Achieving Organizational Ambidexterity Using Management Control Systems
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Achieving Organizational Ambidexterity Using Management Control Systems

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The presentation of a framework for understanding how different types of management control system, guided can be used to induce and balance both exploitation and exploration in organizations.

The presentation of a framework for understanding how different types of management control system, guided can be used to induce and balance both exploitation and exploration in organizations.

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Achieving Organizational Ambidexterity Using Management Control Systems Presentation Transcript

  • 1. ACHIEVING ORGANIZATIONAL AMBIDEXTERITY USING MANAGEMENT CONTROL SYSTEMS Ian P. McCarthy Beedie School of Business Ian_mccarthy@sfu.ca
  • 2. Based on the following research: McCarthy I. P. & Gordon B. R. 2011. Achieving contextual ambidexterity in R&D Organizations: A Management Control System Approach, R&D Management, 43(1): 240-258 Access the full paper here.
  • 3. WHAT IS ORGANIZATIONAL AMBIDEXTERITY? • The pursuit of two different modes of learning: 1. Exploitation = using current resources and capabilities in an efficient and reliable fashion to head in the same direction 2. Exploration = searching for , acquiring and developing new resources and capabilities to go in a new direction
  • 4. EXPLOITATION EXPLORATION Follow the rules and drive out the variance and slack. Break the rules and promote variance and slack. Focus on serving existing customers and their needs. Serve new customers with new needs. Manage and refine existing competences. Develop and lead new competences. Optimize the organization for existing rules. Develop new organization system with new rules. Make money now. Make money later. AMBIDEXTERITY
  • 5. WHY IS IT IMPORTANT? • Firms, teams and individuals that attain an appropriate balance between exploration and exploitation will achieve superior performance over time. • ‘Balance’ does not mean 50% exploitation and %50 exploration. It depends on your industry velocity (rate and direction of change) Exploitation ExplorationLongtermperformance LowHigh Mode of Learning
  • 6. TWO APPROACHES • Structural ambidexterity – “involves splitting exploitation and exploration into different organizational units (i.e., separate divisions, departments or teams)” (McCarthy & Gordon, 2011: 241) • Contextual ambidexterity – “the capacity to attain appropriate levels of exploitation and exploration behaviors in the same R&D organizational unit” (McCarthy & Gordon, 2011: 241)
  • 7. CONTEXTUAL AMBIDEXTERITY Involves creating an organizational context that inspires, guides and rewards people to pursue both exploitation and exploration behaviors. But how do you create the context to allow yourself and others to juggle, toggle and be ambidextrous?
  • 8. ANSWER = MANAGEMENT CONTROL SYSTEMS The systems (e.g., rules, rewards, policies, practices, and technologies) that managers use to direct and adjust the behaviors of employees to ensure organizational relevance, greatness and survival.
  • 9. 9 SIMONS ‘FOUR LEVERS OF CONTROL’ Control System Behavior Focus Outcome Beliefs systems Communicate values and goals. Establish purpose and the activities to be performed. Boundary systems Specify and enforce rules of the game. Define the activities to be avoided. Diagnostic systems Determine and support targets. Perform the correct activities well. Interactive systems Promote learning and exploration. Perform new activities.
  • 10. 10 EXPLOITATION Growth vs Control Innovation vs Efficiency EXPLORATION Strategy Risks to be Avoided Boundary Systems Critical Perf. Variables Diagnostic Systems Core Values Belief Systems Strategic Uncertainties Interactive Systems LEVERS, TENSIONS & AMBIDEXTROUS BEHAVIORS
  • 11. “The balancing of exploitation and exploration tensions is much like riding a bike – it requires a continuous and irregular shifting of control system use over time" (McCarthy & Gordon, 2011: 255) ORGANIZATIONAL AMBIDEXTERITY