Perspectives on the Productivity Dilemma

Paul S. Adler; Mary  Benner; David James Brunner; John Paul MacDuffie; Emi  Osono; Bradley R. Staats; Hirotaka   Takeuchi; Michael   Tushman; Sidney G. Winter

Journal Article | Journal of Operations Management | April 2009

Perspectives on the Productivity Dilemma

by Paul S. Adler, Mary Benner, David James Brunner, John Paul MacDuffie, Emi Osono, Bradley R. Staats, Hirotaka Takeuchi, Michael Tushman and Sidney G. Winter

Abstract

For more than a century, operations researchers have recognized that organizations can increase efficiency by adhering strictly to proven process templates, thereby rendering operations more stable and predictable. For several decades, researchers have also recognized that these efficiency gains can impose heavy costs. The capabilities that enable consistent execution can also hinder learning and innovation, leaving organizations rigid and inflexible. By optimizing their processes for efficiency in the short term, organizations become brittle. In the “Productivity Dilemma”, Abernathy conjectured that short-term efficiency and long-term adaptability are inherently incompatible. Organization theorists have conceptualized Abernathy's dilemma as the challenge of balancing exploitation and exploration. Exploitation leverages existing knowledge and capabilities, resulting in stable and efficient performance. Exploration creates new knowledge, enabling organizations to innovate and adapt to changing conditions. Enduring organizational performance requires ambidexterity, the ability to sustain both exploration and exploitation. Various techniques have been proposed for achieving ambidexterity, such as differentiated exploratory subunits and meta-routines that modify underlying processes. Ambidexterity requires operational processes that combine high levels of efficiency with the flexibility to evolve and improve over time. Thus, the perspectives of operations management are essential to understanding the mechanics of ambidexterity. Moreover, theories of ambidexterity raise important questions for operations management. This article synthesizes several recent perspectives on the dynamics of ambidexterity and the productivity dilemma.

Keywords: Learning; Innovation and Invention; Knowledge Use and Leverage; Operations; Business Processes; Organizational Change and Adaptation; Performance Efficiency; Performance Improvement; Performance Productivity; Adaptation;

Format: Print

15 pages

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Citation:

Adler, Paul S., Mary Benner, David James Brunner, John Paul MacDuffie, Emi Osono, Bradley R. Staats, Hirotaka Takeuchi, Michael Tushman, and Sidney G. Winter. "Perspectives on the Productivity Dilemma." Journal of Operations Management 27, no. 2 (April 2009): 99–113.

Working Paper | HBS Working Paper Series | 2019

Managed Ecosystems and Translucent Institutional Logics: Engaging Communities

Elizabeth J. Altman, Frank Nagle and Michael Tushman

When organizations need input into their innovation or production process, they have traditionally faced the decision to make the input themselves or buy it through the market. However, rapidly decreasing information costs allow firms to harness external communities that are neither employees of the firm hierarchy, nor traditional contracted market participants such as supply chain partners. We introduce the managed ecosystem governance form in which a central organization engages external communities and also manages these communities by maintaining some degree of control over their activities. This model is evident in various organizational approaches including multi-sided platforms, crowdsourcing, and the gig economy. Building upon the knowledge-based view of the firm, we argue that these increasingly common governance models offer a wealth of opportunities but require organizations to adopt a translucent institutional logic that is in-between the traditional closed logic of the firm and the open logic of the market. To successfully employ this model, firms must learn to shepherd communities, leverage them without exploiting them, and share intellectual property rights.

Keywords: Managed Ecosystems; Open and User Innovation Strategy; Governance; Multi-Sided Platforms;

Citation:

Altman, Elizabeth J., Frank Nagle, and Michael Tushman. "Managed Ecosystems and Translucent Institutional Logics: Engaging Communities." Harvard Business School Working Paper, No. 19-096, February 2019. View Details

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Why do incumbent firms frequently reject nonincremental innovations? Beyond technical, structural, or economic factors, we propose an additional factor: the degree of the top management team's (TMT) frame flexibility, i.e., their capability to cognitively expand an innovation's categorical boundaries and to cast the innovation as emotionally resonant with the organization's identity, competencies, and competitive boundaries. We argue that inertial forces generally constrict how TMTs perceive innovations, but that frame flexibility can overcome these constraints, increasing the likelihood of adoption and broadening the organization's innovation practices. We advance a theoretical model that relaxes the assumption that cognitive frames are static, showing how they become flexible via categorical positioning, and introduce a role for emotional frames that appeal to organizational members' sentiments and aspirations in innovation adoption.

It’s notoriously difficult for a business to manage two separate-but-equal goals—making money and creating social value at the same time, for example, or managing an existing business at the same time that you invent a new one. Most attempts at managing these ”strategic paradoxes” fail because they’re not managed carefully and consistently. (It’s easy to write a great purpose statement or to dream up a new business model but way more difficult to follow through when it’s time to make actual tradeoffs between the goals.) Three organizational mechanisms can help: guardrails that protect the weaker of the two goals, dynamic decision-making that treats high-level goals as sacrosanct but tactical decisions as provisional, and leaders dedicated to “both/and” thinking.

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