Sequential ambidexterity in practice: a longitudinal study on shifts from exploration to exploitation and reverse

Many scholars have stressed the need for balancing exploitation with sufficient levels of exploration (Levinthal and March, 1993; March, 1991, 2006). Organizations that have a one-sided focus on exploitation by allocating resources to refinement of existing technologies rather than to developing new skills and capabilities, achieve immediate success at the future risk of becoming obsolete (Holmqvist, 2004; Leonard-Barton, 1992). For growing companies, maintaining sufficient levels of exploration is challenging. Investing in exploration competes with investing in exploitation, of which the outcomes are more secure and less remote in time (March, 1991). When organizations grow, they tend to skew to efficiency and develop core capabilities for exploitation of current success (Sørensen and Stuart, 2000). These establishing mindsets, expertise and routines are different from those required for exploration (Gupta et al., 2006). The more they become embedded, the more challenging it becomes to transition the organization toward revival of exploration. Balancing exploration and exploitation in time by oscillating back and forth between periods of exploration and exploitation – often referred to as sequential ambidexterity – may be a viable option for small and medium sized organizations that lack resources to pursue simultaneous ambidexterity. Few studies, however, have shown how organisations successfully sequence changes in organizational structures (O'Reilly and Tushman, 2013). It remains unclear how sequential ambidexterity occurs and what the transitions look like. What does it require to shift from exploitation to exploration, or the vice versa? Research in this domain is not fine-gained enough to provide much insight. Although previous studies have provided valuable insights into the antecedents of explorative and exploitative innovation in organizations, only few have unravelled the process of how these factors change exploration levels in growing organizations over time. Since the time dimension is mostly absent in existing studies (Gibson and Birkinshaw, 2004; Jansen et al., 2005) and only partial relationships are illuminated (Eisenhardt, 2010), it remains unclear how structural and individual antecedents in growing organizations interrelate and how they affect exploration decline and recovery. The purpose of this paper is to provide in-depth insights into the dynamics of a growing organization’s exploration and exploitation levels. By adopting an organizational learning perspective, we demonstrate how structural and individual factors change an organization’s exploration and exploitation over time. In order to do so, we conduct a study in a fast growing research and development organization in the wind power industry, providing access to a unique collection of time-accounting data and descriptions of all R&D projects conducted in a timeframe of 100 months. Through text mining these documents, we measure the dynamics of exploration and exploitation levels, visualizing in great detail how a firm goes through transitions from focus on exploration to exploitation and vice versa. Based on a series of interviews with employees of this organization, we demonstrate how structural and individual factors interact and together impact these shifts from exploration to exploitation and