Speaker(s): Michael Tushman
(HBS)
Title:
Dynamic Capabilities
Abstract
This paper explores the roots of dynamic organizational capabilities. We
suggest that streams of innovation are central to a firm’s ability to compete
over time. We argue that organizational design is an important determinant of
innovation streams and that these streams can be effectively executed within
organizations through ambidextrous organizational designs. Based on in-depth
data on 15 business units and 36 innovation episodes we explore the consequences
of organization design choices on innovation outcomes. We explore the phenomena
of ambidextrous organizational designs - what they are, how they operate, and
their association with innovation outcomes. We also explore their boundary
conditions as well as how these complex organizational forms evolve. Functional
designs, cross-functional teams, and unsupported teams are significantly less
effective in hosting innovation streams than ambidextrous designs. Ambidextrous
organizational designs are effective for all types of non-incremental
innovations except for product substitution events. Further, the use of
ambidextrous designs was associated with the sustained performance of existing
products. While not all ambidextrous designs were successful, firms that did not
employ ambidextrous designs were unable to implement streams of innovations.
These exploratory results suggest that organizational design and senior
leadership behaviors are powerful levers in driving streams of innovation and
that ambidextrous organizational designs permit a business unit to
simultaneously explore and exploit. We discuss the implications of these results
for the ongoing debates on the nature of dynamic capabilities and organizational
evolution.