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Exploration and exploitation in novel digital settings (ECIS2014)
 

Exploration and exploitation in novel digital settings (ECIS2014)

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Full paper is at http://bit.ly/1hzbx5k ...

Full paper is at http://bit.ly/1hzbx5k

Organizations are caught in a struggle to capitalize on existing strengths and competencies whilst pursuing new opportunities. To succeed, they must strike a balance between exploration and exploitation (March, 1991). A significant amount of research looks at how ambidextrous organizations do both simultaneously; but fails to address key qustions about exploration and exploitation (i) in novel settings, (ii) at a micro level, (iii) over time. In particular, few studies take the impact on environment novelty into account or look at the role of Information and Communication Technologies (ICTs). This study therefore investigates the dynamics of organizational exploration and exploitation in the virtual world of Second life. The study reveals that transitions between exploration and exploitation are triggered by changes in perceived environmental complexity over time. The paper presents a new conceptual framework which identifies some of the main factors affecting the dynamics of this process and shows how their significance changes over time.

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  • Cover image: http://martianchronicles.files.wordpress.com/2010/05/explore.jpg
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Exploration and exploitation in novel digital settings (ECIS2014) Exploration and exploitation in novel digital settings (ECIS2014) Presentation Transcript

  • Where the streets have no name: EXPLORATION AND EXPLOITATION IN NOVEL DIGITAL SETTINGS Niamh O Riordan, National University of Ireland Galway, Ireland Frédéric Adam, University College Cork, Ireland Philip O’Reilly, University College Cork, Ireland niamh.oriordan@nuigalway.ie www.niamhoriordan.com ie.linkedin.com/in/niamhoriordan/ European Conference on Information Systems, TEL AVIV 2014 2
  • AGENDA 1. Background 2. Some overlooked questions 3. Research approach 4. Findings 5. Summary 3European Conference on Information Systems TEL AVIV 2014
  • 1. BACKGROUND • Organisations are goal-directed social entities that are designed as deliberately structured and coordinated activity systems (Daft, 2009, p. 10). Organisational design is therefore a question of pooling resources and coordinating activities – Exploitation is • the use and development of things already known • the refinement and extension of existing competencies, technologies and paradigms • captured by terms like refinement, choice, production, efficiency, selection, implementation, and execution – Exploration is • the pursuit of new knowledge, of things that might come to be known • experimentation with new alternatives • captured by terms like search, variation, risk taking, experimentation, play, flexibility, discovery, innovation 4European Conference on Information Systems TEL AVIV 2014 Factoid: The number of leading management journal publications on this topic increased eight fold between 2004 and 2009 (Raisch, et al., 2009)
  • 5 • Firms typically overemphasise exploitation (more immediate and certain returns; reduced the risk that effort will result in dead ends) • But as a result, they are likely to “suffer the costs of experimentation without gaining many of the benefits and to exhibit too many undeveloped new ideas and too little distinctive competence” (March, 1991) • Whilst firms that engage in exploitation to the exclusion of exploration are “likely to find themselves trapped in suboptimal stable equilibria” (March, 1991) 1. BACKGROUND European Conference on Information Systems TEL AVIV 2014
  • 6 The challenge: to trade off the pursuit of efficiency and effectiveness today (based on existing strengths and competencies) against the need for change and renewal tomorrow (based on the pursuit of new opportunities) How? Ambidexterity? Punctuated equilibrium? 1. BACKGROUND Exploitation ~incremental innovation vs Exploration ~ radical innovation European Conference on Information Systems TEL AVIV 2014
  • 2. SOME OVERLOOKED QUESTIONS • What of organisations operating in novel settings? [novelty] – Afterall, firms are, by definition, linked to the external environment (cf. Daft, 2009, p. 10) so organisational design must also be seen as a question of adapting to changes in the external environment • Must all firms achieve this balance? • If yes, then we must increase our understanding of ambidexterity and punctuated equilibrium approaches [process] • If no, then we must ask about alternate strategie. For instance, might firms successfully pursue a deliberate strategy of specialisation? [ICTs] • Are these two concepts continuous (complementary) or orthogonal (mutually exclusive)? [micro] 7European Conference on Information Systems TEL AVIV 2014
  • 3. RESEARCH APPROACH • We carried out 6 case studies in Second Life over a 12 month period – Novely – Digitally mediated environments – Significant opportunities for data collection 8European Conference on Information Systems TEL AVIV 2014
  • 4. FINDINGS • Study participants in the six cases engaged in 15 distinct types of activity that could be classified as – exploratory and endogenous – exploratory and exogenous – exploitative and endogenous – exploitative and endogenous • At the individual and group level, transitions from exploration to exploitation are triggered by changes in perceived environmental complexity over time (which are a function of prior knowledge) – We used Snowden’s Cynefin framework to distinguish between • the chaotic (where practices are novel) • the complex (where practices are emergent) • the complicated (where good practice begins to emerge) • the simple (where best practice begins to emerge) • This process can be accelerated if individuals and teams can successfully utilise ICTs to work ‘outside’ traditional organisational boundaries and thereby leverage interorganizational networks 9European Conference on Information Systems TEL AVIV 2014
  • 10
  • 5. SUMMARY • This paper identifies and sheds light on a number of key gaps in the existing literature on balancing exploratory and exploitative activities in firms. • It also investigates the impact of perceived environmental uncertainty on exploratory and exploitative activities at a micro level in the specific context of virtual worlds • It reveals that in practice, transitions between exploration and exploitation take place over time and are primarily triggered by changes in perceived environmental complexity over time • For immersed at least, ICTs do have the capacity to either facilitate or prevent particular types of transition but in virtual worlds (and somewhat counterintuitively) individuals continue to struggle to engage effectively with others outside the boundaries of the firm 11European Conference on Information Systems TEL AVIV 2014
  • 12 Full paper available at http://aisel.aisnet.org/ecis2014/proceedings/track01/11/ or from Niamh O Riordan, National University of Ireland Galway, Ireland Frédéric Adam, University College Cork, Ireland Philip O’Reilly, University College Cork, Ireland niamh.oriordan@nuigalway.ie www.niamhoriordan.com ie.linkedin.com/in/niamhoriordan/ Thank You European Conference on Information Systems TEL AVIV 2014