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Leadership and organizational ambidexterity

Article in Journal of Management Development · July 2016

DOI: 10.1108/JMD-01-2016-0004

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JMD
35,6
Leadership and organizational
ambidexterity
Saša Baškarada
778 Defence Science and Technology Group, Melbourne, Australia, and
Jamie Watson and Jason Cromarty
Received 14 January 2016 Defence Science and Technology Group, Canberra, Australia
Accepted 20 April 2016

Abstract
Purpose – The purpose of this paper is to answer calls for more research on how leaders may promote
organizational ambidexterity (i.e. exploitation and exploration), and how such behaviors relate to
transactional and transformational leadership styles.
Design/methodology/approach – The findings presented in this paper are based on semi-structured
interviews with 11 senior leaders in Australian Defence.
Findings – This paper identifies three organizational mechanisms that leaders rely on to promote
exploitation, and five behaviors that leaders rely on to promote exploration. These mechanisms and
behaviors closely match transactional and transformational leadership styles, respectively.
Originality/value – This paper provides support for the leadership ambidexterity construct, and for
the thesis that transformational leadership is appropriate in the context of exploratory innovation,
while transactional leadership is appropriate in the context of exploitative innovation.
Keywords Ambidexterity, Exploration, Exploitation, Transactional Leadership,
Transformational leadership
Paper type Research paper

Journal of Management
Development
Vol. 35 No. 6, 2016
pp. 778-788
Emerald Group Publishing Limited
0262-1711
DOI 10.1108/JMD-01-2016-0004
Introduction
Exploitation (incremental innovation) and exploration (discontinuous innovation) are
critical to organizational prosperity and long-term survival (March, 1991). Ambidexterity
refers to the ability of an organization to both exploit and explore (Tushman and Reilly,
1996). In other words, to deliver efficiency, control, and incremental improvements, while
embracing flexibility, autonomy, and experimentation. Maintaining appropriate balance
between exploitation and exploration is critical since too much innovation may produce
an excess of immature technologies, whereas too much refinement may lead to a reduction
in variability (increased reliability) at the expense of discovery of better alternatives (Yukl,
2008); i.e., a competency trap (Levitt and March, 1988). Achieving ambidexterity can be
difficult as innovation and refinement compete for finite organizational resources (March
and Simon, 1953) as well as stand in relative tension. For instance, short-term benefits
may not necessarily be advantageous in the long term and vice versa (March, 1991).
Given that ambidexterity was originally proposed as an abstract organizational
construct (Tushman and Reilly, 1996), it is perhaps unsurprising that most of the
scholarly research has so far taken place in the context of organizational theory.
Thus, most frequently studied mechanisms for managing organizational ambidexterity
include sequential ambidexterity (Duncan, 1976), where management systems shift
over time, simultaneous/structural ambidexterity (Tushman and Reilly, 1996), where
autonomous exploitation and exploration subunits operate in parallel, and contextual
ambidexterity (Gibson and Birkinshaw, 2004), where individuals decide when to focus
© Commonwealth of Australia
on exploitation and when on exploration. There has been limited research on how Organizational
leaders may promote ambidexterity (O’Reilly and Tushman, 2013). ambidexterity
Although some studies have indicated that transformational leadership behaviors
promote ambidexterity (Li et al., 2015; Jansen et al., 2008; Nemanich and Vera, 2009), there
has been virtually no research on the relationship between transactional leadership and
organizational ambidexterity. One exception is a study by Jansen et al. (2009), which
indicated that transformational leadership may be more appropriate in the context of 779
exploratory innovation, while transactional leadership may be more appropriate in the
context of exploitative innovation. Building on such insights, others have suggested that
ambidextrous leadership involves either concurrent focus on exploration as well as
exploitation, or the ability to seamlessly switch between the two approaches (Rosing
et al., 2011; Li et al., 2015). Thus, while ambidextrous leaders encourage their followers to
stretch objectives, they also enforce expectations, and create an environment where
employees support and trust each other (Gibson and Birkinshaw, 2004; Zacher and
Rosing, 2015). The aim of this paper is to further explore how leaders may promote
organizational ambidexterity (i.e. exploitation and exploration), and how such behaviors
relate to transactional and transformational leadership styles.

