Dynamic Decision Making

r Academy of Management Journal2015, Vol. 1015, No. 1, 58–89.http://dx.doi.org/10.5465/AMJ.2011.0932

DYNAMIC DECISION MAKING: A MODEL OF SENIORLEADERS MANAGING STRATEGIC PARADOXES

WENDY K. SMITHUniversity of Delaware

Senior leaders increasingly embed paradoxes into their organization’s strategy, butstruggle tomanage them effectively. To better understand how they do so, I compared in-depth qualitative data from six top management teams exploring and exploiting si-multaneously. The results informed a model of dynamic decision making in whichstrategic paradoxes can be effectively engaged. The details of this dynamic decision-making model extend and complicate our understanding of managing paradoxesby depicting dilemmas and paradoxes as interwoven, explicating a consistentlyinconsistent pattern of addressing tensions, and framing both differentiating andintegrating practices as necessary for engaging paradox.

The senior leaders say it is a bitch to manage thesetwo types of businesses. It takes a great deal of time,and they know there will be great outcomes, but theywill not see them for 12–24 months. They say it’s likebrushing your teeth—you’ve got to do it every night,but you only know when you go to the dentistwhether it was worth the effort.

(Generalmanager, IT Services strategic business unit)

Organizations are rife with competing demands.At an organization’s highest level, senior leaders facesuch pressures as exploring and exploiting (March1991), integrating globally and adapting locally(Marquis & Battilana, 2009), or maximizing profitsand improving social welfare (Margolis & Walsh,2003). Early organizational scholars acknowledgedthese competing strategic demands, but argued thatsuccess depended on leaders making choices and

maintaining a consistent commitment to these deci-sions (Barnard, 1938; Thompson, 1967). Now, in thecontext of more complex and global environments,organizations and their leaders face pressures to ad-dress multiple, competing strategic demands simul-taneously (Jarzabkowski & Sillince, 2007; Kraatz &Block, 2008; Smith, Binns, & Tushman, 2010). Ratherthan choosing between alternatives, long-term per-formance depends on engaging them both. Yet, as theepigraph suggests, doing so challenges and frustratessenior leaders.

Paradox theory offers insight into these challenges(Quinn & Cameron, 1988; Smith & Lewis, 2011).Paradoxes denote tensions that coexist and persistover time, posing competing demands that requireongoing responses rather than one-time resolutions(Lewis, 2000). Studies describe approaches to man-aging paradoxes in general that include acceptingparadoxes as vital and learning towork through them(Luscher & Lewis, 2008), accommodating contra-dictions into novel synergies (Eisenhardt & Westcott,1988; Rothenberg, 1979), or differentiating and in-tegrating to understand alternatives (Andriopoulos& Lewis, 2009; Smith & Tushman, 2005). More re-cently, Smith and Lewis (2011) have theorized amodel incorporating these various approaches thatinvolves managing paradox by accepting tensionsas inherent, and shifting between choosing and ac-commodating alternatives over time. However, westill know little about the specific nature and man-agement of strategic paradoxes, which—drawingfrom Lewis (2000)—I define as contradictory, yet in-terrelated, demands embedded in an organization’sgoals. Managing strategic paradoxes is particularlychallenging for top management teams, because even

Thank you to Kevin Corley, associate editor, and threeanonymous reviewers for their constructive feedback andguidance through the review process. I am deeply gratefulto Michael Tushman for his generous, ongoing support ofthis study. I also appreciate advice and feedback on earlierdrafts of this manuscript from Costas Andriopoulos,Marya Besharov, Andy Binns, Amanda Cowan, ShoshanaDobrow, Amy Edmondson, Richard Hackman, Paula Jar-zabkowski, Adam Kleinbaum, Marianne Lewis, SallyMaitlis, Michael Posner, and Heather Smith, as well as thegenerative conversations had with Joshua Margolis, AndyMolinksy, Mike Pratt, Ann Langley, members of the Eu-ropean Group for Organizational Studies (EGOS) “Strat-egy as Practice” subtrack, and members of the MayMeaning Meeting. Thank you to Anthony Alagbile andJoseph Szczepanski for research assistance. Finally, I ap-preciate the Fortune 500 senior leaders who generouslyshared with me their time and experiences.

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as they might seek to maximize both strategies si-multaneously, these leaders face ongoing pressureto make clear and consistent decisions betweenalternative strategies to allocate resources and toprovide guidance for the rest of the organization.How senior leaders address strategic paradoxescritically impacts an organization’s success, yetremains relatively unexamined.

This gap in the literature motivated the study’skey research question: How do senior leaders sus-tain strategic paradoxes? To investigate this question,I compared in-depth data from the top manage-ment teams of six strategic business units as theymade decisions in response to strategic paradoxes—specifically, exploring and exploiting simultaneously(Raisch, Birkinshaw, Probst, & Tushman, 2009;Smith & Tushman, 2005). Integrating insights fromthese data with existing literature informed a modelof dynamic decision making that depicts how topmanagement teams engage strategic paradoxesthrough a pattern of iteratively choosing betweendomains over time. The details of this model ad-vance and complicate our understanding of thenature and management of paradox by depictingdilemmas and paradoxes as interwoven, under-standing paradoxical management as a pattern ofdecisions over time rather than reactions to in-dividual issues, and describing the critical role ofboth differentiating and integrating practices to-gether to manage paradox.

NATURE AND MANAGEMENT OFORGANIZATIONAL PARADOXES

Paradoxes are “contradictory yet interrelated el-ements that exist simultaneously and persist overtime” (Smith & Lewis, 2011: 382).1 Scholars typi-cally distinguish paradoxes from dilemmas. Whileparadoxes persist and are impervious to resolution,

dilemmas involve tradeoffs that are resolved with“either/or” decisions (Cameron &Quinn, 1988; Clegg,2002). Strategic paradoxes describe organization-level performing tensions that “stem from the plural-ity of stakeholders and result in competing strategiesand goals” (Smith & Lewis, 2011: 384). Even asthere are multiple types of paradox that exist atmultiple levels of analysis, strategic paradoxes areparticularly prevalent, challenging, and consequen-tial to an organization’s fate.

