter their current business model. When pressed by Natarajan to explore the new approach to software development, several senior managers CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 7 Organizational Ambidexterity in Action: How Managers Explore and Exploit suggested that SBP simply be integrated into their existing units. Others wanted SBP to be spun out as a new venture. In contrast, the leader of the SBP project wanted to have his own business unit reporting directly to the CEO. As Natarajan reflected on the challenge, he was sure that the company should pursue SBP but was unsure how to structure the new initiative to best ensure its success. Caroline White at Defense Corp Defense Corp (pseudonym) is a major U. S. defense contractor with long-term relationships with customers in the military. Caroline White, a vice president and general manager of a division, saw an attractive opportunity for growth in the new Homeland Security market but was frustrated in her efforts to develop this area. Her mission, approved by the President, was to create a franchise in this business equivalent to those it enjoyed in other defense markets. In spite of this high-level approval, Caroline found funding difficult, with the business development funds budgeted by supporting units never available in the amounts promised. Instead, these seem to be siphoned off to support more near-term opportunities with existing clients. When Caroline pressed her colleagues in other business units about this, she heard complaints about her new initiative. They saw her mission as less tangible and immediate than theirs, with a smaller payoff to investment, and labeled her effort as a â€Å"think tank† as opposed to a real business. They also complained that her project lacked clarity around deliverables and metrics. Making matters more difficult, line of business leaders were under significant pressure to deliver revenues and questioned the viability of Caroline’s efforts. In the face of these obstacles, Caroline was resolved to ask the CEO to intercede. The question, however, was what she wanted him to do to ensure the viability of her exploratory effort? Given the resistance, she knew that it would require more than just funding to ensure the success of the new initiative. Mike Lawrie, Ganesh Natarajan and Caroline White each face the classic explore-exploit dilemma. What specifically can they do? At a high level of abstraction, ambidexterity requires a willingness of senior managers to commit resources to exploratory projects and the establishment of separate structural units for exploitation and exploration. Most research on ambidexterity begins with the acceptance of these general characteristics. 3 However, while there is general agreement about the elements of ambidexterity, O’Reilly and Tushman have noted that what is missing is a clear articulation of those specific management actions that facilitate the simultaneous pursuit of exploitation and exploration. What has been missing from the research on ambidexterity is insight into the core leadership mechanisms that underlie how dynamic capabilities operate in practice. T hus, while directionally correct, the research is not granular enough to be of much use to an operating manager facing the problems described above. To be practically useful, what is needed is greater insight into the specific micromechanisms required for a manager to implement and operate an ambidextrous strategy. This article reports the results of interviews and qualitative case studies 8 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit of leaders in 15 organizations that were confronted with the need to simultaneously explore and exploit. We use these data to induce how managers actually dealt with the challenges of ambidexterity. In doing this, we also explored those activities that discriminated between those more- versus less-successful attempts at implementing ambidextrous designs. Leading the Ambidextrous Organization In an attempt to characterize the specific elements of ambidexterity, we offer five propositions that are necessary for leaders to be successful at managing ambidexterity. 14 These are specific mechanisms that enable firms to successfully manage separate â€Å"explore-and-exploit† subunits and to leverage common assets in ways that permit the firm to adapt to new opportunities and threats. It is the presence of these characteristics that permits leaders to reconfigure existing competencies and assets to explore new opportunities even as the organization continues to compete in mature markets. Absent these elements, inertial forces keep the firm focused on the exploitative part of the business. 15 Thus, we propose that ambidexterity is more likely to be successful in the presence of the following five conditions: b A compelling strategic intent that intellectually justifies the importance of both exploration and exploitation. An articulation of a common vision and values that provide for a common identity across the exploitative and exploratory units. b A senior team that explicitly owns the unit’s strategy of exploration and exploitation; there is a common-fate reward system; and the strategy is communicated relentlessly. b Separate but aligned organizational architectures (business models, structure, incentives, metrics, and cultures) for the exploratory and ex ploitative units and targeted integration at both senior and tactical levels to properly leverage organizational assets. The ability of the senior leadership to tolerate and resolve the tensions arising from separate alignments. To appreciate the logic of these, consider the effects on ambidexterity if these elements were not present. First, without an intellectually compelling strategic intent to justify the ambidextrous form, there will be no rationale for why profitable exploit units, especially those under pressure, should give up resources to fund small, uncertain explore efforts. As previous research has shown, managers routinely discount future threats and focus on short-term gains at the expense of less certain long-term returns. 6 Second, absent a common vision and values, there will be no common identity to promote trust, cooperation, and a long-term perspective. 17 Third, if the senior team lacks a consensus about the importance of ambidexterity, those who are uncommitted will be encouraged to resist the effort, diminishing cooperation, increasing competition for resources, and slowing down execution. 18 The absence CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 9 Organizational Ambidexterity in Action: How Managers Explore and Exploit f a common-fate reward system and a lack of relentless communication of the ambidextrous strategy can further undermine cooperation and encourage unproductive conflict. 19 Fourth, without separate alignments for explore and exploit units and targeted integration to leverage common assets, there will be inefficient use of resources and poor coordination across the units. 20 Finally, if the leadership is unable to manage the conflicts and trade-offs required by ambidexterity, the necessary decision processes will be compromised and end up in confusion and conflict. 1 Method and Results To assess whether these five propositions are veridical descriptions of ambidexterity in practice, we conduc ted semi-structured interviews with senior managers at fifteen firms that were attempting to manage both exploratory and exploitative units. Eight of the 15 cases were either successes or qualified successes as reflected in increased growth or profits, three were clear failures, and four firms were underperforming before learning how to be ambidextrous and deemed successful afterwards. Table 1 lists these companies and the challenge each faced. Senior managers and key informants in each firm were interviewed and asked to describe in detail how they attempted to simultaneously explore and exploit. 22 They were probed about the nature of their leadership challenges, what actions they had taken, an assessment of their progress to date, and to identify those elements that they believed were helping or hindering them in accomplishing their task of exploration and exploitation. The focus in these interviews was on understanding in some detail what actions had been taken and how these had been implemented. The goal of these interviews was to specify in a granular way what leadership actions were associated with the organization’s ability to reconfigure existing assets and develop the new capabilities needed for exploration. 