How Process Management affects Exploration and Exploitation

Introduction :
Abernathy (1978) described the productivity with organizational flexibility and capability. Teece et al. (1997) believed that only when firms integrate their current and new core competencies, the performance will gain competitive advantage in both short and long run. Ishikawa (1985) defined process management as a system of interlinked processes, involves concerted efforts to map, improven and adhere to organizational processes. And total quality management (TQM) became popular since 1980s (Hackman and Wageman, 1995). And according to Harrington et al. (1997), process management practices have been the governance tool to powerful organizations. However, there lacks the empirical researches about institutional influence, and assessments of outcomes after having process management (Ittner, 1997). Benner and Tushman (2002) argued Abernathys productivity dilemma, and proposed that the influence to technological and organizational innovation by process management is negative. Structure : With Abernaths productivity dilemma as the beginning, the authors found that previous process studies have heavily stressed on quality management: Total Quality Management, Malcolm Baldrige National Quality Award, the ISO series 9000, and Six Sigma programs Followed by the background introduction of the ideology and reality of process management, the authors critically cited the comparison of academic requirements and benefits from applying process management, with empirical evidences. After exploring the relations between process management and technology innovation, the classification of innovation s types, and how process management influence innovation, have been introduced by a proposed model. The final part is the explanation about future studies, which could be built on the contributions and implications from this paper.

Key concepts:
Exploration and Exploitation Exploratory units base on experiments with small volume outcomes, whether wins or losses (Sitkin, 1992). In contrast, exploitation units are successful by increased organizational efficiency, with the cost and variability reduction. Adler et al. (1999) believed that exploration and exploitation activities could not conducted simultaneously. However, Bradach et al. (1997) argued it with the exemplification called ambidextrous or dual organization. Lawrence and Lorsch (1967) stated these organizations as composed of highly differentiated and exploitation units, loose and tight coupling with subunits, and centralized and decentralized focused-needs. There are two extreme environment stunt explorative innovations. To Gavetti and Levinthal (2000), when the strategic integration is too low, short term but marked effect is driven by exploitation. Nevertheless, when the firms integration stays at the extreme high level, the dynamic stream of exploration would also be dampened. Technology Cycles Abernathy and Utterback (1978) first proposed the alternated environments as a cycle: firms initially introduce the rapid

How Process Management affects Exploration and Exploitation

innovation to outstand in the industry; after a dominant technology emerging, the incremental refinements of these dominant technology shift to play as the major role. And the incremental exploitation will be central, until outside firms create the discontinuous new technologies (Benner and Tushman, 2003).

Main Propositions:
Benner and Tushman (2003) have developed eleven propositions in a diagram to illustrate the relation between process management and innovation.

Source: Bebber and Tushman (2003)

Proposition one: Unless the firm underperform, process managers would not change the organizations out of their existing trajectory (Kearns and Nadler, 1992). They prefer improving efficiency and emphasize on incremental innovation, by adhering the best practices with repeating practices. Proposition two: Process managements promote innovation benefit d for existing customers. Cole (1998), Garvin e (1988) and other scholars found that organizational improvements and synchronization efforts are established on the results from customer satisfaction investigation. Thus the senior managers make decisions and control the firms with meeting existing customers needs (Winter, 1994). Proposition three, four and five: the more process management practices, the less architectural, rapid innovation, and new customer segmented. Refer to the statistics, process managements are promoted to repeat and refine the succeed activities to satisfy existing consumers, rather than carrying out the vague and difficult-to-measure exploration to attract potential customer sets and market segments.

How Process Management affects Exploration and Exploitation

Proposition six: the ambidextrous organizations manage the exploitative and explorative innovation in a balance. Ambidextrous firms allow differentiated units and exploration to impel process management. Proposition seven and eight: in the stable environment, the more process management practices, the better organizational performance and responsiveness will appear. Ittner and Larcker (1997) stated that process management improve customer satisfaction rapidly, reduce waste and costs, and hence strengthen efficiency. Proposition nine and ten: the process management does not perform well during the turbulent time. Daft and Weick (1984) pointed out the importance of simultaneous diversification in firms, within the uncertain period and environment. However, organizations always delay to receive or react these turbulent changes (Henderson, 1993). To Repenning (1999), process management introduces the managerial control and bureaucratic procedures cycle, which increase rapid exploitative innovation and efficiency, but restricts and resists radical change. Proposition eleven: the ambidextrous organizations could increase receptiveness and performance during the eras of stable period, but have no effort in the uncertainty or chaotic environment.

Outcomes of this paper :

Firstly, the changeable condition influences the organizational conduciveness by process management. When the environment is turbulent, organizational internal resources have more resistances with architectural and radical change. While the stable or incremental change for incremental and innovation organizations, has made the process management more effective. Secondly, process management relies on the current and short run requirements to enhance their effectiveness. However, unless organizations could manage both exploitative and explorative demands in short and long run, they will not compete in the market successfully. According to Benner and Tushman (2003), ambidextrous organizations have balanced these paradoxical demands, and gained benefits from process control and architectural restructure. Thirdly, from the research, authors found that senior managers majorly participate in innovation, since the organizational innovations are funded on their managing capabilities.

Guidance of Future Research

Benner and Tushman (2003) suggested that future study should integrate different perspectives to measure how to increase organizational benefits through those approaches, rather than pure quality improvement. Regarding to the open-time and scope of organizations, further research should distinguish the adoptive differences among small start-ups, and large experienced firms. Although the propositions cover all types and sizes of firms, the former ones have no time to plan the exploratory innovation. Furthermore the integrated perspectives from research and theory in process control, firms and strategy are suggested to understand the relations between process management and or ganizational performance.

Conclusion :
In reality, the managers could not ignore the power from institutions, which have pressured firms to implement process management without considering the age or size. Therefore, when and where to utilize process management need to concern carefully for managers (Benner and Tushman, 2003).

How Process Management affects Exploration and Exploitation

In addition, process management limits the dynamic capabilities more than literature-statement. And the ambidextrous organizations and heterogeneous senior managers could set the equilibrium of gaining benefits and reducing damage from process activities (Benner and Tushman, 2003).

How Process Management affects Exploration and Exploitation

Reference :
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How Process Management affects Exploration and Exploitation

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