Strategic paradoxes pervade organizations, in-creasingly garnering attention from both practi-tioners and scholars. Research is replete withexamples of strategic paradoxes, including tensionsbetween global integration and local adaptation, fi-nancial profitability and social missions, or highcommitment and high performance (i.e., Beer, 2009;Clegg, 2002; Gittell, 2004; Nonaka & Toyama, 2002).Moreover, as the complexity, plurality, and com-petitiveness of environments grows, senior leadersexperience increased pressures to simultaneouslyembed multiple competing demands within organ-izations (Besharov & Smith, 2014; Greenwood,Raynard, Kodeih, Micelotta, & Lounsbury, 2011;Kraatz & Block, 2008).

In this study, I focus on exploring and exploitingas a key example of strategic paradoxes. As March(1991: 101) noted in his early conceptualization,demands to explore and exploit exist across organ-izations and remain “a central concern of studiesof adaptive processes.” Exploring introduces novelinnovations to achieve long-term sustainability,while exploiting finds operational efficiencies inexisting products for short-term performance. Am-bidexterity studies investigate how organizationsexplore and exploit simultaneously (Raisch &Birkinshaw, 2008; Tushman & O’Reilly, 1996). Yetthese strategic demands are paradoxical, involvingcontradictory, self-referential, and persistent ten-sions (Hughes & Brecht, 1975). They are contradic-tory because they are associated with inconsistentsenior leadership demographics (Beckman, 2006), cul-tures (Ghoshal & Bartlett, 1994), processes (Benner &Tushman, 2003), and knowledge management prac-tices (Sheremata, 2000). Efforts to explore and ex-ploit are also self-referential. Exploiting involvesstability and efficiency that effectively enable ex-ploration. Exploring engenders change and renewal,reducing risk and improving execution for exploita-tion (Farjoun, 2010). Finally, these tensions persist,because engaging one domain triggers demands onthe other and fuels cycles over time (Andriopoulos &Lewis, 2009).

1 Researchers use various terms to describe opposi-tional elements, including “paradox,” “dualities,” and“dialectics” (i.e., Farjoun, 2010; Seo & Creed, 2002; Smith& Graetz, 2006). A key distinction lies in the persistentnature of tensions. Dialectics and dualities imply re-solving tensions by identifying a novel synergy. In con-trast, paradoxical tensions persist and cannot be resolved(see Smith & Lewis, 2011). Conceptual confusion betweenthese constructs remains, and scholars often use theseterms interchangeably. Following other ambidexteritystudies (i.e., Andriopoulos & Lewis, 2009; Raisch & Bir-kinshaw, 2008; Smith & Tushman, 2005), I adopt the term“paradox” to highlight the simultaneity and persistence oftensions between exploring and exploiting.

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Effectively managing strategic paradoxes conse-quentially impacts an organization’s fate (Cameron,1986; Jay, 2013; Smith, Lewis, & Tushman, 2011).In particular, ambidexterity studies emphasize thatlong-term organizational performance depends onsuccessfully exploring and exploiting simulta-neously (He &Wong, 2004; Tushman, Smith, Wood,Westerman, & O’Reilly, 2010). Senior leaders playa critical role: Their actions, rhetoric, and decisionsin response to tensions create organizational contexts(Jarzabkowski, 2008), influence middle-managerresponses (Floyd & Lane, 2000), and ultimately im-pact performance (He & Wong, 2004). Yet simulta-neously engaging paradoxical strategies challengesand frustrates senior leaders. Even as paradoxes eluderesolution, senior leaders frequently face pressuresto make decisions in order for the organization tomove forward. Moreover, leaders experience bothinternal and external pressure for consistency, ratherthan encouragement to embrace inconsistent strat-egies simultaneously. Internally, commitments tomultiple strategic goals can foster ambivalenceamong employees (Merton & Barber, 1976; Pradies &Pratt, 2010) or contestation between subgroups withdistinct alignments (Glynn, 2000). These conflictsbecome particularly intractable when the goals re-inforce competing identity claims (Besharov, 2013;Fiol, Pratt, & O’Connor, 2009). Efforts to manageambiguity and conflict can result in choosing onestrategic alternative (Thornton, 2002). Leaders furtherface inertial pressures, in which structures (Hen-derson & Clark, 1990), cognitive frames (Tripsas &Gavetti, 2000), routines (Gilbert, 2005), and compe-tencies (Leonard-Barton, 1992; Tripsas, 2009) sup-port existing products over innovations. In addition,embedding conflicting demands creates legitimacychallenges with divergent external stakeholders(Kraatz & Block, 2008). These pressures to minimizeinternal conflict and to address external legitimacydrive leaders to choose a single strategy.

Paradox research depicts various approaches formanaging these tensions. First, research stressesrefraining tensions to bring to the surface theirparadoxical nature. Paradoxes defy rational, linearlogic, and in so doing create uncertainty and am-biguity that are both emotionally and cognitivelythreatening (Lewis, 2000). Individuals often re-spond defensively, repressing paradoxes by fram-ing tensions as dilemmas and “either/or” options,and ultimately choosing one alternative (Vince &Broussine, 1996). These choices can fuel viciouscycles as emphasizing one option resurfaces de-mand for the other and thwarts the creative energy

embedded within (Lewis, 2000; Sundaramurthy &Lewis, 2003). Individuals and groups can ulti-mately be paralyzed by a choice between alterna-tives (Frankl, 1960; Smith & Berg, 1987). To avoidthese paralyzing cycles, scholars emphasize para-doxical thinking (Smith & Tushman, 2005), refrain-ing the tensions of “either/or” as the possibilities of“both/and” (Bartunek, 1988).

Studies also point to specific management ap-proaches to responding to paradoxes. Recognizingthat paradoxes defy resolution, scholars depictstrategies for managing competing demands simul-taneously that include (1) accepting, (2) accommo-dating, and (3) differentiating/integrating. Acceptinginvolves “learning to live with the paradox” (Lewis,2000: 764). Doing so includes “working through” theparadox to recognize and embrace the conflictingtensions (Murnighan & Conlon, 1991; Smith & Berg,1987). Luscher and Lewis (2008) describe developinga “workable certainty”—a negotiated understandingto move forward without resolutions. To do so, theystress the value of paradoxical inquiry as a practice tosurface tensions and to enable sensemaking. Othersemphasize using communication or humor to em-brace paradox (Hatch, 1997; Hatch & Erhlich, 1993;Jarzabkowski & Sillince, 2007).