23 Table 2 provides a summary of the comparative results across the fifteen organizations studied. These results suggest that there are themes associated with the leadership of more- versus less-successful ambidextrous designs. The first proposition offered by O’Reilly and Tushman suggests that ambidexterity is facilitated when there is a compelling strategic intent that intellectually justifies the explore and exploit strategy. In each of the 15 cases investigated here, there was a clear strategic intent on the part of the organization to pursue an exploratory venture (this obviously reflects our sample selection where cases were chosen based on their attempt to be ambidextrous). While each of the 15 firms articulated a strategic intent, only ten were able to actually execute such an aspiration. The articulation of a clear strategic intent clearly does not discriminate between more- versus less-successful attempts to implement ambidextrous designs. Other research has documented the transformation of firms occurring without an explicit ambidexterity strategy. 24 These results suggest that while 10 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit TABLe 1. sample description (continued on next page) IBM Life Sciences (Success) In 2000, IbM began a programmatic effort, (termed the Emerging business Organization or EbO), to identify and develop cross-IbM business that could provide $1b in revenue within a 5-year time frame. In April of that year, Carol kovac, an IbM R manager, was asked to establish a new Life science business that would capitalize on the increased demand for computing being generated by the genomic revolution. between its founding and 2006, Carol grew the business to $5b in revenue. IBM Middleware (Success) In 1998, IbM’s software division was in turmoil. There were conflicting pressures to continue to develop and service software for their existing installed base that relied heavily on mainframe computers and to develop radically new products based on the emerging World Wide Web. Resolving this required that their senior managers exploit existing programming languages and customers and to explore new languages and markets. They accomplished this by systematically establishing different units and carefully integrating them at senior levels. Cisco TelePresence (Success) Cisco systems is a $22b company that sells plumbing for the internet. It has grown at 12-17% annually and currently has a dominant market share in its main businesses. As a part of his effort to continue Cisco systems growth, John Chambers, the CEO, has launched an ambitious initiative to identify 30 new potential $1b businesses. His aim is to generate 25% of the firm’s revenues from these new ventures within 5-10 years. In October 2006, one of these efforts (TelePresence) was launched as an internal venture to develop high-end video conferencing. since then the business has grown from two internal entrepreneurs and a sheet of paper to more than 100 people and $200M in revenue. Misys Corporation (Success) Misys is a $1b software firm selling service and systems to health care and banking clients. As a part of a turnaround effort commenced in 2007, the new CEO initiated a cost-cutting effort in the mature business and proposed a new open source approach to replace the existing proprietary platform. To ensure the success of this disruptive approach, he set up a new exploratory unit and replaced several members of his senior team who were resisting the new approach. by 2010, the new open source platform had opened up new markets and attracted a significant number of new customers. DaVita Rx (Success) daVita is a $6b business that derives the bulk of its revenues from operating kidney dialysis centers. In 2004, kent Thiry, the CEO, formed a team to identify new business opportunities that would match daVita’s clinical skills with economic opportunities. One opportunity identified was to provide prescription drugs to chronic kidney patients. begun in 2004, daVita Rx was an internal start-up with a different business model, metrics, and margins than the larger daVita. by 2010, this new business was generating $220M in revenue with 400 employees. Defense Corp (Success) defense Corp is a $6b provider of hardware and systems to the u. s. military establishment. In 2005, in an attempt to broaden their customer base the company initiated an effort to sell technology to the newly established Homeland security Agency. Although the initiative was approved by the CEO, development funding and cooperation from main lines of business were slow in coming until a separate unit was established with a clear charter, appropriate metrics, and an aligned senior team. The new unit recently won a $13M contract. Ciba Vision (Success) In the early 1990s, Ciba Vision, a maker of soft contact lenses and lens solutions, was losing ground to their larger competitors, J and bausch and Lomb. In a bold move, Glenn bradley, the President, halted all incremental innovation and placed six bets on revolutionary new products such as extended wear lenses and daily disposables. These new units were encouraged to establish their own alignments (people, structure, culture) as they pursued their breakthrough innovation. With the success of several of these, revenues tripled over the next decade. Zensar Technologies (Success) In 2002, Zensar Technologies, a mid-sized Indian IT services firm was losing market share and key talent. There was substantial tension between a potentially promising new technology platform and the existing geographical business units. A new CEO shifted Zensar to a product-focused firm but kept the new technology venture as a business unit reporting to his office. In 2008, after the entrepreneurial unit’s technology and business model was validated this unit and its innovative business model was integrated into the product units. Over the five-year period, Zensar was able to build its core business even as it brought to the market a fundamentally new technology. CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 11 Organizational Ambidexterity in Action: How Managers Explore and Exploit TABLe 1. sample description (continued from previous page) SAP Business-by-Design (Failure) In 2006, the CEO of sAP declared that future revenue growth for the company was in the small and Medium business market and selling software on demand. This software-as-a-service product (business-by-design or byd) was developed but no separate unit was established. Although this market has grown substantially, sAP has failed to successfully market their offering. In 2010, the CEO, Leo Apotheker, was fired for failing to implement business-by-design. HP Scanner (Declining to Success) beginning in 1991, HP’s scanner division had begun to develop a portable scanner to complement their flatbed product. For five years they had failed to commercialize any of their inventions. In 1996, a new division GM separated out the handheld business into an ambidextrous unit that was physically separated from the flatbed business and had its own people, systems, incentives, and culture. Two years later, this business was successful enough to be spun-out as its own division. Printing Company (Failure) In 2007, faced with increased competition and declining customer satisfaction and usage of their core legal research products, the senior managers of the business decided to reinvent their business as a web-based publisher based on a new open source architecture. In spite of a clear vision of the future, heavy investment in the new technology, and a promise to â€Å"rescue the company†, the new product has failed to reignite growth. The new unit has faced continual resistance from the more mature part of the business. Turner Technologies (Declining to Success) The Advanced IC division of Turner had issues of growth in new products as well as quality in its existing product line. While the division’s strategic intent was clear, it could not get traction on either performance issue until it split out the innovative strategic agenda from its existing product line. Energized by two new managers reporting the divisional GM and a rearticulated identity for the division, Turner was able to both effectively explore and exploit. Software Company (Failure) under pressure from corporate executives, the general manager of software Company articulated a strategic intent to both build on its struggling extant product line and initiate a remarkable set of new software solutions. This general manager built a separate unit, reporting directly to him, to focus on innovation. Over a three-year period, he did not, however, staff or fund this innovative unit. The unit underperformed in its existing as well as its innovative product line. IBM Network Technologies (Declining to Success) A highly entrepreneurial general manager articulated a strategic intent to exploit her existing chip line even as she promised to explore into fundamentally new chips. yet her zeal for exploration led her to build a business unit only focused on exploration. Her extant product line suffered. under pressure from corporate staff and client dissatisfaction, the general manager rebuilt her senior team and her business unit to focus attention on both her current product as well as her new product lines. USA Today (Declining to Success) In the late 1990s, usA Today, like most u. s. ewspapers, began to see a decline in both circulation and advertising revenues as web-based news began to supplant print. In response to this trend, Tom Curley, the paper’s publisher, adopted a â€Å"network strategy† which emphasized the delivery of news content across three platforms, print, the web, and TV. between 1999 and 2002, he was successful at managing this transition and simultaneously d elivering news content across the three platforms-with the result that earnings increased by 50 percent. 