Literature review
Transformational leadership, the most frequently studied established leadership theory
in recent times (Dinh et al., 2014; Marques, 2015), emphasizes the motivation and
inspiration of followers (Von Krogh et al., 2012), and has been defined in terms of
intellectual stimulation, individualized consideration, idealized influence, and
inspirational motivation (Bass, 1999). Transactional leadership, on the other hand,
focusses on leader-follower exchanges (Von Krogh et al., 2012), and has been defined in
terms of contingent reward and active management by exception (Bass, 1999).
From a contingency perspective, leadership requirements, responsibilities, and
challenges are largely dependent on internal and external factors (Baškarada et al.,
2014). Such contingency factors include the environment ( Jansen et al., 2006, 2009;
Waldman et al., 2001; Osborn et al., 2002), prior organizational performance (March and
Simon, 1953), and the stage of organizational life (Vera and Crossan, 2004). It is
generally accepted in the literature (O’Reilly and Tushman, 2013) that organizations
with mechanistic management systems (hierarchical relations and well-defined roles
and responsibilities) are more effective in stable environments, whereas organizations
with more organic systems (lateral relations and flexible roles and responsibilities) are
more effective in dynamic environments (Burns and Stalker, 1961). This is because
mechanistic management systems are thought to enable exploitation, which is
rewarded in stable environments, while organic systems are thought to enable
exploration, which is rewarded in dynamic environments (March, 1991; Tushman and
Reilly, 1996; Jansen et al., 2009). Accordingly, transformational leadership has been
associated with turbulent and uncertain environments, relatively poor organizational
performance, and periods of organizational inception and decline/renewal, while
transactional leadership is more suited to environments that are stable and predictable,
satisfactory organizational performance, and mature organizations. As such,
transactional leadership mainly applies to situations that require institutionalization,
reinforcement, or refinement of existing knowledge, while transformational leadership
is most appropriate for situations requiring change to the status quo ( Jansen et al.,
2009). Nevertheless, empirical studies suggest that the relationship between
transformational leadership and exploratory innovation may not be straightforward
JMD ( Jaussi and Dionne, 2003; Keller, 1992; Shin and Zhou, 2003; Elenkov et al., 2005;
35,6 Jung et al., 2003; Jansen et al., 2009; Rosing et al., 2011; Schweitzer, 2014).
By focussing on standardization, formalization, control, and training, transactional
leaders can have a positive impact on both feed-forward and feedback learning that
reinforces institutionalized learning (Vera and Crossan, 2004). Such leaders tend to prefer
closed cultures, mechanistic structures, and rigid systems and procedures. For instance,
780 transactional leadership has been associated with bureaucratic learning systems that
comprise sophisticated procedures and rules for controlling the flow of information (Vera
and Crossan, 2004; Shrivastava, 1983). Transformational leaders may facilitate
exploration by providing their staff with contextual support to develop their ideas
(Berson et al., 2006). By encouraging individuals to be creative, embrace change, question
assumptions, take calculated risks, and participate in strategy development,
transformational leaders can have a positive impact on both feed-forward and feedback
learning that challenges institutionalized learning (Vera and Crossan, 2004). Such leaders
prefer open cultures, organic structures, adaptable systems, and flexible procedures.