Accommodating involves defining a novel, crea-tive synergy that addresses both oppositional ele-ments together. Rothenberg (1979) suggested thatgeniuses such as Mozart, Einstein, and Picasso de-veloped breakthrough ideas by cognitively juxta-posing contradictions and seeking a solution toaccommodate both alternatives—a capability thathe labeled “Janusian thinking.” Eisenhardt andWestcott (1988) describe how adopting a paradoxi-cal frame enabled Toyota’s senior leaders to gener-ate new strategic solutions—e.g., juxtaposing goalsto carry no inventory while having access to anynecessary component at the right time, which resul-ted in their “just in time” processes.

Other research identifies differentiating and in-tegrating as complementary approaches for address-ing paradox. Building on the early conceptualizationsof Lawrence and Lorsch (1967), these studies de-scribe differentiation and integration in organiza-tional designs (Tushman &O’Reilly, 1996), leadershipcognition (Smith & Tushman, 2005), or organiza-tional practices (Andriopoulos & Lewis, 2009). Dif-ferentiating involves separating distinct elementsand honoring the unique aspects of each, while in-tegrating stresses synergies and linkages (Smith &Tushman, 2005). For example, Andriopoulos andLewis (2009) suggest differentiating practices that

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include building diversified portfolios, debatingproject demands, and temporally and spatiallysplitting practices, and integrating practices thatinclude cultivating a paradoxical vision, purpose-fully improvising, and identifying integrative roles.More recent studies proposed attending to variousapproaches over time. Jarzabkowski, Le, and Van deVen (2013) depict cycles of tensions and responses.As individuals responded to paradoxical tensions,new tensions emerged, fueling different responses.Smith and Lewis (2011) theorized a “dynamic equi-librium” model that proposes managing tensions byaccepting inherent paradoxes, then vacillating be-tween choosing and accommodating strategies.

Taken together, these studies posit strategic par-adoxes as increasingly prevalent, challenging, andconsequential. Yet while research offers approachesto managing paradox in general, we still know littleabout how senior leaders address the intensedemands of strategic paradoxes under which theyseek to engage competing demands simultaneously,but face pressures to make decisions in response tocritical issues. This study therefore seeks to expandand build upon our understanding of the nature andmanagement of paradoxes, by exploring the centralresearch question: How do senior leaders makedecisions that can sustain commitments to strategicparadoxes?

METHODS

I compared six case studies to investigate howsenior leaders made decisions that enabled them toexplore and exploit simultaneously (Eisenhardt &Graebner, 2007; Yin, 1984). I observed each of

these cases for a year. Analyzing in-depth data overthe course of a year allowed me to generate novelinsights into the patterns of decision making in eachcase. In addition, comparing across six distinct casessurfaced differential patterns of decision making.

Research Context and Case Selection

I observed top management teams of six strategicbusiness units from one Fortune 500 corporation.Following ambidexterity research (i.e., Jansen,Simsek, & Cao, 2012), I focused on such units be-cause industry competition often occurs at this level(Porter, 1985), and the leaders of the strategic busi-ness units have responsibility for exploratory andexploitative strategic domains (Gatignon, Tushman,Smith, & Anderson, 2002). In addition, studyingmultiple strategic business units in one organizationallowed me to compare cases within the same cor-porate context (Gibson & Birkinshaw, 2004) and tominimize extraneous variability (Eisenhardt, 1989).This Fortune 500 firm adopted a strategy requir-ing its strategic business units to “develop productsacross multiple horizons” (see Baghai, Coley, &White, 2000), resulting in a broad population ofstrategic business units. Following existing research(Finkelstein & Hambrick, 1996), I defined the topmanagement team as the general manager and hisor her direct reports. Table 1 summarizes thesesix cases.

I worked with an executive in corporate stra-tegy to sample cases theoretically based on threecriteria. First, each strategic business unit made acommitment in its annual budget plan to exploitand explore. Following extant research, I defined

TABLE 1Case Selection

Case Existing Products InnovationsAge(yrs) Industry

Existing ProductPerformance

Existing Product StrategicCommitment

Innovation StrategicCommitment

Software 1 Databasesoftware

Web-based databasesoftware

18 Software Growth #2 inmarket

#1 in market Increaserevenue 35%

#1 in market Three-digitgrowth in 3 years

Software 2 Enterprisesoftware

Web-basedenterprisesoftware

14 Software Stable #1 inmarket

#1 in market Stablerevenue

#1 in market Three-digitgrowth in 5 years

IT Services Strategicoutsourcing;businessintegration

Applicationmanagementservices

10 IT; Consultingservices

Decline #1 inmarket


#1 in market $1bn in2 years

Life Sciences Back-officetechnologysolutions

Life scienceresearch anddeliverytechnologysolutions

10 Hardware Stable #2 inmarket

#1 in marke Stablerevenue


Semiconductor ASIC chips Transport andnetwork chips

8 Hardware Decline #2 inmarket



Software 3 Collaborationsoftware

Web-basedcollaboration tools

20 Software Decline #2 inmarket


#1/#2 in market $0.5bnin 2 years

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“exploiting” as incrementally improving an existingproduct’s technology and/or marketing strategiesto increase efficiencies to the same target market,and “exploring” as developing and commercializingnonincremental innovations (Gatignon et al., 2002;Tushman & Smith, 2002).

Second, I sought to minimize variance in thecontexts of the strategic business units. All six stra-tegic business units were in high-tech industries.Their existing products had been in the marketplacebetween eight and 20 years, and had earned betweenUS$1 billion and $3.7 billion in revenues. Innova-tions were introduced to the market less than a yearprior to the study.

Third, to expedite data collection, I includedthree real-time cases and three retrospective cases(Leonard-Barton, 1990). To minimize bias fromthese different types of data, I focused interviewson specific events, corroborated across multipledata sources, and asked key informants to assesscomprehensiveness (Eisenhardt & Graebner, 2007).The time frame did not seem to impact the find-ings, with both real-time and retrospective casesdemonstrating the differences that emerge from mydata analysis.

Data Collection

Data collection lasted for more than two years,including interviews, observations, and archivalmaterials (Eisenhardt, 1989; Jick, 1979). Table 2summarizes the data.