12 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit TABLe 2. Interview Results (continued on next page) strategic intent that intellectually justifies ambidextrous form Vision and values that promote a common identity but separate cultures senior team that explicitly owns the ambidextrous strategy (common-fate rewards, communication) Ambidextrous Leadership (conflict resolution, resource allocation) separate units with aligned architectures and targeted integration (senior level and tactical) Proposition 1 Proposition 2 Proposition 3 Proposition 4 Proposition 5 Success: IbM Life sciences yes yes yes 100% of bonus for senior executives yes yes yes 70% of bonus yes EbO structure yes success— $5b in revenue in 6 years Cisco TelePresence yes Council/board structure yes Geographically separate yes daVita Rx yes yes yes but some initial disputes over autonomy yes but some conflict over metrics and rewards yes senior leader integrates Ciba Vision yes yes â€Å"Healthy eyes for life† yes yes Geographically separate Explore report to senior team IbM Middleware yes yes â€Å"beat bEA† yes senior leaders agree on a new structure yes yes Geographically separate units yes distinct unit for new platform es senior leaders integration yes Tension held at top Zensar Technologies yes yes â€Å"Among the top Indian IT services Firms† Misys yes yes drive productivity and innovate yes Replaced old team with new one yes Open source reports to CEO yes CEO drove the new effort CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy . Edu Overall Performance success— $200M in revenue in 4 years success— $220M in revenue in 6 years success— tripled sales in 10 years success— old and new products combined both profit and growth doubled from 20052010 success— developed new platform with new customers 13 Organizational Ambidexterity in Action: How Managers Explore and Exploit TABLe 2. Interview Results (continued from previous page, continued on next page) strategic intent that intellectually justifies ambidextrous form Vision and values that promote a common identity but separate cultures senior team that explicitly owns the ambidextrous strategy (common-fate rewards, communication) Ambidextrous Leadership (conflict resolution, resource allocation) separate units with aligned architectures and targeted integration (senior level and tactical) Proposition 1 Proposition 2 Proposition 3 Proposition 4 Proposition 5 defense Corp yes No but did set new explore culture yes After initial resistance yes unit reports to President yes used consultant to mediate conflict Failure: sAP businessby-design yes No No disputes over revenue recognition yes but the strategy does not fit well with current one yes yes â€Å"save the company† No short-term revenue still dominates No clear ambidextrous unit or leader No Continued conflicts over who owns the customer No Ambidextrous unit not represented Failure— lack of penetration in targeted markets Failure—no new growth Printing Company No Explore unit not protected software Co No No yes No Transition to Success: usA Today yes yes â€Å"Network, not a newspaper† H-P scanner yes No No then yes senior team bonus based on overall performance No to yes yes separate units with targeted integration No then yes Physically separate units No to yes Resource allocation to web-based business No to yes senior leader integrates stalled to success— increased earnings 50% in 3 years stalled to success— then innovation unit spun out 14 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. suMMER 2011 CMR. bERkELEy. Edu Overall Performance success— Won $13M in new contracts Poor Innovation Performance Organizational Ambidexterity in Action: How Managers Explore and Exploit TABLe 2. Interview Results (continued from previous page) strategic intent that intellectually justifies ambidextrous form Vision and values that promote a common identity but separate cultures senior team that explicitly own s the ambidextrous strategy (common-fate rewards, communication) Ambidextrous Leadership (conflict resolution, resource allocation) eparate units with aligned architectures and targeted integration (senior level and tactical) Proposition 1 Proposition 2 Proposition 3 Proposition 4 Proposition 5 Turner Technologies yes yes No to yes No to yes No to yes IbM Network Technologies yes No to yes yes No to yes No to yes possibly helpful, a clear strategic intent may not be a necessary condition for executing ambidextrous designs. The second proposition suggested the importance of a common vision and values as necessary to promote a common identity across explore and exploit units. Here the evidence is largely consistent with proposition two. Six of the eight consistently high-performing firms had a clear over-arching vision and common values. In contrast, two of the three poor performing firms did not have such clarity. Printing Company (pseudonym) had a senior team that both articulated a clear strategic intent as well as an overarching vision and identity. This senior team could not, however, execute against this clear strategy and overarching identity. Moreover, three of the four firms that learned how to be ambidextrous had or developed a well-defined vision. For example, at USA Today there was an explicit strategy to â€Å"be a network, not a newspaper. † The over-arching aspiration was to be â€Å"the local paper for the global village. † This strategy and vision, and a common set of values around fairness, accuracy, and trust, helped knit together a highly differentiated organization. Of the twelve firms able to execute ambidextrous designs, only HP Scanner and Misys were able to implement the ambidextrous design without an overarching identity. Thus, while not definitive, the evidence suggests that a common vision is an important discriminator of more- versus less-successful ambidextrous designs, but not necessarily a sufficient one. The third proposition argued for the importance of a consensus in the senior team about the ambidextrous strategy and a common-fate reward system within the team to promote this. Our data supports this proposition. In each of the three instances of failure, there was a lack of consensus within the senior team about the relative importance of ambidexterity and there was no CALIFORNIA MANAGEMENT REVIEW VOL. 3, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Overall Performance declining to improving declining to Improving 15 Organizational Ambidexterity in Action: How Managers Explore and Exploit common-fate reward system for the senior team. Interviews suggested that the existing reward systems that were based on sub-unit or functional performance were a major cause of the inability of the organization to leverage common assets. In the case of SAP, these disputes played out in the unwillingness of the sales force to promote lower-margin new products and disputes among senior managers about revenue recognition. In the printing company case, short-term financial pressures and the lack of any common-fate reward for the senior team resulted in a focus on achieving short-term revenue targets through the older but higher-margin products. Similarly, at Defense Corp, White’s Homeland Security initiative was initially opposed by other members of the senior team because of its inability to generate short-term revenue. The uncertainty of a long sales-cycle associated with a new government customer was overwhelmed by the short-term metrics of revenue and gross margin. The senior team’s systems for evaluating performance lacked the capacity to evaluate a