Building Flexible Organizations for Fast-moving Markets

By considering flexibility as a valuable strategic option in turbulent environments, this article distinguishes four types of effective response to strategic change. From this typology different trajectories of revitalization are derived. On the basis of this typology, the article describes a method for diagnosing organizational flexibility and guiding the transition process, the Flexibility Audit & Redesign (FAR) method. This method was applied successfully within the Dutch Postbank NV, Philips Semiconductors and the Dutch National Gas Corporation. The findings suggest that a viable corporation has to oscillate between ‘planned’ and ‘flexible’ forms. In this process of change, the corporation has to prevent itself from overshooting and becoming extremely rigid or chaotic

Rethinking the Dutch Innovation Agenda: Management and Organization Matter Most

In this essay, we challenge the present dominant emphasis in the Dutch Innovation Debate on the creation of technological innovations, the focus on a few core technologies, and the allocation of more financial resources. We argue that managerial capabilities and organizing principles for innovation should have a higher priority on the Dutch Innovation Agenda. Managerial capabilities for innovation deal with cognitive elements such as the capacity to absorb knowledge, create entrepreneurial mindsets, and facilitate managerial experimentation and higher-order learning abilities. These capacities can only be developed by distinctive managerial roles that enhance hierarchy, teaming and shared norms. Utilizing these unique managerial capabilities requires novel organizing principles, such as managing internal rates of change, nurturing self-organization and balancing high levels of exploration and exploitation. These managerial capabilities and organizing principles of innovation create new sources of productivity growth and competitive advantage.The dramatic fall back of the Netherlands in the league of innovative and high productivity countries of the World Economic Forum-Report can be mainly attributed to the present lack in the Netherlands of these key managerial and organizational enablers of innovation and productivity growth. We provide various levers for building unique managerial capabilities and novel organizing principles of innovation. Moreover, we describe the necessary roles that different actors have to play in this innovation arena. In particular, we focus on the often neglected but important role of strategic regulations that speed up innovation and productivity growth. They are the least expensive way to boost innovation in organizations in both the Dutch private and public sector. Finally, we discuss the implications for the Dutch Innovation Agenda. It should start with setting a challenging ambition, namely the return of The Netherlands within the WEF- league of the top-ten most innovative and productive countries of the world. Considering the under-utilization of available knowledge stemming from technological innovations, managerial and organizational determinants of innovation should receive first priority. These determinants have a high strategic relevance and should receive more public recognition. We suggest to organize an annual innovation ranking of the most outstanding Dutch firms, to develop an innovation audit that measures firms’ non-technological innovation capacity, and to create an overall innovation policy for fast diffusion of new managerial capabilities and adequate organizing principles throughout the Dutch private and public sector.In conclusion, we add five new items to the Dutch Innovation Agenda:1. Prioritize administrative innovationsInvestments in management and organization determinants of absorption of knowledge and its successful application (administrative innovation) should have a higher priority than investments in technological innovations.2. Build new managerial capabilities and develop novel organizing principlesFor these administrative innovations to succeed, firms have to build managerial capabilities (broad knowledge-base, absorptive capacity, managerial experimentation, higher-order learning) and various management roles (hierarchy, teaming, shared norms) to increase the assimilation of external knowledge and the utilization for innovation. Moreover, they have to develop novel organizing principles that increase internal rates of change, nurture self-organization and synchronize high levels of exploration and exploitation.3. Set levers of innovation by creating selection environments that favor innovation and by redefining the roles of key actors Management has to create a proper organizational context to foster entrepreneurship and innovation (internal selection environment). Governmental agencies have to focus on innovation and productivity enabling strategic regulations (external selection environment). Moreover, research institutes, business schools, and consulting firms should not only focus on technological knowledge, but also on managerial and organizational knowledge for innovation. In the end, private small and large firms and public institutions have to recognize that they all must contribute to the national goal of increasing innovation and productivity growth.4. Create a new challenging national ambition: return of the Netherlands within the top-10The Netherlands has to return to the top-ten most innovative and productive countries in the world as reflected in international rankings such as the World Economic Forum’s Global Competitiveness Index.5. Proliferate an awareness and passion for innovation:Create public awareness and recognition of the societal relevance of outstanding managerial capabilities and organizing principles to innovation and productivity growth:o Initiate a Dutch innovation ranking in terms of management and organization;o Develop proper assessment tools for innovations in management and organization;o Enhance reporting on the progress on managerial and organizational innovation as part of modern corporate governance and as part of outstanding annual reports.These issues may contribute to rethinking the fundamental sources of innovation, productivity growth and sustainable competitive advantage of the Dutch economy.dynamic capabilities;knowledge transfer;exploitation;exploration;mANAGEMENT;mindsets;organizing pinciples;srategic rgulation;strategy innovation

Change for change’s sake?