Interviews. I conducted 96 interviews with 65distinct informants. To triangulate insights from dif-ferent sources, I interviewed informants at variouslevels in the company, including (1) the strategicbusiness unit’s general manager, (2) the strategic

business unit senior leaders, (3) division managers,(4) internal organizational consultants working withthe unit, and (5) corporate executives (Eisenhardt,1989). I first interviewed the general managers, andthey identified additional interviewees. Interviewslasted between 45 minutes and two hours. Guidedby extant research, I started with structured inter-viewing to understand the strategic business unit’sstrategic context, exploratory products or services,and exploitative products or services. I asked in-formants to describe the challenges of managingmultiple strategic domains and how they respondedto these challenges (Miles & Huberman, 1994). Aseach interview progressed, I began focusing on thenature of specific strategic challenges and issues,and how the informant responded. I adopted a“courtroom” style of interviewing, pushing for con-crete illustrations to increase the data’s trust-worthiness (Eisenhardt & Graebner, 2007). Becauseof the strategic and interpersonal sensitivity of theissues, I did not record the interviews, but took ex-tensive notes, which conveyed trust and motivatedaccuracy (Miller, Cardinal, & Glick, 1997). I recor-ded verbatim quotes and typed the notes up as soonas possible (Miles & Huberman, 1994). To increasedata reliability, an internal corporate organizationalconsultant accompanied me for 10% of the inter-views. The similarities in our independent notesreinforce confidence in the data quality.

Observation. I observed 16 senior leadershipmeetings, including monthly board meetings andspecial offsite strategy sessions. I sat in the back ofthe room for these meetings, taking notes about theircontent and processes, including verbatim quotes,and typed up these notes as soon as possible. I spokewith executives during breaks to ask questions andto check my inferences. In the three real-time cases,

TABLE 2Data Collected

Interviews Meetings

Case Time Frame

StrategicBusinessUnit

GeneralManager

StrategicBusinessUnitSeniorLeaders

DivisionManager

InternalOrganizationConsultant

CorporateExecutives

TotalInterviews

TotalInterviewees

TotalMeetingsObserved Meeting Type

Software 1 Real time 2 5 1 1 9 7 2 Board meetingOffsite

Software 2 Retrospective 5 16 2 1 24 13 1 OffsiteIT Services Retrospective 2 7 1 1 11 9 1 OffsiteLife Sciences Real time 2 7 0 3 12 7 4 Board meeting

OffsiteSemiconductor Retrospective 3 10 1 0 14 11 1 Board meetingSoftware 3 Real time 2 16 1 1 20 14 7 Board meeting

6 6 4 OffsiteTotal 96 65 16


I observedmultiple meetings. In retrospective cases,I observed at least one meeting and used these datato support interview narratives.

Archival information. Forty archival documents—including internal strategic business unit documentssuch as business plans, strategic progress reports,andmeeting agendas, as well as information from thecompany websites and industry analyses—allowedme to triangulate my understanding of each stra-tegic business unit’s context, strategy, practices,and outcomes.

Data Analysis

I adopted analytical techniques to generate in-sights within each case and then compared acrosscases (Eisenhardt, 1989; Yin, 1984). I describe fourstages that systematically move from raw data totheoretical interpretations (Gioia, Corley, & Hamilton,2013). Even as I delineate stages, the process wasiterative to improve insights and generalizability(Langley, 1999; Locke, Golden-Biddle, & Feldman,2008). Table 3 summarizes the stages of the analyt-ical process.

Stage I: Develop thick descriptions. I developeda rich case study for each strategic business unit,which incorporated various types of data (Langley,1999) to describe the organizational context, ex-ploratory and exploitative strategies, and a chronol-ogy of senior leadership challenges and responses.I interspersed case writing with data collection,allowing insights and questions from the cases toinform future data collection (Yin, 1984). I sharedcases with key informants to assess reliability andcomprehensiveness.

Three critical insights emerged from the casestudies and guided my subsequent analyses. First,leaders identified a number of specific issues thatinvolved tensions between exploration and exploi-tation. They described the issues as complex, chal-lenging, and frustrating. This insight led me to focuson specific issues as a primary unit of analysis(Maitlis, 2005).

Second, these issues persisted over time. Asleaders made decisions on one issue, new issuesemerged. Informants experienced issues as “ongo-ing tensions” and said that they are “constantlygrappling.” This insight guided my focus on pat-terns of responses over time, rather than responsesto individual issues.

Finally, early insights suggested three differ-ent approaches to managing tensions between ex-ploration and exploitation—only exploring, only

exploiting, and both exploring and exploiting.These distinctions helped to guide future analyses,in which I systematically coded raw data to de-velop theoretical constructs (Gioia et al., 2013)and ultimately to verify the distinct approaches(Eisenhardt, 1989).

Stage II: Identify key issues. I identified specificissues between exploring and exploiting. To doso, I generated a list of emerging issues, which Idefined as conflicts facing senior leaders involv-ing both the existing product and the innovation.I included issues that fit four criteria. First, theissue was salient and challenging. Leaders de-scribed these issues using words such as “difficult,”“very hard,” “uncertain,” “unclear,” “challenging,”“tensions,” or “problem.” Second, the issue in-volved tensions between existing product and in-novation, and were not problems facing only oneproduct domain. Third, the senior leaders had re-sponsibility to address the issue. For example, I didnot include issues of leaders’ compensation thatrequired corporate policy changes. Finally, multi-ple informants raised an issue, ensuring its im-portance and salience.

I coded issues using short descriptions or in vivocodes. Grouping thematically and incorporatingexisting literature resulted in eight types of issue,which I clustered into three categories that emergedfrom the literature:

(1) resource allocation (i.e., Bower & Gilbert, 2005)including issues of allocating (a) financial re-sources, (b) human resources, such as engineersand sales people, and (c) time such as the seniorleaders’ time in meetings;

(2) organizational design (i.e., Nadler & Tushman,1992) including issues around (d) organizationalstructure, (e) processes, and (f) metrics; and

(3) product design (i.e., Gatignon et al., 2002) in-cluding issues around (g) product technology,and (h) target markets.

I returned to each case to ensure that I had cap-tured all of the issues, from which 47 issues resul-ted. To identify how leaders understood issues,I explored their descriptive words (Huff, 1990),which suggested two different experiences. Theirlanguage included words that indicated paradoxi-cal tensions, such as “tensions,” “yet,” “but,”“balance,” and “on one hand/on the other hand”(Andriopoulos & Lewis, 2009). They identified con-tradictions, both noting how they had to address themsimultaneously and recognizing that tensions per-sisted over time, impervious to resolution. Yet they

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also described issues as dilemmas, using languagesuch as “tradeoffs,” “choice,” “resolve,” and “either/or” (Smith & Lewis, 2011).