business at a more immature phase of development. In contrast, in the most-successful ambidextrous efforts, the senior team was heavily incented to promote both explore and exploit businesses. In the Cisco TelePresence case, members of the governance team (Boards and Councils) had a significant portion of their bonus contingent on the success of both units. In the successful DaVita Rx case, there were initial disputes within the senior team about metrics and margins that were only resolved after a common-fate reward system was installed. At Misys, senior team resistance was overcome only after Lawrie replaced the opposing managers. Importantly, in three of the four cases where the firms learned how to be ambidextrous, there was a shift from a lack of consensus ownership about the importance of the exploratory effort to a fully committed senior team. This shift in top team ownership of the ambidextrous strategy involved the creation of common-fate incentive systems, a shift in leadership behaviors of the senior manager, and, in several cases, turnover within the senior team. The fourth condition proposed as necessary for successful ambidexterity was the presence of separate aligned architectures for the explore and exploit units coupled with targeted integration to ensure that common resources were leveraged across units. In all three instances of failure, these distinct alignments were conspicuously missing. In the case of SAP, responsibility for the exploratory venture (software-as-a-service) was split between two functional heads with the result that effective coordination never occurred and decisions were made slowly. At Software Company (pseudonym), a separate exploratory unit was established on paper but never staffed. In each of these ambidextrous failures, the locus of integration between the needs of the exploratory and exploitative activities was either too low in the firm or was ambiguous. In contrast, in each successful case there were always separate explore and exploit units with senior-level integration to ensure that resources were allocated. At IBM this was done either through their EBO process (e. g. in Life Sciences)25 or, in the Middleware case, through the establishment of distinct units focused on different time horizons; that is, mature, growth, and emerging 16 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit products. At Cisco this was done through a Boards and Councils process where there was a clear allocation of responsibilities, resources, and structures. In all successf ul cases, the exploratory units were initially physically separated from the exploit parts of the business. Similarly, for three of the four firms that learned how to be ambidextrous, there was a switch in organization design from an integrated approach (e. g. , project teams) to the establishment of separate units for explore and explore businesses. The final core mechanism proposed as important for successful ambidexterity was the ability of the ambidextrous leader to resolve the inevitable conflicts and resource allocation decisions that this organization design entails. This too is an important discriminator between more- versus less-successful ambidextrous designs. In each failure case this capability was lacking. At SAP there were continual disputes about resources and responsibilities across the participating functions without a clear mechanism or clear leadership for resolution. In the printing firm, although there was a separate explore unit with a responsible manager, he reported to an exploit manager who was held responsible for margins and short-term revenues. The exploratory unit manager was not represented on the senior team with the result that his voice was not heard when critical resource decisions were made. In contrast, in each successful case, there was a clear, identifiable leader and forum to resolve conflicts and make definitive resource allocation decisions. For example, at Zensar, even though there were substantial conflicts between the existing business units and the new integrative software platform, the CEO saw to it that his team actually dealt with these conflicts and made the appropriate resource allocation shifts between the existing units. At Misys, Mike Lawrie ensured that resources needed for the new open source effort were allocated in a timely manner. Similarly, in each of the four units that learned how to be ambidextrous, the general manager changed the senior team composition and processes to resolve conflicts associated with exploration and exploitation. For instance, at USA Today, only after Curley replaced several members of his team was his firm able to excel at both print and web-based content delivery. Similarly, only after the division general manager changed her leadership style at IBM’s Network Technology Division was her team able to balance resource allocation and decision making between her explore and exploit business lines. The Management of Ambidexterity One of the key features of ambidexterity is the ability of the organization to reallocate assets and capabilities to address new threats and opportunities. Practically speaking, this means that leaders within the organization are able to make the difficult choices required to reconfigure assets to promote exploratory ventures. The results from these fifteen case studies suggest that there are identifiable core mechanisms that discriminate between more- versus less-successful ambidextrous designs in action. The most-successful ambidextrous designs had leaders who developed a clear vision and common identity (Proposition 2), CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 17 Organizational Ambidexterity in Action: How Managers Explore and Exploit built senior teams that were committed to the ambidextrous strategy and were incented to both explore and exploit (Proposition 3), employed distinct and aligned subunits to focus on either exploration or exploitation (Proposition 4), and built teams that could deal with the resource allocations and conflicts associated with exploration and exploitation (Proposition 5). Those less-successful attempts at ambidexterity did not employ these core mechanisms. Although useful, the articulation of a clear strategic intent (Proposition 1) and, to a lesser extent, the provision of an overarching vision (Proposition 2) did not discriminate between the more- versus less-successful attempts to build an ambidextrous organization. This suggests that articulating why ambidexterity is important is not the same as how it is implemented. In the implementation of an ambidextrous design, execution appears to trump strategy. The first two propositions (articulating a strategy and overarching vision for the ambidextrous form) are the easy part for senior managers. The next three propositions are about strategic execution. These require hard choices about resource allocation, leader behavior, senior team composition (or replacement), and the balancing of contradictory organizational architectures. The most-successful ambidextrous designs had more of these components from the beginning. In contrast, those firms that learned how to be ambidextrous struggled with at least two of these core components and only after resolving these were they to effectively implement an ambidextrous design. These results suggest that effective ambidextrous designs are based on a set of interrelated choices made by the leader. Any subset of the core mechanisms is associated with underperformance. As such, executing ambidextrous designs can be seen as a complex senior leadership task that requires an integrated set of strategic, structural, incentive, and top team process decisions. Clearly, successful ambidextrous designs require more than the simple organizational structural decision in which the exploratory and exploitative subunits are separated. The critical elements, and perhaps the more difficult elements, are the processes by which these units are integrated in a value enhancing way. Discussion These results are largely consistent with Teece’s observation that â€Å"dynamic capabilities reside in large measure with the enterprise’s top management team. †26 Concretely, it appears that ambidexterity as a dynamic capability rests on the ability of leaders not only to articulate a strategic intent and vision that justifies exploration and exploitation, but—more importantly—to manage the inherent tensions associated with incompatible organizational architectures. These results also extend previous research that has linked transformational leadership to successful ambidexterity by explicating some of the core processes that underpin the transformational leadership construct. 