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T1: Strategy (Eisenhardt (2010); Balancing Efficiency and Flexibility in…

- - - - the underlying individual-level and group level
        actions that shape strategy, organization, and, more broadly, dynamic capabilities, and lead to the emergence of superior organization-level performance
    - - on one hand, organizations have to be FLEXIBLE to to adjust fluidly to unanticipated situations, On the other hand, organizations also need to EFFICIENT to gain traction, create direction, and avoid mistakes. Thus high performance in dynamic environments relies on resolution of these fundamental tensions between flexibility and efficiency in the organization by the leaders.
        
        Approaches to solve this tension
        
        AMBIDEXTERITY
        
        efficiency and flexibility are conflicting that requitre contradictory choices and mutually exclusive solutions that support either efficiency or flexibility
        
        methods
        
        spatial differentiation - organizational spin-outs; small decentralized units focused on flexible exploration are physically separated from larger centrally organized organization focused on exploitation
        
        the isolated units are protected from contamination of each others activities, culture and cognitive frame
        
        Temporal differentiation; oscillation of units between efficient and flexible structures
        
        Toyota production system switched between predictable tasks situated in formal structures designed for efficiency and novel tasks situated in infor mal structures designed for flexibility. Such switching helped them to improve focus and minimize confusion.
        
        regardless whether ambidexterity in spatial or temporal ; senior executives ultimately must integrate the contradictory agendas of efficiency and flexibility through mechanisms such as f.e. contingent awards for senior teams and education.
        
        SEMI-STRUCTURES; embraces efficiency and flexibility at the same tim = constant balancing of these 2 spheres
        
        methods =all provide some structure toguide actions (efficiency) and leave space for real-life adjustments of actions in response to events (flexibility)
        
        modular business unit structures
        
        strategic alliance networks
        
        enables leaders to improve competence i existing domains thereby ensuring current viability while simultaneously generating novel resources that will be needed in future success
        
        balancing efficiency and flexibility is depended on environment ; the more dynamic the more flexibility is needed
        
        heuristics-based strategic process
        
        AMBIDESXTERITY and SEMISTRUCTURE converge on 3 things
        
        the more dynamic the environment the more flexibility is necesseary
        
        devoet significant attention to managing the cognitive contradiction inherent in the tension between efficiency and flexibility.
        
        leaders should balance flexibility and efficiency
        
        There are several issues
        
        THE ISSUES
        
        the argument for balancing efficiency and flexibility does not account for the multidimensional of the environment such as ambiguity and unpredictability that may alter the acuity if the tension between opposing demands of efficiency and flexibility. is it more critical to balance between efficiency and flexibility in highly ambiguous versus highly unpredictable environment,
        
        the argument underlying balancing efficiency and flexibility acknowledges the cognitive contradiction inherent in this tension but it neglects how this contradiction is resolved beyond the dictum to hold dual conflicting solutions simultaneously; Although we argue that balancing efficiency and flexibility is at the core of the microfoundations of performance in dynamic environments, we note that a lack of precision about structure, environment, and cognition provides an opportunity to elaborate how leaders achieve this balance.
        
        the argument for balancing efficiency and flexibility does not account for the tendency of organizations to become more structured as they age and grow
      - Upsetting Structure: Efficiency Drift and Unbalancing to Balance
        
        structure = defined here as simply constraint on action. it shaped oth efficiency and flexibility, ut in opposite directions = more structure means more efficiency and less flexibility
        
        Structure guides behaviors, and so more structure improves the reliability of actions, speed, and overall efficiency. Conversely, less structure provides greater latitude to take unanticipated actions in response to actual situations.
        
        moderate structure balances between the competing demands for efficiency and flexibility and thus is likely to be high performing. Empirical support for relating moderate structure with high performance exists in several literatures
        
        high flexibility vs high efficiency drawbacks
        
        organizations that are overstructured may be optimized for efficiency but underperform because they either miss or cannot adapt to new opportunities. (Organizations are usually biased to be overstructured that understructured)
        
        organizations that are understructured may be optimized for flexibility but underperform because they are unable to maintain a consistent strategy for capturing a stream of high-value opportunities
        