Stage III: Identify patterns of leadership prac-tices, leadership focus, and decisions. To in-vestigate my research question about how seniorleaders make decisions to sustain commitments tostrategic paradoxes, I read through the raw data,asking:How are senior leaders responding to issues?Three types of code emerged: (1) practices orleaders’ everyday activities (Feldman & Orlikowski,2011; Jarzabkowski, 2005); (2) decision contexts

describing how practices impacted the leaders’ un-derstanding of exploring and exploiting (Corley &Gioia, 2004; Huff, 1990); and (3) decisions. To codefor leaders’ practices and decision contexts, I readthrough the raw data and created in vivo codes orshort phrases for critical passages, which I clus-tered into meaningful groups. This process resul-ted in six themes describing leadership practicesand two themes describing the decision context.I shared these themes with two researchers notinvolved with this study, and used their feedbackto clarify and distinguish emergent themes. Noting

TABLE 3Data Analysis: Stages of Analytical Process

Stage Analytical Activities Output

1. Develop thick descriptions togenerate initial insights

1. Generate thick descriptions of each case c Six thick case studies, one for each SBU2. Share descriptions with informants to increase

reliability and comprehensiveness2. Identify key issues in each case 1. Generate a list of issues based on four criteria:

(a) salience; (b) tension between exploring andexploiting; (c) senior leaders’ span ofresponsibility; and (d) multiple informants

c 47 issues across all cases (approx. eightper case)

c Eight types of issues in three categories(resource allocation, organizationaldesign, product design)

c Two themes describing leaders’experience of issues

2. Code issues using in vivo codes or shortphrases

3. Cluster and incorporate literature to identifyeight types of issue in three categories

4. Return to raw data to confirm all instances ofissues

5. Identify language that leaders use to describetheir understanding of issues

3. Identify leadership practices,decision contexts, and decisions(a) Code data to elicit leadershippractices and decision contexts

1. Code data to identify responses to tensions(315 instances)

c Six leadership practices, aggregated intodimensions of differentiating andintegrating2. Cluster codes into meaningful groups (six

practices, two contexts) c Two themes of decision contexts3. Check coding reliability with external

researchers4. Incorporate existing literature to aggregate into

dimensions

(b) Classify decisions in responseto issues

1. Identify decisions in response to issues c Classification of decisions in response toeach tension2. Classify decisions as (a) supporting

exploration, (b) supporting exploitation, or (c)supporting both

(c) Aggregate each case overmultiple issues to define patternsover time

1. Create tables by case with responses to eachissue to describe patterns over time

c Three decision patterns: (1) exploringand exploiting (three cases), (2) onlyexploring (two cases), and (3) onlyexploiting (one case)

2. Code data to identify how leaders understanddecision patterns

c Two themes describing decision patternsto explore and exploit

4. Incorporate data and literature tobuild a theoretical model

1. Combine data on leadership practices, decisioncontexts, and decision patterns to describeoverall approaches

c Model of dynamic decision making tosustain strategic paradox

2. Integrate existing literature to inform an overallmodel of dynamic decision making


similarities and differences, I clustered the leader-ship practices into two dimensions. Adopting labelsfrom existing literature, I labeled these “differenti-ating” and “integrating” (Andriopoulos & Lewis,2009; Smith & Tushman, 2005). I further noted thedistinct context for the decision making, in whichthe leaders stressed either the distinct strategicdomains or the interconnections between domains.

I then identified leaders’ decisions in response toeach issue. For example, they reallocated resources,changed organizational structures, or reconsideredleaders’ roles and responsibilities. I also noted in-stances in which leaders did nothing in responseto critical issues (i.e., Greenwood & Hinings, 1993;Tversky & Shafir, 1992). I categorized decisionsbased on whether they supported exploration, ex-ploitation, or both. In the cases in which leadersmade no decisions, I coded these cases as eitherexploring or exploiting, depending on the nature ofthe status quo. For example, in one case, the seniorleaders noted that they needed to decide on orga-nizational design. The existing design benefitedonly the existing product and was limiting theinnovation’s success. Yet the leaders did nothingin response.

To understand how leaders attended to persistentissues, I identified patterns of responses over time.I created a table for each case, which listed leader-ship practices and decisions in response to eachspecific issue, and aggregated these for each strate-gic business unit (Miles & Huberman, 1994). Threedecision patterns emerged, supporting my initialinsight into the three different approaches to man-aging exploration and exploitation simultaneously.In three cases, leaders’ decisions shifted supportbetween the existing product and innovation, witha small number of decisions supporting bothdomains simultaneously. In the other cases, leaderssupported one domain while avoiding the other.Two cases only explored, while one case only ex-ploited. Based on my research question aiming tounderstand how senior leaders managed strategicparadoxes, I focused on the three cases that sup-ported both exploration and exploitation simulta-neously, using the other three for comparison.I returned to the data to investigate how leaders inthese three cases described their decisions. Usinga similar coding process to that already described,I identified two key themes. Leaders in thesecases described approaches to managing compet-ing demands as inconsistent, flexible, and dynamic.Following Smith and Lewis (2011), I label this pat-tern “consistently inconsistent.”

Stage IV: Incorporate findings to build a theo-retical model. I integrated data about leadershippractices, decision contexts, and decision patternsto describe overall approaches. Finally, I embeddedexisting theory to help inform relationships be-tween constructs. These data and literature resultin a model of dynamic decision making to managestrategic paradoxes. I shared the emergent modelwith two peer researchers to clarify theoreticalinsights.

Overall, I adopted prescribed methods for datacollection and analysis that sought to increase thetrustworthiness of the findings, including:

(1) a prolonged engagement with the research siteto become enmeshed in the context and data(Lincoln & Guba, 1985);

(2) multiple sources of data and multiple levels ofinformants to triangulate perspectives (Eisen-hardt, 1989; Jick, 1979);

(3) retrospective and real-time cases to expeditedata collection, while minimizing bias (Eisen-hardt & Graebner, 2007; Leonard-Barton, 1990);

(4) thick descriptions and informant feedback tocapture the rich context, and to ensure thequality and validity of interpretations (Langley,2007); and

(5) outside researchers reviewing the emergent con-structs and models to vet ideas, and to in creasethe reliability and validity of interpretations(Lincoln & Guba, 1985).