27 These mechanisms are largely consistent with earlier research. For example, our findings that senior team consensus is an important ingredient in the implementation of ambidexterity is consistent with previous research showing that the behavioral integration 18 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit of the senior team is a precursor to successful ambidexterity. 28 Similarly, the importance of targeted integration and clear incentives documented here has also been suggested in previous studies. 29 The critical aspect of resource allocation illustrated here has also been seen in previous studies, especially in research showing that failed efforts at renewal stem not from a lack of technology or resources but the inability of senior managers to allocate those resources effectively to the exploratory effort. 0 Finally, while each component characteristic of ambidextrous designs is important, it appears that it is the set of components interacting together that define the dynamic capabilities that drive effective ambidextrous designs. 31 These patterns suggest concrete yet integrated sets of actions that leaders can take to execute strategies that encompass both exploration and exploitation. At Misys, Mike Lawri e articulated his strategic intent for open source software solutions at a senior team offsite. He kept Misys Open Source as a separate unit reporting to his office. He also emphasized the need for cost and quality progress in his existing business units even as he encouraged disciplined experimentation in the open source unit. As a leader, Lawrie was able to tolerate the competition between Misys Open Source and other platforms and was willing to risk shortterm revenue to help create longer-term options with a potentially disruptive technology. He has seen his strategy pay dividends. The healthcare business unit revenues grew more than 30% in 2009 with Misys Open Source as the basis for important new contracts with hospitals, physicians, and insurers. At the same time, Open Source has triggered innovation into other Misys units—a new banking product has large open source components, and the Misys website is completely open source. To realize the potential of SBP at Zensar, Ganesh Natarajan made the decision to keep SBP separate from the other units. He clarified his strategic and emotional rationale for exploration and exploitation with his senior team and, for the next two years, relentlessly emphasized both exploration and exploitation. By 2008, SBP had almost doubled its number of clients as well as profits. Having demonstrated its success technically and in the market, SBP was then reintegrated within the main business in 2008. Finally, at Defense Corp, Caroline White received approval to separate her homeland security exploration unit and built a new management system and metrics for gauging progress of this business. She also changed the incentives of her top team so that they were all accountable for both short-term results as well as longer-term results. By 2010, the exploratory unit proved its value, winning a $13M contract with the Transport Security Agency for improving perimeter security at U. S. irports. Conclusion There is now convincing evidence suggesting that for organizations to survive in the face of change, they need to be able to successfully exploit their existing businesses and to explore into new spaces by reconfiguring existing resources and developing new capabilities. 32 While the evidence for the benefits CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CM R. bERkELEy. Edu 19 Organizational Ambidexterity in Action: How Managers Explore and Exploit of ambidexterity is accumulating, there exists a gap in understanding how ambidexterity is actually managed within organizations. This article has explored how leaders within organizations actually implement ambidexterity. The actions, behaviors, and design choices made by the senior leader comprise the dynamic capabilities that enable firms to simultaneously explore and exploit and emphasize the key role of strategic leadership in adapting, integrating, and reconfiguring organizational skills and resources to match changing environments. Notes 1. Charles I. Stubbart and Michael B. Knight, â€Å"The Case of the Disappearing Firms: Empirical Evidence and Implications,† Journal of Organizational Behavior, 27/1 (February 2006): 79-100. . Ibid. , p. 96. 3. Rajshree Agarwal and Michael Gort, â€Å"The Evolution of Markets and Entry, Exit, and Survival of Firms,† Review of Economics and Statistics, 78/3 (August 1996): 489-498. 4. Paul Ormerod, Why Most Things Fail (New York, NY: Pantheon Books, 2005), p. 18. 5. Leslie Hannah, â€Å"Marshall’s Trees and the Global Forest: Were Giant Redwoods Diff erent? † Center for Economic Performance, Discussion Paper #318, 1997. 6. See James G. March, â€Å"Exploration and Exploitation in Organizational Learning,† Organization Science, 2/1 (February 1991): 71–87; James G. March, â€Å"The Evolution of Evolution,† in J. Baum and J. Singh, eds. , Evolutionary Dynamics of Organizations (New York, NY: Oxford University Press, 1994), pp. 39-52. 7. For interesting examples of how biological evolution might apply to organizations, see Tim Harford, Adapt: Why Success Always Starts With Failure (New York, NY: Farrar, Straus and Giroux, 2011); Martin A. Nowak and Roger Highfield, Supercooperators: Altruism, Evolution and Why We Need Each Other to Succeed (New York, NY: Free Press, 2011); Charles A. O’Reilly, J. Bruce Harreld, and Michael L. Tushman, â€Å"Organizational Ambidexterity: IBM and Emerging Business Opportunities,† California Management Review, 51/4 (Summer 2009): 75-99; Ormerod, op. cit. 8. Hannah, op. cit. , p. 19. 9. See, for example, Ze-Lin He and Poh-Kam Wong, â€Å"Exploration vs. Exploitation: An Empirical Test of Ambidexterity,† Organization Science, 15/4 (July/August 2004): 481-494; Sebastian Raisch, Julian Birkinshaw, Gilbert Probst, and Michael L. Tushman, â€Å"Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance,† Organization Science, 20/4 (July/August 2009): 685-695; Michael L. Tushman and Charles A. O’Reilly, â€Å"The Ambidextrous Organization: Managing Evolutionary and Revolutionary Change,† California Management Review, 38/4 (Summer 1996): 8-30. 10. For a review of the growing literature on dynamic capabilities, see V. Ambrosini and C. Bowman, â€Å"What Are Dynamic Capabilities and Are They a Useful Construct in Strategic Management? † International Journal of Management Reviews, 11/1 (March 2009): 29-49; Kathleen M. Eisenhardt and Jeffrey A. Martin, â€Å"Dynamic Capabilities: What Are They? † Strategic Management Journal, 21/10-11 (October/November 2000): 1105–1121; J. Bruce Harreld, Charles A. O’Reilly, and Michael L. Tushman, â€Å"Dynamic Capabilities at IBM: Driving Strategy into Action,† California Management Review, 49/4 (Summer 2007): 21-43; Constance E. Helfat, Sydney Finkelstein, Will Mitchell, Margaret A. Peteraf, Harbir Singh, David J. Teece, and Sidney G. Winter, Dynamic Capabilities: Understanding Strategic Change in Organizations (Malden, MA: Blackwell Publishing, 2007); David J. Teece, Gary Pisano, and Amy Shuen, â€Å"Dynamic Capabilities and Strategic Management,† Strategic Management Journal, 18/7 (August 1997): 509-533. 1. C. O’Reilly and M. Tushman, â€Å"Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma,† Research in Organizational Behavior, 28 (2008): 190. 12. Harreld et al. (2007), op. cit. ; David J. Teece, â€Å"Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance,† Strategic Management Journal, 28 (D ecember 2007): 1319-1350. 