Method
While most previous research on leadership has relied on questionnaires (usually
administered to subordinates), given the complexity of the problem, it has been argued
that a qualitative approach with multiple leaders may be able to provide a richer insight
(Yukl, 2009). Accordingly, in order to explore how leaders may promote organizational
ambidexterity (i.e. exploitation and exploration), and how such behaviors relate to
transactional and transformational leadership styles, qualitative data were collected
through semi-structured interviews with the Chief of Defence Force and ten other senior
leaders in Australian Defence (see Table I). The semi-structured approach provided the
authors with the flexibility to refocus questions, or prompt for more information, when an
interesting or novel topic emerged (Baškarada, 2014). All interviews were transcribed
and reviewed for accuracy by the respective interviewees.
The constant comparative method was employed to identify constructs, group them
into themes, find patterns, negative evidence, and the like (Tesch, 1990). Domain and
taxonomic analyses were used to identify cover terms (i.e. domains), included terms,
semantic relationships (e.g. location, inclusion, causation, rationale, function, sequence),
and concepts that had different meanings and distinct connotations for different people
(Spradley, 1979). Finally, the draft paper was critically reviewed by all interviewees as
well as several peers with relevant subject matter expertise.

Results
How leaders promote exploitation
The analysis identified three key organizational mechanisms (training, performance
management, and knowledge management) that leaders use to promote exploitation. As
the focus is on reducing variation, reinforcing institutionalized learning (the status quo),
reliability, refinement, efficiency, selection, implementation, and execution, the
mechanisms deal with how these objectives may be accomplished.
Training. With respect to promoting exploitation among his staff, an interviewee
suggested that within his organization it is almost expected by default, noting that the
training continuum encourages exploitation. Another interviewee noted that, similar to
other professionals who must undergo continual training and certification, warfighters
must also maintain currency in their domain. Training programs are built on lessons
Role
Chief of Defence Force (CDF)
Chief Joint Operations (CJOPS)
Deputy Chief Joint Operations
(DCJOPS)
Chief Defence Scientist (CDS)
Commander Border Protection
Command (COMBPC)
Commodore Warfare (COMWAR) COMWAR commands both the Fleet Battle Staff and the
Deputy Chief of Army (DCA)
Director General Defence Learning DGDLB has responsibility for education and training across the
Branch (DGDLB)
Head Joint Capability
Coordination (HJCC)
Director General Support (DGS)
Commander 1st Division (C1DIV) C1DIV commands the Army 1st Division which is Australia’s
Description
Organizational
ambidexterity
CDF has primary responsibility for the command of the
Australian Defence Force (ADF) and is the principal military
adviser to the Minister of Defence on matters that relate to military
activity, including military operations
CJOPS is responsible for the integration of strategic and
operational military objectives with tactical activity by planning, 781
and controlling the conduct of military campaigns, operations,
joint exercises and other activities
DCJOPS deputizes to CJOPS, convenes and chairs the joint
operational lessons board and assumes the role of acting CJOPS
when required
CDS is the primary adviser to the Defence Secretary and the CDF
on science and technology issues and is the Chief Executive
Officer of the Defence Science and Technology Group
COMBPC is responsible for the security of Australia’s maritime
domain utilizing resources from both the ADF and the Australian
Border Force
Australian Maritime Warfare Centre
DCA is responsible for coordinating and monitoring Army policy
and governance (in terms of commitments, preparedness,
personnel and capability development), and administration of
Army Headquarters, Army Commands and Army Staff overseas
ADF and Australia’s Defence civilian community
HJCC is responsible to the Vice Chief of Defence Force for strategic
and joint capability planning and integration, simulation and
preparedness
DGS is responsible for the development of joint operational
support plans and the delivery of operational support effects to
meet CJOPS’ requirements
Table I.
large scale option as a deployable Joint Force Headquarters List of interviewees