The output of these analyses describes a modelof dynamic decision making to manage strategicparadoxes.

FINDINGS

Three Approaches to Managing StrategicParadoxes

The top management teams in all six casescommitted to both exploratory and exploitativesuccess, but only three senior leadership teamssustained these commitments. In the other threecases, the senior leaders focused only on exploringor only on exploiting. In this section, I briefly de-scribe the three cases that only explored or onlyexploited to throw into sharp relief the remainingnarrative, which describes my findings that theother three cases could support both explorationand exploitation.

The “Life Sciences” and “Semiconductor” stra-tegic business units focused only on exploring, but

2015 65Smith

avoided or ignored the needs of the existing prod-uct. Life Sciences created IT services for the lifescience industry. Its existing business providedback-office hardware and software primarily forbig pharmaceutical companies. At the same time, itsnew business offered IT solutions for biologicaland medical research and delivery. Semiconductormade ASIC chips primarily for computing hardwareand was launching a new business developing chipsfor network technologies. In both strategic businessunits, the general managers focused predominantlyon developing the innovations, seeking to growthem quickly into billion-dollar businesses. To en-sure that they provided the resources for the inno-vation businesses to success and were not burdenedby the existing product, the managers created newsenior team roles with responsibilities for only theinnovation, held offsite meetings to ensure thesuccess of these businesses, and focused almost allof their monthly senior team agendas on the in-novation. I describe these practices as “differenti-ating”: They enable the senior leaders to distinguishthe innovation needs from those of the existingproduct. Doing so helped them to avoid inertialpressures that could keep them bound to the past.Yet they engaged in few practices that engaged theexisting product or linked the existing product withthe innovation. As the Life Sciences general man-ager noted: “I have gotten pressure from others toexpend the money on helping us shore up solutionsthat are more traditional conventional areas. It’s notvery difficult to say no… It’s not strategic, not wherethe puck is moving.” As a result, the strategic busi-ness unit spent no time focused on the existingproduct. The manager’s strategic decisions reflectthis pattern; all decisions made were in favor of theinnovation. One frustrated Life Science leader noted“[The senior team] is only focused on this futuristicstuff,” then asserted that he had nothing to sell to-day to achieve the revenue targets for the existingproduct. Similarly, Semiconductor’s vice presidentof business development said: “We don’t work onthe existing products. We are only looking for newopportunities.”

The “Software 3” strategic business unit pro-duced enterprise-wide collaboration software (e-mail,calendaring, etc.), while building new businessesfor online collaboration tools. To manage both ofthese strategic domains, the senior leaders engagedpractices linking the existing product to the in-novation. For example, they articulated an over-arching vision that encompassed both the existingproduct and innovation, and then promoted this

vision to the whole organization by speaking aboutit frequently, hanging signs on office walls, creat-ing wallpaper for each employees’ computer, etc.As one senior leader noted: “We get it that we aresupposed to be ambidextrous.” They also askedeach of the senior leaders to take responsibility forboth the existing product and innovation. Theystructured senior leadership meeting discussionsaround functional responsibilities, which meantthat they addressed issues associated with both theexisting product and the innovation together. I de-scribe these practices as “integrating”—practicesthat seek to create linkages and synergies betweenthe different strategic domains. Software 3 adoptedintegrating practices, but unlike Life Sciences orSemiconductor, none of its practices created dis-tinctions between the existing product and in-novation. As a result, inertia led the leadership tofocus all of their time, resources, and decisions onlyon the existing product. As one Software 3 leadersummarized: “We keep treating [the innovation] justlike the [existing product] and as a result do damageto the innovation.” Leaders reported feeling frus-trated and stalled.

Comparing these three cases with the three casesthat both explored and exploited revealed severalcritical differences around how the strategic busi-ness units manage exploration and exploitation.In particular, Life Sciences and Semiconductoradopted only differentiating practices, which wereassociated with only exploring. Software 3 adoptedonly integrating practices, which were associatedwith only exploiting. The other three cases engageboth differentiating and integrating practices,which were associated with supporting exploratoryand exploitative businesses. Table 4 highlights thiscomparison.

In the narrative that follows, I describe how theselast three cases adopted both differentiating andintegrating practices, and how these practices wereassociated with both exploration and exploitation.To support this narrative, I include a data structuredisplay (Figure 1), a data table supporting emergentconstructs (Table 5), and a list of key issues anddecisions for each of the three cases (Table 6). I thenintegrate these findings with existing literature tobuild an overall model of dynamic decision making(Figure 2).

Key Issues and Experienced Tensions

The “Software 1,” “Software 2,” and “IT Services”strategic business units all committed to both


explore and exploit, and by doing so raised criticaltensions between these different strategic domains.Softwares 1 and 2 were both growing existingbillion-dollar enterprise-wide software systems,while developing new software for online support.IT Services had several IT consulting businessesthat created long-term contracts allowing clients tooutsource their hardware servicing or to integratecorporate information technology systems, whilebuilding a new business that created shorter-termcontracts to manage software applications forclients.

Managing both existing businesses and innova-tions surfaced a number of competitive issues be-tween the two businesses. In particular, I categorizedthree types of issues.

(1) Resource allocation included competition forfinancial resources, human resources, and timeresources. For example, leaders grappled withhow to allocate engineering headcount betweenstrategic domains depending on short-term cli-ent needs or long-term demands to build thebusiness.

(2) Organizational design included differentialneeds for structure and leadership roles, pro-cesses, and metrics. For example, leadersdebated whether to create a new subunit forthe innovation and, if so, whether its leadershould be from inside the organization oroutside.

(3) Product design involved competition for thetechnological development or target markets ofthe existing product or innovation. For exam-ple, leaders discussed whether the innovationshould leverage technology and/or existingcustomers from the existing product.

Leaders experienced and described these compet-itive issues as both (1) “either/or” dilemmas that re-quired resolutions and choices, and (2) paradoxical

tensions in which contradictory, yet interrelated,elements defy resolutions.