13. See, for example, Vijay Govindarajan and Chris Trimble, â€Å"Building Breakthrough Businesses within Established Organizations,† Harvard Business Review, 83/5 May 2005): 58-68; Justin P. Jansen, Frans A. Tempelaar, Frans A. Van den Bosch, and Henk W. Volberda, â€Å"Structural 20 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu Organizational Ambidexterity in Action: How Managers Explore and Exploit 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. Differentiation and Ambidexterity: The Mediating Role of Integration Mechanisms,† Organization Science, 20/4 (July/August 2009): 797-811; Michael H. Lubatkin, Zeki Simsek, Yan Ling, and John F. Veiga, â€Å"Ambidexterity and Performance in Small- to Medium-Sized Firms: The Pivotal Role of TMT Behavioral Integration,† Journal of Management, 32/5 (2006): 646672; Tom J. Mom, Frans A. Van den Bosch, and Henk W. Volberda, â€Å"Understanding Variation in Managers’ Ambidexterity: Investigating Direct and Interaction Effects of Formal Structural and Personal Coordination Mechanisms,† Organization Science, 20/4 (July/August 2009): 812-828; Sebastian Raisch and Julian Birkinshaw, â€Å"Organizational Ambidexterity: Antecedents, Outcomes, and Moderators,† Journal of Management, 34/3 (June 2008): 375-409; Michael L. Tushman, Wendy K. Smith, Robert C. Wood, George Westerman, and Charles A. O’Reilly, â€Å"Organizational Designs and Innovation Streams,† Industrial and Corporate Change, 19/5 (October 2010): 1331-1366. O’Reilly and Tushman (2008), op cit. Clay M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston, MA: Harvard Business School Press, 1997); Erwin Danneels, â€Å"The Dynamics of Product Innovation and Firm Competences,† Strategic Management Journal, 23/12 (December 2002): 1095-1121; March (1991), op. it. ; Mary Tripsas and Giovanni Gavetti, â€Å"Capabilities, Cognition, and Inertia: Evidence from Digital Imaging,† Strategic Management Journal, 21/1011 (October/November 2000): 1147-1161. Max Bazerman and Michael Watkins, Predictable Surprises (Boston, MA: Harvard Business School Press, 2004); Mary J. Benner and Michael L. Tushman, â€Å"Exploitation, Exploration and Process Management: The Productivit y Dilemma Revisited,† Academy of Management Review, 28/2 (April 2003): 238-256; March (1991), op. cit. Justin J. Jansen, Dusya Vera, and Mary Crossan, â€Å"Strategic Leadership for Exploration and Exploitation: The Moderating Role of Environmental Dynamism,† Leadership Quarterly, 20/1 (February 2009): 5-18; R. Scott Livengood and Rhonda K. Reger, â€Å"That’s Our Turf! Identity Domains and Competitive Dynamics,† Academy of Management Review, 35/1 (January 2010): 48-66; Louise A. Nemanich and Dusya Vera, â€Å"Transformational Leadership and Ambidexterity in the Context of an Acquisition,† Leadership Quarterly, 20/1 (February 2009): 19-33. Lubatkin, Simsek, Ling, and Veiga, op. cit. Jatinder Sidhu, Henk Volberda, and Harry Commandeur, â€Å"Exploring Exploration Orientation and Its Determinants: Some Empirical Evidence,† Journal of Management Studies, 41/6 (September 2004): 913-932. Christine M. Beckman, â€Å"The Influence of Founding Team Company Affiliations on Firm Behavior,† Academy of Management Journal, 49/4 (August 2006): 741-758; J. Jansen, G. George, F. Van den Bosch, and H. Volberda, â€Å"Senior Team Attributes and Organizational Ambidexterity: The Moderating Role of Transformational Leadership,† Journal of Management Studies, 45/5 (July 008): 982-1007. Charles A. O’Reilly and Michael L. Tushman, â€Å"The Ambidextrous Organization,† Harvard Business Review, 82/4 (April 2004): 74-83; Nicolaj Siggelkow and Daniel Levinthal, â€Å"Temporarily Divide to Conquer: Centralized, Decentralized, and Reintegrated Organizational Approaches to Exploration and Adaptation,† Organization Science, 14/6 (November/December 2003): 650-669. Clark Gilbert, â€Å"Unbundling the Structure of Inertia: Resource versus Routine Rigidity,† Academy of Management Journal, 48/5 (October 2005): 741-763; Mom, Van den Bosch, and Volberda, op. cit. Charles A. O’Reilly, David F. Caldwell, Jennifer A. Chatman, Margaret Lapiz, and William Self, â€Å"How Leadership Matters: The Effects of Leaders’ Alignment on Strategy Implementation,† Leadership Quarterly, 21/1 (February 2010): 104-113; Wendy K. Smith and Michael L. Tushman, â€Å"Managing Strategic Contradictions: A Top Management Model for Managing Innovation Streams,† Organization Science, 16/5 (September/October 2005): 522-536. V. J. Gilchrest, â€Å"Key Informant Interviews,† in B. F. Crabtree and W. L. Miller, eds. , Doing Qualitative Research (London: Sage, 1992). This research used a multi-case design in which cases were written for each of the fifteen ambidexterity efforts (e. g. , Eisenhardt, 1989). These cases were then used to generate insights into those actions that were more or less likely to be associated with the successful implementation of an ambidextrous form. Each of the 15 cases was compared to the five propositions suggested by O’Reilly and Tushman (2008). Given the exploratory and qualitative nature of this investigation and the nature of our convenience sample, any results are necessarily tentative. CALIFORNIA MANAGEMENT REVIEW VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu 21 Organizational Ambidexterity in Action: How Managers Explore and Exploit 24. Govindarajan and Trimble, op. cit. ; Charles H. House and Raymond L. Price, The HP Phenomenon: Innovation and Business Transformation (Stanford, CA: Stanford University Press, 2009); Richard S. Rosenbloom, â€Å"Leadership, Capabilities, and Technological Change: The Transformation of NCR in the Electronic Era,† Strategic Management Journal, 21/10-11 (October/ November 2000): 1083-1103. 25. O’Reilly, Harreld, and Tushman, (2009) op cit. 26. Teece (2007), op cit. , p. 146. 27. Jansen, George, Van den Bosch, and Volberda, op. cit. ; Jansen, Vera, and Crossan, op. cit. ; Nemanich and Vera, op. cit. ; Smith and Tushman, op. cit. 28. For example, see Beckman (2006), op. cit. ; Lubatkin, Simsek, Ling, and Veiga, op. cit. ; Alva Taylor and Constance E. Helfat, â€Å"Organizational Linkages for Surviving Technological Change: Complementary Assets, Middle Management, and Ambidexterity,† Organization Science, 20/4 (July/August 2009): 718-739. 9. See Jansen, Tempelaar, Van den Bosch, and Volberda, op. cit. ; O’Reilly and Tushman (2004), op. cit. ; Wendy K. Smith, â€Å"Managing Strategic Ambidexterity: Top Management Teams and Cognitive Processes to Explore and Exploit Simultaneously,† paper presented at the 25th EGOS Colloquium, Barcelona, July 3, 2009; Tushman, Smith, Wood, Westerman, and O’Reilly, op. cit. 30. For example, see Gilbert, op. cit . ; Robert Sobel, When Giants Stumble: Classic Business Blunders and How to Avoid Them (Paramus, NJ: Prentice Hall, 1999); Donald N. Sull, â€Å"The Dynamics of Standing Still: Firestone Tire and Rubber and the Radial Revolution,† Business History Review, 73/3 (Autumn 1999): 430-464; Tripsas and Gavetti, op. cit. 31. Harreld, O’Reilly, and Tushman (2007), op. cit. ; Jan Rivkin and Nicolaj Siggelkow, â€Å"Balancing Search and Stability: Interdependencies among Elements of Organizational Design,† Management Science, 49/3 (March 2003): 290-311; Richard Wittington, Andrew Pettigrew, Simon Peck, Evelyn Penton, and Martin Conyon, â€Å"Change and Complementarities in the New Competitive Landscape,† Organization Science, 10/5 (September/October 1999): 583-600. 2. Matthew S. Olson and Derek Van Bever, Stall Points (New Haven, CT: Yale University Press, 2008); Raisch and Birkinshaw (2008), op. cit. ; Juha Uotila, Markku Maula, and Thomas Keil, and Shaker A. Zhara, â€Å"Exploration, Exploitation and Financial Performance: Analysis of S 500 Corporations,† Strategic Management Journal, 30/ 2 (February 2009): 221-231. 22 uNIVERsITy OF CALIFORNIA, bERkELEy VOL. 53, NO. 4 suMMER 2011 CMR. bERkELEy. Edu How to cite Managers Explore and Exploit, Papers

Caspian Energy Oil and Gas Resources

Question: Describe about A Report on Effects of Oil Price Volatility Upon British Petroleum? Answer: Introduction The volatility in the international markets of commodities like oil and gas has a great impact on the businesses within the sector. The report shall ponder upon the reasons of such volatility and elaborate the effects of the same on the business of British Petroleum, as a firm in energy sector. An example would give an idea of the volatility in pricing, where per barrel of crude oil in the International markets, as monitored by OPEC (Organization of Petroleum Exporting Countries) have shown massive price instability. In January of 2009 a barrel was priced at 42 USD which jumped to 100 USD in January 2011 and further went upto 125 USD in May 2011. Nevertheless, the January 2015 shows the price tag of 50 USD per barrel (Please refer Appendix). Such vast gaps are critical for business to be efficient and balance their act of future strategy formulation. Such uncertainties added with climate policies, growing social concerns, geo-political instability, limited supply are few of multiple risks that the business from this sector has to face (Bp.com, 2015, Csb.gov, 2013, Bergin, 2008). Why BP? British Petroleum (BP) is the British firm which ranks sixth among the majors of the global oil and gas sector with fifth largest revenue earnings. The business had been operating as Anglo Persian Oil company since 1908 which later renamed itself as BP in 1954. The forte of the business is its global presence, strong brand repute and experience in the field of oil and gas exploration and energy generation business. The diversity of businesses that the firm has accumulated is exploration, generation, refining, distribution, trading, marketing, energy