that have been learned and reinforce what is known to work. Ultimately, the training
process is about encouraging people to exploit previous lessons. Through training,
people can appreciate the level of investment needed to achieve a particular outcome
and be confident of achieving that goal.
Performance management. Leaders’ expectations and standards for the workforce
may be enforced through performance management. To do things well, to do things
diligently, to make sure processes are appropriately followed, a leader needs to project
the understanding that it is implicit that certain approaches will be followed.
An interviewee noted that difficult conversations sometimes need to be had, and stressed
that performance management should be taken seriously. However, another interviewee
noted that a leader also needs to have empathy with relatively inexperienced junior staff.
Furthermore, given that exploitation may be considered mundane and process
orientated, it was noted that leaders also need to be able to motivate and encourage their
staff; for instance, by explaining the significance of their work.
Knowledge management. With respect to promoting exploitation, an interviewee
noted that Australian Defence has very rigorous knowledge management processes
JMD involving the capture of information from current operations. So, when presented with
35,6 a situation that is similar to one previously encountered, the interviewee directs his
staff to identify what happened and what was learned in similar situations, adopting
the approach based on this feedback. This is consistent with March and Simon’s
concept of “satisficing” (March and Simon, 1953), i.e., looking for a good enough rather
than the best possible solution. For instance, in addressing planning for any new
782 activity, the first thing the interviewee asks his team to do is to identify what worked
and what did not work the last time the organization undertook a similar activity.
The relative effectiveness of the current knowledge management processes is due to
sufficient resourcing and sustained operational momentum. Conversely, such processes
were significantly less effective in the past when they were under-resourced and
fragmentary in nature (i.e. being exercise driven).
One of the interviewees described implementing a register for ad hoc tasks and
requests, so that “out of the ordinary” issues can be recorded and tracked. As new
issues arise they can be compared to a database of previous issues and people can
check if the same thing has been dealt within the past. Another interviewee described a
recent establishment of an electronic lessons forum. He noted that he is attempting to
get a tool that is accessible, so that junior leaders can get involved. In other words, he
wanted the officers involved to widely share knowledge electronically rather than have
it filtered and changed during regular social interactions. He concluded by noting that
he is intimately involved in the lessons forum and provided an example where he, as a
senior leader, actively contributed his knowledge and observations of certain activities.