“Either/or” dilemmas. Senior leaders experi-enced issues between the existing product andinnovation as tradeoffs that needed a clear de-cision one way or another. As one IT Servicesleader noted, the process was “a lot about makingtradeoffs.” IT Services’ general manager furtherreflected: “The tradeoff is short-term, quarterlyand annual achievement of targets versus hav-ing to manage our innovation with a very differ-ent type of model.” Resource issues surfaced asdilemmas when leaders felt pulled between allo-cating financial resources, human resources, andtheir own time to either the existing productor innovation. As Software 1’s general managernoted, “The trick was always how to allocatemoney,” while another leader said, “The tradeoffswere fairly headcount based.” Leaders also de-scribed organizational design decisions as trade-offs between strategic domains, including issuesaround structures, processes, and metrics. Forexample, an IT Services leader noted that thestrategic business unit would have to “makea clear decision” about whether to create a distinctsubunit for the innovation or not. A Software 1leader grappled with designing the innovationteam to include people who were committed tothe past or people who had skills for the future:“Are you better off breaking with the past andgoing with something different in developmentand marketing or not?” Finally, product designissues surfaced as dilemmas when leaders feltunder pressure to choose technological designelements or to make “either/or” choices aroundcustomers and target markets. For example, lead-ers in Softwares 1 and 2 described debates aboutwhether to adopt the technology platform for theinnovation that aligned with the existing productor the one that took advantage of novel software inthe marketplace.

Paradoxical tensions. Beyond describing“either/or” tradeoffs, senior leaders also depictedissues as paradoxical—that is, they recognized theexisting product and innovation as contradictory,yet both necessary for long-term success. Theynoted inherent contradictions within each issueimpervious to resolution. For example, leaderspointed to short-term and long-term paradoxesin allocating resources. Senior leaders wanted toachieve performance in the long term, but doing sodepended on short-term successes. Investing inthe innovation often involved short-term costs for

TABLE 4Comparing Approaches to Managing Strategic

Paradoxes

CasesLeadershipPractices

DecisionPattern

Software 1 Differentiating andintegrating

Exploring andexploitingSoftware 2

IT ServicesDifferentiating Only exploringLife Sciences

SemiconductorSoftware 3 Integrating Only exploiting

2015 67Smith

FIG

URE1

DataStructure

TABLE5

DataSupportingInterp

retation

sof

Sec

ondOrd

erThem

es

Dim

ension

Them

esRep

resentative

Quotes

Exp

erience

dtension

s“Either/or”

dilem

mas

“W

enee

ded

tomak

eadecisionof

whether

ornot

toseparatethis

outfrom

therest

ofthedivision.”

(VPInnov

ation,S

oftw

are1)

“Much

ofthedec

isionswerefairly

hea

dco

untb

ased

.Therewas

aloto

fculture

ofhow

totrac

klineitem

san

dinput.W

eeffectivelymov

edke

ythinke

rsov

erto

thenew

product.I

wou

ldmak

ethedec

isionto

pullpeo

ple

back

.”(V

PInnov

ation,S

oftw

are2)

“W

earealway

spointingfinge

rsat

each

other,a

lltryingto

cutco

sts.

Wearetouch

ingthem

equally.”

(VPInnov

ation,S

oftw

are1)

“Shewithher

man

agem

entteam

agreed

—how

doyo

ulook

ataproduct

portfolio

andsh

iftfrom

what

youareinve

stingin

tosomethingnew

?Thereis

noincrem

entalmon

eyduringtimes

like

these,

soit’s

allab

outtrad

eoffs.”(V

PInnov

ation,S

oftw

are1)

Parad

oxical

tension

s“W

eweretryingto

leve

rage

theex

istingsalesch

annelsforgrow

th,a

nditwas

determined

that

toke

epthemom

entum,a

ndalso

wenee

ded

tojumpstartitby

addingou

row

nsalesforce.”(V

PInnov

ation,ITService

s)“W

eca

nch

ange

thefinan

cial

resu

ltsof

this

operationby

slashingco

sts—

thesu

nbe

amap

proac

h.W

eco

uld

getthequ

arterlyresu

ltsthat

everyo

newas

look

ingfor.Or…

weco

uld

buildastrategy

forthelongterm

that

doe

sbo

th.”

(Gen

eral

man

ager,ITService

s)“Ifyo

uwan

ttotryto

cutsom

ethingthat

ison

[thege

neral

man

ager’s]lev

elit’sofflim

its.Can

’tsave

expen

sesforproductsthat

arethat

strategic.

Itsh

owspeo

ple

that

wenee

dthis—

yet,wearealway

ssh

iftingresources.”

(VPBusinessDev

elop

men

t,IT

Service

s)“Thebigg

estc

hallenge

was

that

wenee

ded

tohelp[theen

ginee

rs]g

etmotivated

tobu

ild[theinnov

ation],be

cause

wejustkilled

what

they

were

doing.”(V

PInnov

ation,S

oftw

are1)

“Thech

allenge

isthat

as[theinnov

ation]g

rew,itc

reated

grow

thfor[theex

istingproduct].Butita

lsoch

allenged[theex

istingproduct’s]v

alue

propositionan

dforced

them

togrow

andch

ange

.So[theinnov

ation]n

eeded

toad

dva

lueto

[theex

istingproduct],ev

enas

itdep

ended

onthe[existingproduct].”(V

PInnov

ation,ITService

s)

Differentiatinglead

ersh

ippractices

Alloc

atingdom

ain-specific

roles

“Ourinve

stmen

tstrateg

yarou

ndthe[existingproduct]isto

keep

thecu

stom

erhap

py,

protect

thereve

nuestream

andsp

endtheleasta

mou

nto

fmon

ey.S

oyo

unee

dthekindof

personin

thosejobs

whoca

ngo

inan

dfigu

reou

thow

todojust

enou

ghwithlittle

andgive

thecu

stom

ers

enou

ghforw

ell-be

ingan

dsecu

rity.T

he[innov

ationsnot

yetinthemarke

tplace

]istheen

trep

reneu

r,folkshav

eto

figu

reou

thow

toscalean

dbu

ildproce

sses

that

arego

ingto

buildefficien

cy.”

(Gen

eral

man

ager,S

oftw

are1)

Com

paringdom

ainsto

raisenov

eldistinctions

“W

ehad

differentch

ampionsfordifferentproducts.”(V

PInnov

ation,S

oftw

are2)

See

kinginform

ationab

outdom

ains

indep

enden

tly

“Iwen

toffan

dassessed

theinnov

ation,a

ndhow

wesh

ould

man

agethis

business,

andreportedba

ck.”