production and other such petro-chemical products. Today the firm have an operational income of about 6.5 Billion USD with 84,5000 employees all across the globe. As on the end of 2013 the business had its presence in over 80 different nations from where 3.2 million barrel per day was the production volume. Further, the current reserves are estimated to be around 17.9 billion barrels (Bp.com, 2015). Nevertheless, the growing political tensions in the various parts of the globe have made few fields vulnerable to Terrorist attacks (as in the Middle East) while fields of China and Russia have its own national policy fallacies those effects the investments over and above the fluctuating production quantity, thus price. Furthermore, the business has diversified into non-traditional sources of energy production owing to gain stability in such a market to enhance its sustainability in an oligopolistic market. Thus BP is a classic firm for a case to study to decipher the strategies they have taken to transform its operations to reach the targeted goal (Obadi and Koraek, 2012). Critical analysis of Strategic choices The firm has its strategies to counter the volatility in the energy sector. The recent technological advancements have enabled the producing firms the ability to produce and transport both in traditional and non-traditional refining methods. However, the demand still remains high and supply on the downside due to geopolitical reasons. Few events like the acquisition of local refineries and reserves along with local producers acquired while expanding was the way that BP developed its volume, as we see on date. The firm has also undergone strict public scrutiny in its business phase for direct involvements in oil spills, accidents and environmental endangering incidents. The 2005 Texas city refinery explosion which caused 15 deaths, the 2006 Prudhoe bay Oil spills resulting in USD 25 million civil penalty, the 2010 Deepwater Horizon oil leak also attracted a huge outcry when it did hit the bio-diversity with a 1.8 billion gallons of oil leak in the high seas (Valvi and Fragkos, 2013). Thus the strategic overview of the business investments, project breakdowns, disinvestments, cost efficiencies etc to determine the strategic motives linked to volatility in crude oil price in international commodity markets. The Macro-economic view to mitigate the resilience of price had been the concern for all major oil and gas businesses since 1970s. The vulnerability has various macro as well as micro economic effects on the drillers being the most globalized commodity is huge. The climate change issues and production of fuel for economic growth are the two ends of the scale that the Nations are trying to achieve. Different laws to mitigate the carbon emission, changing regimes of nations with oil reserves along with policy shifts, drilling risks and cost to profit ratios are thus very uneven in the sector making a strategic stability very vulnerable and thus the forecasting unpredictable. The 90% of all the global energy is generated out of fossil fuel which then in turn drives the industrial revolution. Thus the fluctuations have a significant environmental and macroeconomic perspectives associated with it. The fundamentals of oil market suggest that the demand and supply of oil market are based on short term supply so the change in demand supply may have a large price deviation. Hence it can be said that the business of BP is thus vulnerable to many social, economic, political, technological factors those have direct effects on the businesses stability and strategies (Surrey and Gregg, 2003). Investment in New Project and Technology BP has invested in acquiring firms from around the globe to expand under different names depending on location and the conglomerations that they form there. For an example Russian BP owns nearly 20% of Rosneft as an investment (Csb.gov, 2013). This policy is a well judged one as the history of Shell, another Oil and Gas company experience in Russia was not good where the stake they had was over 80% in a Government backed conglomerate of Gazprom, which they had to surrender to the national Government with change of State policies under the Putin regime. Russia is the second largest oil rich nation thus the 20% stake in the market making a great stake the global hydrocarbon fuel reserve, ensuring future excavation resources for future. The business could manage 3.8 Billion USD in the year (Financial year/ FYI) ended as on December 2014 and have an operational cash flow of 32.8 Billion USD to the 21.1 USD of 2013 FYI (Bp.com, 2015). Thus the investments had been huge so has been the ret urns giving the liquidity needed for investments in offshore merger and acquisitions for future stability and reserve enhancement for a capacity that meets the demands for investors in future. It includes subsidiaries in oil and natural gas alike in 80 various nations, globally. This global expanse is another strategic investment from BPs part to establish the needed buffer as well as enhance the capacity from 2.1 million barrels of daily production to 3.2 million barrels in 2014 year end. Hence, the supply in a global scale as well as production sources in various parts have given the needed efficiency and cost affectivity to the business needed logistics support, marketing functions, manufacturing and distribution in 80 economies (Ey.com, 2014). Slowing Down of Projects The business started its inception as Anglo Persian out of Irans deposits. Later they acquitted various other firms in other corners like North Sea, Gulf, Saudi, China Sea, Australia like vast expanses with full fledged production, distribution and marketing activities that have effectively given the business leverage in terms of market presence and leverage in terms of cost of operations in various economies to its competitors (Nduka, 2015). The diversification had been a costly affair but had been a boon considering the potential and volume it had generated over time. The downstream businesses like the petro chemical products like lubricants, nylon, plastic, poly-ethylene like byproducts have further consolidated the business. Natural gas deposits and exploration is the second major vertical which have been well utilized where they have effectively used the supply chain via trains, trucks and pipelines (Kretzschmar et al. 2007). The bio-fuel generating investments in terms of alter native fuel and energy production via natural renewable sources are the other aspect of the businesses investment. Disinvestments of Parts for Consolidation The fluctuation in the energy sector have been well monitored and thus the alternative energy resources like wind energy, hydro and solar energy like clean sources are been undertaken to boost the futuristic infrastructure needed for the eminent future due to massive climate change issues and social awareness (Murota and Ito, 1996). The change in crude oil price is not in the businesss control where the situations are politically manipulated and thus gives the price as well as production fluctuations. However, the businesses have its capacities to get enhance production in one part of the globe, if one part of the globe is posing problem. The demand and supply balance is needed to have the stability of global crude oil prices so the geo political stability is a necessity in those parts which rests on huge oil reserves (Reed, 2012). The futuristic model was build keeping the deepwater deposit, Arctic deposits, onshore deposits in a manner where the infrastructures was build to gain th e best of operational leverage. However, the futuristic plans of alternative fuel, nuclear energy like clean sources would be more viable to invest into as the social perspective of fossil fuel is changing fast. The futuristic balance of alternate fuel for energy production, distribution network and infrastructure are being undertaken with the new explorations and network creation for future prospects. The investors finds the balance to be a safe bargain to invest into. Nevertheless, there are aspects like safety and environmental damage control where the business needs to ponder more to apply technologies and safety measures that let no accident or disaster as had been the case in the past. The Chairman of the Business keeps the investors returns as priority. This priority have its flipside too where the production pressure needs to be equally distributed so that the business can generate the revenue, cater demands in all 80 markets even in times of political pressures on disruption of production. The balancing of revenue generation from the horizontal line of