Integrating exploration and exploitation at individual level boosts overall performance
|Datum:||17 september 2019|
After years of research, it is an established consensus that in order for the organisation to adapt, thrive and innovate, their operation must balance between exploration and exploitation. Exploration refers to activities focused on discovering and developing new knowledge, experimenting with new solutions and applying new information, while exploitation emphasizes gradual development of existing knowledge, fine-tuning and refining existing tools and methods for better efficiency.
Those two activities can seem contradictory: one is all about new possibilities, while other explicitly turns away from them and looks at the resources at hand. Given limited time and energy, one can expect that trying to do both is overfilling a person’s plate and will end up in not doing either of them sufficiently well. However, when they are simultaneously applied in organizational context, joining exploration and exploitation can lead to better performance. The benefit lies in allowing for the emergence of new opportunities and novel ideas in the presence of solid, stable base of validated and stable methods. The ability of an organisation to integrate both exploration and exploitation is called ‘ambidexterity’.
Although ambidexterity is mostly considered as a quality of the whole organization or larger unit comprising separate exploration and exploitation subunits, new research shows that organizational ambidexterity in fact depends on the individual employee’s ability to explore and to exploit. An individual can contribute to the organization’s ambidexterity by, for example, looking for areas of improvement in their daily tasks, applying more efficient methods learned from peers (exploitation), searching for new ideas and developing knowledge that might contribute to changing current practices (exploration).
The study by Schnellbacher, Heidenreich and Wald (2019) attempts to disentangle what makes individual employees engage in exploration and exploitation, and what are the effects of increased individual ambidexterity. Particularly, the authors were interested in the interplay between (a) the architecture of organization (e.g. separation and integration mechanisms in exploitation and exploration oriented units), (b) organizational context (encouragement for novel solutions, discipline, support and trust) and (c) higher level unit (e.g. team) performance and effectiveness.
Based on the data from over 400 German employees from various organizations and professions, this study found that organization-level mechanisms for integrating exploration and exploitation efforts, such as presence of exploration and exploitation units, fosters individual ambidexterity. Also, a trusting and supporting company environment was found to benefit employees’ ability to explore and exploit. Finally, individual ambidexterity contributed to further increase team performance and department effectiveness.
What practical conclusions can be derived from this study?
- First and foremost, the results show that thinking about exploration and exploitations in organizations should happen on more than only at the unit-level: individual ambidexterity is worth fostering and can positively impact performance.
- Individual ambidexterity can be promoted by including in the company culture features such as promotion of an ambitious approach, setting high, but realistic goals, and encouraging employees to meet those expectations.
- To strengthen trust and support, actions such as increasing transparency and stability and providing relevant resources needed for the tasks and personal employee growth can be taken.
- From the perspective of organizational architecture, separating the more exploration and exploitation oriented units seems beneficial, conditional on mechanisms that enable cross-unit interactions and integration of knowledge and practices between such units. A practical example of such mechanism can be a presence of liaison or boundary-spanning personnel, interdisciplinary teams or job rotation between exploration and exploitation units.
Karolina Karpe (k.a.karpe rug.nl) is a PhD student at the department of Human Resource Management and Organizational Behaviour. Her PhD research focuses on the role of teamwork-related social networks in determining team performance in innovative tasks.
Schnellbächer, B., Heidenreich, S., & Wald, A. (2019). Antecedents and effects of individual ambidexterity–A cross-level investigation of exploration and exploitation activities at the employee level. European Management Journal.