How leaders promote exploration

The analysis identified five leadership behaviors/attributes (commitment, vision, risk
comfort, empowerment, and inclusivity) that leaders use to promote exploration. As the
focus is on increasing variation that challenges institutionalized learning, risk taking,
experimentation, flexibility, discovery, and innovation, the behaviors do not comprise
processes specifying how these objectives may be accomplished, but rather address
requisite factors underpinning organizational conditions suitable for exploration.
Commitment. A key finding was that any discontinuous innovation should be leader
driven. In other words, the culture of exploration is associated with a leader who
participates, makes it clear that he or she has a desire for innovative outcomes, and leads
with a constructive tone/approach. The involvement of the leader is a way of ensuring
that the output is of value to and owned by the leader (Caldwell et al., 2015). Conversely,
in the absence of leaders’ direction, there is not likely to be strong ownership of the
outcomes. Thus, in order to promote exploration, senior leaders need to demonstrate their
personal commitment to, and belief in, discontinuous innovation. Such commitment is
usually underpinned by an ability to see the organization from a discomforting/external
position (from a novel perspective), humility, and openness to learning.
By continually questioning the status quo and asking exploratory questions several
interviewees sought to create an environment that is critical, flexible, and innovative.
One interviewee explained how he takes ownership and sponsorship of discontinuous
innovation by specifically dedicating time for exploratory discussions within his senior
leadership meetings. As a further example of a personal commitment to exploration, he
cited his recent participation in a five day conference where he deliberately decided to
remain fully engaged for the duration of the conference rather than delegate. Given a
leader’s personal commitment to exploration, people within the organization respond
positively to challenges and soon learn to expect to be asked questions that seek Organizational
greater understanding and explore risks. ambidexterity
Vision. A leader who seeks discontinuous innovation should lead with a
constructive tone and approach in order to shape the vision and help people move
beyond an individual agency approach; i.e., transform individual problems into a
shared vision. For instance, one of the interviewees highlighted the importance of
working on “big issues.” Since exploratory approaches involve a shared problem, they 783
also involve shared risk. Shared vision and a common understanding of risk are likely
to lead to cooperation, and provide a way of achieving buy-in. Articulating and
confirming a common language associated with the problem is critical to creating a
shared vision, and being a good listener is critical to ensuring that a presupposed
solution or outcome is not inadvertently introduced. An interviewee noted that he saw
it as his responsibility to actively set the scene for any exploratory activities; in
situations where he could not be present he expected the same from his representatives.
Risk comfort. As an inherent understanding and articulation of risk underpins
exploratory culture, the leadership needs to be consistently demonstrating risk comfort
(i.e. a suitable level of risk appetite). Risk comfort is essential as any exploration of new
ways of doing business will bring in the unknown and introduce risk; exploitation
naturally engenders less risk. As such, the challenge with new ways of doing things is
to identify and mitigate risks. A leader with the ability to rationally accept risk may
inculcate a culture of exploration within his or her staff.
Empowerment. A leader also needs to empower people and let them know they have
the leader’s authority and confidence to move beyond the here and now and explore
new ways of doing business (Hayes et al., 2015; Friedman and Westring, 2015).
For instance, reflecting on his role, an interviewee recalled that he chose to keep himself
“one step removed from combat” in order to “do the job of a General,” and suggested
that reaching down too far, and getting involved in areas where a leader does not
necessarily have to, is time consuming and damaging. He also highlighted the
importance of creating an independent spirit and giving “young people space.”
From a cultural perspective, a leader needs to promote and praise innovation and be
very careful not to criticize failure, as having their leader put confidence in them and
move forward with their recommendation is rewarding for staff. This is consistent
with existing research, which has shown that verbal rewards (i.e. positive feedback)
can have a significant positive effect on intrinsic motivation for interesting tasks, and
that tangible rewards can, under certain conditions, have a negative effect (Deci et al.,
1999; Deci, 1971; Kruglanski et al., 1971; Calder and Staw, 1975). As such,
several theories on employee motivation (Nohria et al., 2008) may be of relevance,
including the equity theory (Adams, 1965), the expectancy theory (Vroom, 1969), the
two-factor theory (Herzberg, 1959), and various theories of needs (Maslow, 1943;
McClelland, 1961).
In particular, the leader needs to avoid the situation where no one is willing to do
anything until the leader provides direction. A cultural complication within the military
(that is amplified in an operational context) is that there is a tendency for the majority to
look to their seniors for the “big ideas.” Such environment may stifle innovative thought,
and people may hold back on suggesting ideas, even if they know a better way of doing
things. An interviewee explained that he has built upon the common background and
experience of his senior leadership group to develop and engender “trust and comfort” as
precursors to discussion and exploration of new ways of doing business.
JMD Inclusivity. As consultation is an essential component of exploration, leaders also
35,6 need to listen to their staff and learn from their experiences. One of the interviewees
noted that during his role as a commander his superior was very attentive to the views
of commanders in the field and argued that this relationship/dynamic was a significant
factor in developing an exploratory culture. In particular, a leader also needs to
encourage people with alternate views as this is needed to counteract the fear
784 associated with stepping outside governance and process boundaries. An interviewee
noted that a great diversity within his leadership team has enabled the group to trigger
ideas for exploration. Another interviewee agreed that it all comes down to a culture of
respect, conversation, and inclusivity. As such, a leader needs to make it clear that the
team is an inclusive one, and needs to demonstrate that everyone’s opinion is valid.
If people feel they are included then the solutions they bring back for consideration by
the leader are more likely to be “outside the box.”
One of the interviewees noted that he has always relied on professional networks as
a means of promoting exploration results through collaboration. Bringing together a
group of people from various backgrounds and services has been a key enabler for
creating new insights. He works at understanding how the various team members
work together and encourages them to see how they can be more effective with positive
engagement. The interviewee noted that it was about developing the various teams he
has in his organization, and helping them see that they cannot work in isolation.
Another interviewee noted that, within his teams, he is keen to develop a high degree of
awareness of what is going on across the organization. In order to do this, he meets
with his senior reports every day to share what is happening and uses that forum to
explore opportunities for innovative approaches. He is focussed on creating an
environment where the senior leadership is able to “bounce ideas off each other” and
where people are not “tunnel visioned” in outlook.
Finally, an interviewee suggested that people are more likely to accept changes,
even when such changes are difficult, if they have been involved in the change process.
If buy-in is achieved through consultation, and people are provided with an
opportunity to give feedback, they are more likely to own the solution.