        Unbalancing towaqrds flexibility
        
        3 main methods
        
        simplification cycling
        
        Extant theory argues that, once created, routines are increasingly shaped by accumulating experiences and often become more elaborated, with more and more detailed action steps to accommodate the implications of new experiences. some executives actively limit this tendency toward the elaboration of structure. That is, they use simplification cycling whereby they add to the structure as suggested by their new experiences, but they also purposefully pare back the structure. Thus, they go through cycles of adding and then eliminating structure rather than continually adding more details to cope with an increasing number of possible contingencies
        
        flexibility-injecting structures
        
        such as temporary assignments, prototyping rather than planning, alliances rather than relying solely on internal organizational activities, and redundant organizational units
        
        heuristics-based processess
        
        using heuristics to shape key strategic processes (e.g., alliance, acquisition, internationalization, and product development) that are at the heart of dynamic capabilities. Heuristics are rules of thumb that provide shortcuts in problem solving. Heuristics emerge as individuals adjust to problem-solving situations in which there is limited time and information. leaders develop “simple rules strategies” that consist of heuristics for capturing opportunities that flow in key strategic processes like acquisitions and alliances. Such strategies are effective because they adapt to the particular information and available time in real dynamic environments.
        
        heuristics provide some common guidance for a range of roughly similar problems (e.g., a flow of heterogeneous acquisition opportunities) but provide only some details and thus favor flexibility.
        
        In summary, to balance between efficiency and flexibility effectively, leaders have to compensate for the natural drift of organizations toward efficiency. To counter this drift and effectively balance efficiency and flexibility, leaders actively unbalance in favor of flexibility by (1) heuristics-based, “simple rules” processes that allow improvisation; (2) simplification cycling to update structure for new experiences without increasing it; and (3) flexibility-injecting structures such prototypes and probes. These three mechanisms add detail to our understanding of how leaders balance efficiency and flexibility by emphasizing how to favor flexibility to counter the tendency to structure.
        
        Unpackng Evronments: Richer dimensions and Multiple Realities
        
        Both the ambidexterity and semi-structures views argue that the optimal structure for balancing efficiency and flexibility diminishes as environments become more dynamic; emphisized for example by contingecy theory that says that structure has to be more flexible the more the environment is dynamic. Same in strategy and sociology literature. The stronger the ties the more eficiency. The weaker the ties the higher performance in dynamic environments.
        
        shortcoming of the argument ; Contingency theory neglects multidimensionality of environmental dynamism; dynamism varies on several dimensions such as ambiguity and predictability - and these facets might have an important impact on efficiency-flexibility balancing.
        
        FOR EXAMPLE: Balancing might be easy or even redundant in highly ambiguous environments (ambiguous environment defined as one where there is lack of clarity on what are the central features of opportunities)
        
        research shows that in such environment difference between structures is negligable.
        
        implication; instead of shaping the structure maybe shape the environment - so it becomes more ambiguous. It is a good strategy for novice/unskilled entrepreneurs as these environments are more forgiving. The highly skilled executives should be in well defined environments so they can use their excellent balancing skills.
        
        Opposite is for highly unpredictable environments ; the balancing is of key immportance
        
        Because unpredictable environments are ones where executives cannot anticipate effectively what will occur, they cannot embed much structure to match the environment. There is little pattern to match. So to capture at least some opportunities, executives rely on limited structure with flexible adjustments in real time. Hence, the optimal structure diminishes, but with so little structure, improvised action requires extensive attention to figure out what to do, and it often results in errors that waste time. These attention and time demands are likely to limit the number of opportunities that can be captured. As a result, the relationship between structure and performance in highly unpredictable environments narrows to a punishing inverted V such that there is an extreme trade-off between efficiency and flexibility
        
        Another key insight ; working in multiple environments. - the more environments the more ambiguity
        
        Cognition: Expertese and the Psychological Foundations of balance
        
        we offer the insight that executives can also rely on single, cognitively sophisticated solutions. Therefore, whereas extant theory advocates dual solutions for balancing efficiency and flexibility, we propose solitary solutions to achieve this balance.
        
        abstraction = abstract thinking helps to create a unified understanding of seemingly diverse experiences. Specifically, greater abstraction can reveal similarities across situations that superficially appear different and yet also create room for flexible action within that similar understanding that is nonetheless grounded in the specific context. The former enables some degree of efficiency across the organization, and the latter takes advantage of unexpected events “on the fly.” more abstract = less specific
        
        Cognitive variety = diversity of mental templates for problem solving that exist in an organization
        
        third cognitive solution for achieving the efficiency– flexibility duality is interruption. Interruption enables flexibility because it creates a pause in the flow of activity that can trigger reassessment and change of direction. Yet interruption simultaneously allows for efficiency because it also enables leaders to avoid wasting time on inappropriate paths.
        
        PAGE 9 = good sumary table