petro-chemical Business as well as oil and gas with vertical integration of the clean energy within the business value generation processes. Therefore, secure production infrastructure, safety issues control and further integration of global supply-chain for enhanced distribution and supply as per demand needs to be achieved (Bp.com, 2015). Strategic acquisition or Merger activity The strategic acquisition of the business was such that it covered each part of the globe where the model was to build a full proof exploration, drilling, refining, distribution and marketing easy, cost effective and thus gained substantial share of market. The infrastructure investments had been huge but to attract investors the business had to go miles in choosing fields to acquire, explore or go in a conglomerate from another economy outside UK. Steady but slow process of choosing what to acquire and invest into. The 2014 had a volatile time for the sector and is supposed to go on in 2015 too. The ISIS threat of Middle East for one have been a source of concern for the authorities as the black market of oil mafia have disrupted the stability of 100USD per barrel cost (Bashir and Holtam, 2015). Cost Efficiency measures The evidence of cheap black-market oil being bought by Power plants has further made the pricing volatile and unpredictable to a large extend. Nevertheless, the average output of the 94.9% efficiency in refining and 90% in operating plant efficiency have given the business the edge to mitigate such local threats in an overall global perspective (Bp.com, 2015). This is the strategic measure to develop a quality portfolio with a medium pricing strategy where the fluctuations would not be the reason of loss making or drainage of funds allocated for other projects. However, the Ernst and Young survey suggests that the economic collapse global have reduced the demand for oil for energy production and so has the global outlook towards fossil fuel which poses a long term threat. The business in next five years has to integrate in a way that it can balance its revenue from energy production from both fossil fuel and renewable source of energy. This would give the firm to focus upon the way t he International Governments wish to take the energy policy forward in the next five years. Therefore, investments in renewable sources and disinvestments in volatile political areas would give a better stand and resilience for BP in the coming years. Conclusion and Recommendations The volatility of the Crude oil commodity in the international market is thus projected to be continued. The business thus needs to accommodate the risks and opportunities to gain the best value out of the business for the investors. The mix of new age technology, integrated supply chain, new explorations, investments and disinvestment in accordance to the Geo Political conditions are the key that holds the future for the BP. Nevertheless, the futuristic exposure to renewable energy sources is a very measured strategic step that the business has undertaken for investors confidence. The recommendations for BP for its future ventures shall be focusing in 3 major areas in its strategy formulation. The operational, financial and portfolio resilience is the key to it. The recommendations are as follows: Figure 1: The Recommended model of Strategy formulation in next five years for BP (Source: As designed by Author) The model would be designed to identify the areas of concern, look for a viable solution and adapt in it to mitigate the futuristic risks, if any. The investments in the operational processes that enhance safety while gives better equipment efficiency is what the business should be looking into. Financial Resilience: The optimization of capital structures with best venture selection that attracts banks and investors to invest so as to keep the ongoing projects fund pumped to generate more value. Thus which is asset and what are the liabilities needs to be identified to mitigate future risks. The balance of cash inflow also needs to be equated with the returns so that the attractively is maintained among the investors. For an example the business may venture in the south China Sea where Vietnam and China have disputes and in the long run the investment may be fatal due to geo political reasons. Had it been invested in a stable part of globe like Australia or in Arctic seas it would be safer considering the current trends of political stability globally. In the same way the business may shift its focus from Syria till the time its volatile which again would needs the business to venture in a stable place that would give over all stability and volume needed for investors return s and well as maintain operational cash flow on. Portfolio resilience: The business of BP has already read the sings of the future and has invested in alternate energy generation so that it may sustain itself assuming one vertical is not profitable so that the business in entirety do not suffer. Allocation of funds on an overall product portfolio is needed so that one may mitigate the risks. The opportunity to enhance in petrochemical line for an example if the Gas production is hampered would let the business sustain in the overall returns of projects it has invested into. For BP the alternative energy generation sources, opportunistic acquisitions while disinvestments in volatile assets like fields of Iraq may be a good option forward. Operational resilience: The integration of business in a model that delivers the best cost savings in operations and distribution. The BPs gas pipeline projects across national borders have enhanced its ability to have cost savings and greater integration of supply chain. Further, the technology investments for safety to see least wastage and most efficient use of plant and machinery for operational efficiency is the call of the times. In the same line the exploration and identification of new fields to explore and optimize the financials in the oligopolistic global crude oil market. Thus the future belongs to the business of BP depending upon the aforesaid criteria as well as its strategic ability to adapt in futuristic energy need situations, identify the scopes and thus mitigate the risks as needed from time to time depending upon the macro-economic factors to keep the investors confidence upright in a volatile energy sector, globally. List of References Amineh, M. and Houweling, H. (2003). II. Caspian Energy: Oil and Gas Resources and the Global Market. Perspectives on Global Development and Technology, 2(3), pp.391-406 Bashir, H. and Holtam, D. (2015). Crude awakening :Deloitte UK. [online] Deloitte United Kingdom. Available at: https://www2.deloitte.com/uk/en/pages/energy-and-resources/articles/crude-awakening.html# [Accessed 3 Jul. 2015]. Bergin, T. (2008). Oil majors' output growth hinges on strategy shift. 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[online] Available at: https://www.ey.com/Publication/vwLUAssets/ey-resilience-in-a-time-of-volatility/$FILE/ey-resilience-in-a-time-of-volatility.pdf [Accessed 3 Jul. 2015] Kretzschmar, G., Misund, B. and Hatherly, D. (2007). Market risks and oilfield ownershipRefining oil and gas disclosures. Energy Policy, 35(11), pp.5909-5917 Surrey, K. and Gregg, M.C. (2003) Mitigating global warming: traditional versus alternative approaches in a planning versus a market context. Fuel and Energy Abstracts, 44(2), p.118 Murota, Y. and Ito, K. (1996). Global warming and developing countries. Energy Policy, 24(12), pp.1061-1077 Nduka, A. (2015). The World Energy Challenge and Global Warming. Energy and Power Engineering, 07(04), pp.105-109 Obadi, S. and Koraek, M. (2012). The Analysis of Natural Gas and Crude Oil Market from the Global and EU Perspective. Studia commercialia Bratislavensia, 5(18) Olcott, M. (2010). Central Asia's Oil and Gas Reserves: To Whom Do They Matter?. Global Journal of Emerging Market Economies, 2(3), pp.257-300 Reed, S. (2012). Series of Write-Downs Leads to Second-Quarter Loss at BP. [online]Nytimes.com. Available at: https://www.nytimes.com/2012/08/01/business/energy-environment/01iht-bp01.html?_r=0 [Accessed 3 Jul. 2015]. Rentscheler, J. (2013). Oil Price volatility its risk on economic growth and development. [online] Let's Talk Development. Available at: https://blogs.worldbank.org/developmenttalk/oil-price-volatility-its-risk-economic-growth-and-development [Accessed 3 Jul. 2015] Willis.Resilience.com (2015) Managing the impact of oil price volatility on the energy sector. [online] Available at: https://www.resilience.willis.com/articles/2015/01/07/impact-oil-prices-energy-sector/ [Accessed 3 Jul. 2015]