Discussion
Exploitation and exploration have traditionally been associated with management and
leadership, respectively (Bass, 1985; Zaleznik, 1977). This paper provides further
support that different leadership styles (transactional and transformational) may also
be associated with exploitation and exploration, respectively. Accordingly,
ambidextrous leadership may promote organizational ambidexterity.
The three organizational mechanisms identified in this paper that leaders use to
promote exploitation closely match the characteristics of transactional leaders
described by Bass (1985). The strong emphasis on performance management agrees
with transactional leaders focus on contingent reward. Training and knowledge
management, which are used to reinforce what is known to work, underpin
transactional leader’s ability to manage by exception; i.e., identify deviations from rules
and standards. Similarly, five leadership behaviors/attributes identified in this paper
that leaders use to promote exploration closely match the characteristics of
transformational leaders described by Bass (1985). For instance, vision may roughly
be associated with inspirational motivation, commitment with idealized influence,
empowerment with intellectual stimulation, and inclusivity with individualized
consideration. Risk comfort, which is frequently discussed in the literature in relation to Organizational
transformational leadership, underpins most of the other characteristics, including ambidexterity
vision, commitment, and empowerment.
As most of the interviewees agreed that effective leadership requires a balance
between transactional and transformational approaches, this study did not find
support for sequential ambidexterity where exploitation and exploration shift over time
(Duncan, 1976). Instead, simultaneous/structural ambidexterity where autonomous 785
exploitation and exploration subunits operate in parallel (Tushman and Reilly, 1996),
and contextual ambidexterity where individuals decide when to focus on exploitation
and when on exploration (Gibson and Birkinshaw, 2004) were the preferred
mechanisms for promoting organizational ambidexterity.
As an example of simultaneous/structural ambidexterity, several interviewees
explained how they mitigate transactional pressures by delegating such
responsibilities to relevant deputies or chiefs of staff. Others described a number of
processes and/or organizational capabilities specifically dedicated to exploration.
For instance, an interviewee suggested that the ADF’s Joint Military Appreciation
Process provides a formal process that, if done correctly, should encourage exploration.
Another interviewee explained that he conducts “futures studies” and “red teaming”
(war gaming) in order to explore potential “black swans” (significant unexpected
events) and emerging disruptive technologies. With regard to creating the environment
in which innovative processes can survive and flourish, another interviewee cited his
sustained support for the operational analysis capability that resides within his
organization. The interviewee suggested that, in the future, as the external
environment changes, his organization will also change, and more areas will need to
take on a reflective role. The Defence Science and Technology Group was highlighted
as a key organizational capability supporting exploration across a number of areas.

Conclusion
This paper answered calls for more research on how leaders may promote organizational
ambidexterity and how such behaviors relate to transactional and transformational
leadership styles. Based on semi-structured interviews with 11 senior leaders in
Australian Defence, this paper identified three organizational mechanisms that leaders
rely on to promote exploitation and five behaviors that leaders rely on to promote
exploration. It was shown that these mechanisms and behaviors closely match
transactional and transformational leadership styles, respectively. As a result, this paper
provides support for the leadership ambidexterity construct and the thesis that
transformational leadership is appropriate in the context of exploratory innovation, while
transactional leadership is appropriate in the context of exploitative innovation.

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Corresponding author
Saša Baškarada can be contacted at: sasa.baskarada@dsto.defence.gov.au

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