__Abstract__ In today’s increasingly volatile business environment, senior managers have to stay one step ahead by making the necessary internal organisational and strategic decisions, before it is too late to react to external changes

Complex Incremental Product Innovation in Established Service Firms: A Micro Institutional Perspective

Many product innovation studies have described key determinants that should lead to successful incremental product innovation. Despite numerous studies suggesting how incremental product innovation should be successfully undertaken, many firms still struggle with this type of innovation. In this paper, we use an institutional perspective to investigate why established firms in the financial services industry struggle with their complex incremental product innovation efforts. We argue that although the impact of micro institutional forces is often overlooked in innovation studies, these forces matter for innovation success. Our study complements the existing innovation literature and provides an additional explanation why incremental product innovation is highly complex and suffers from several liabilities in established firms. Using qualitative data from the Dutch financial services sector collected over the period 1997-2002, the paper illustrates how micro institutional forces at the business unit level affect complex incremental product innovation and how the interaction of these forces delivers their impact.Financial Services Sector;Micro Institutional Forces;Neo-Institutional Theory;Complex Incremental Product Innovation

The Influence of Top Management Team’s Corporate Governance Orientation on Strategic Renewal Trajectories

Using the upper echelons perspective together with corporate governance and strategic renewal literature, this paper investigates how top managers’ corporate governance orientation influences a firm’s strategic renewal trajectories over time. Through both a qualitative analysis (1907-2004) and a quantitative analysis (1959-2004), we investigate this under-researched question within the context of a large incumbent firm: Royal Dutch Shell plc. Our results indicate that top managers having an Anglo-Saxon corporate governance orientation are more likely to pursue exploitative and external-growth strategic renewal trajectories, while those having a Rhine corporate governance orientation are more likely to pursue exploratory and internal-growth strategic renewal trajectories. We also found a positive moderating effect of the proportion of shareholders from the Anglo-Saxon countries on exploitative and external-growth strategic renewal trajectories. Our findings indicate that top managers’ corporate governance orientation can be an important antecedent of strategic renewal and of organisational ambidexterity, both of which influence corporate longevity.corporate governance;strategic renewal;exploitation and exploration;Royal Dutch Shell;top management team;upper echelons perspective

The Impact of Corporate Venturing on a Firm’s Competence Modes

In this conceptual paper we investigate how corporate venturing influences an organization’s competences. The impact of various types of corporate ventures on the portfolio of strategic options of a firm’s competence modes (Sanchez, 2004a; Sanchez and Heene, 2002) will be assessed by distinguishing two fundamentally different dimensions of corporate venturing, technology and product (Block & MacMillan, 1993). We argue that the level of product and factor market dynamism mediates the effect of corporate venturing on a firm’s competence modes. Corporate ventures that significantly increase the level of product or factor market dynamics will lead to an increased flexibility in all five competence modes. These ventures will have a direct effect on the lower-order competence modes and an indirect, lagged effect on higher-order competence modes through feedback loops. The developed framework and the propositions contribute to managing the ability of a firm to change its coordination-, resource and operating flexibility in order to sustain value creation.flexibility;corporate venturing;competence-based management;product and factor market dynamism

Complex Incremental Product Innovation in Established Service Firms: A Micro Institutional Perspective

Many product innovation studies have described key determinants that should lead to successful incremental product innovation. Despite numerous studies suggesting how incremental product innovation should be successfully undertaken, many firms still struggle with this type of innovation. In this paper, we use an institutional perspective to investigate why established firms in the financial services industry struggle with their complex incremental product innovation efforts. We argue that although the impact of micro institutional forces is often overlooked in innovation studies, these forces matter for innovation success. Our study complements the existing innovation literature and provides an additional explanation why incremental product innovation is highly complex and suffers from several liabilities in established firms. Using qualitative data from the Dutch financial services sector collected over the period 1997-2002, the paper illustrates how micro institutional forces at the business unit level affect complex incremental product innovation and how the interaction of these forces delivers their impact.complex incremental product innovation;financial services sector;micro institutional forces;neo-institutional theory

Investigating Managers' Exploration and Exploitation Activities: The Influence of Top-down, Bottom-up, and Horizontal Knowledge Inflows

This paper develops and tests hypotheses on the influence of a manager’s knowledge inflows on this manager’s exploration and exploitation activities. Based on a survey among managers of a leading electronics firm, the findings indicate, as expected, that top-down knowledge inflows of a manager positively relate to the extent to which this manager conducts exploitation activities, while they do not relate to a manager’s exploration activities. Furthermore, as expected, bottom-up and horizontal knowledge inflows of a manager positively relate to this manager’s exploration activities, while they do not relate to a manager’s exploitation activities. We contribute to current literature on exploration and exploitation by focusing on the manager level of analysis, and by adding the importance of knowledge flow configurations to the literature on the impact of organizational factors upon exploration and exploitation.Exploitation;Exploration;Bottom-up;Horizontal;Knowledge inflows;Manager-level;Top-down

On the Evolution of Trust, Distrust, and Formal Coordination and Control in Interorganizational Relationships: Towards an Integrative Framework

In this article, we discuss the evolution of trust, distrust, and formal coordination and control in interorganizational relationships. We suggest that the degrees to which managers trust and distrust their partners during initial stages of cooperation leave strong imprints on the development of these relationships in later stages of collaboration. This derives from the impact of trust and distrust on: (1) formal coordination and control; (2) interorganizational performance; and (3) the interpretations that managers attribute to the behavior of their partners. Collectively, our arguments give rise to a conceptual framework, which indicates that there is a high propensity for interorganizational relationships to develop along vicious or virtuous cycles. By integrating and reconciling previous work on the trust-control nexus, and by emphasizing the dynamics associated with it, the article contributes to a more comprehensive and refined understanding of the evolution of interorganizational cooperation.evolution;trust;distrust;formal coordination;interorganizational relationship;formal control