(VPInnov

ation;S

oftw

are1)

“I’m

gettinginputfrom

allm

ypee

rs.T

hen

Ihav

eahalfd

aybo

oked

foraon

eon

onemee

tingwiththege

neral

man

ager

tomak

esu

rethat

weare

headingin

therigh

tdirec

tion

.”(V

PInnov

ation,S

oftw

are1)

“Atou

rmee

tings,e

achbu

sinesslead

erreports

ontheproductsprogress.”(V

PExistingProduct,S

oftw

are2)

“I’v

ead

ded

onemetricto

theirpersonal

businessco

mmitmen

ts,a

ndtold

them

that

theirparticipationin

dev

elop

ingfuture

strategy

andtheir

thou

ghts

onthefuture

ofthebu

sinesswillhelpusev

aluatethem

.”(G

eneral

man

ager,ITService

s)“W

ebrou

ghtthisto

[thege

neral

man

ager].Hesaid

Ishou

ldfigu

reitou

t.SoIw

rote

apap

erproposingwhat

todo.”(V

PInnov

ation,S

oftw

are2)

Integratinglead

ersh

ippractices

Alloc

atingintegrativeroles

“W

ecrea

tedmyrole

inorder

tolook

across

theorga

nization.”

(VPBusinessDev

elop

men

t,IT

Service

s)“W

ehad

anumbe

rof

differentch

ampionsfordifferentproducts.[Thege

neral

man

ager’s]role

was

tolook

across

theen

tire

organizationan

dweave

his

way

across

each

ofthosedecisionsan

ddifference

s.”(V

PInnov

ation,S

oftw

are2)

Stressingov

erarch

inggo

als

“Therigh

tansw

eris

forusto

rallybe

hindco

mmon

goals,an

djust

dowelle

nou

ghas

weca

nin

themidstof

allthat.Ifo

urpersonal

goalsge

tin

theway

ofallthat,w

ejust

don

’tdowelltoge

ther.I

thinkthat

partof

that

has

todowiththekindsof

peo

ple

that

[thege

neral

man

ager]has

chosen

forher

board.”

(VPResea

rchan

dDev

elop

men

t;Softw

are1)

“W

hat

hap

pen

son

theteam

?Eac

hof

them

wan

tsto

seetheirteam

contribute

tothebo

ttom

line,an

dtheirbo

ttom

lineisthesu

ccessof

theen

tire

business.”(Exe

cutive

assistan

t,Softw

are1)

“Itoldtheman

agersthat

ourdec

isionshav

eto

becross-bu

siness.Itmea

nsthat

anindividual

whorunsaparticu

larlineof

businessmighth

ave

togive

ussomeof

theirbu

dge

tto

inve

stin

opportunitiesin

someo

neelse’s

[lines

ofbu

siness].”

(Gen

eral

man

ager,ITServices)

“Thege

neral

man

ager

isslow

lyge

ttingpeo

ple

whowereon

multiple

pathsto

beon

onepath.”

(VPInnov

ation,S

oftw

are2)

Solvingproblem

sjointly

“Eachfall,w

ehav

ediscu

ssionswherewelook

across

theorga

nization.W

ethinkof

itas

aportfolio,a

ndmak

ean

ymajor

adjustmen

tsat

that

time.”(V

PInnov

ation,S

oftw

are1)

“The[sen

iorlead

ersh

ip]m

eetingwas

usedto

getp

eople

allo

nthesamepage.

[Thege

neral

man

ager]w

ould

helptalk

abou

ttheov

erallstrateg

yforev

eryo

neto

understan

d.”

(VPInnov

ation,S

oftw

are1)

“W

eco

mmittedto

each

other

that

ifsomeo

nenee

ded

toco

ntact

oneof

us,

wewou

ldresp

ondwithim

med

iacy

.Wewan

tedto

show

mutual

resp

ect.”(V

PInnov

ation,S

oftw

are1)

“Thepeo

ple

whoareactually

workingon

thedealsareseeingtheap

propriatecross-[lines-of-bu

siness]assistan

ce.”(V

PInnov

ation,ITServices)

TABLE5

(Con

tinued

)

Dim

ension

Them

esRep

resentative

Quotes

Dec

ision-m

akingco

ntext

Valuingdistinct

strategicdom

ains

“TheH1an

dtheH2productswerebo

thim

portant.”(V

PBusinessDev

elop

men

t,IT

Service

s)“Ikn

owthat

they

nee

ded

theex

istingproducts,ev

enthou

ghIwasn’tas

focu

sedon

it,o

therswere.”(V

PInnov

ation,S

oftw

are2)

“W

ekn

ewitwas

importantto

preservetheinve

stmen

tin

[theex

istingproduct]forthecu

rren

tcu

stom

ers.”(V

PResea

rchan

dDev

elop

men

t,Softw

are2)

“Ithinktheman

agem

enttea

mhas

gotten

themessage

.They

hav

einve

sted

thestrategy

fortheinnov

ation,a

ndnow

it’sto

trickleitdow

nto

the

orga

nization.”

(VPInnov

ation,S

oftw

are1)

“Ic

ameto

[thege

neral

man

ager]a

ndsaid

that

[theinnov

ation]isreally

importanta

ndthat

wewan

ttomov

efaster

onitthan

wealread

yare.

So

weranan

offsitesessionap

plied

tothe[innov

ation’s]strateg

icinve

stmen

tanditpicke

dupthesp

eed.W

ealso

hav

eflag

geditas

aprettybig

deal.”(V

PInnov

ation,ITService

s)

Valuingintercon

nec

tion

sbe

twee

nstrategicdom

ains

“Therigh

tansw

eris

forusto

rallybe

hindco

mmon

goals,an

djust

dowelle

nou

ghas

weca

nin

themidstof

allthat.Ifo

urpersonal

goalsge

tin

theway

ofallthat,w

ejust

don

’tdowelltoge

ther.”

(VPInnov

ation,S

oftw

are1)

“Thepersonrunningou

tsou

rcing,

thinks

abou

tou

tsou

rcing.

Buttoge

ther,w

ethinkab

outthelarger

picture.”

(Gen

eral

man

ager,ITServices)

“The[existingproduct

vice

presiden

t]startedthemee

tingby

sayingbe

fore

webe

gintalkingab

outtheclient,wenee

dto

mak

esu

rethat

asateam

,wearemotivated

toworktoge

ther

tosatisfytheclient’s

requ

irem

ent.”(V

PInnov

ation,ITServices)

“The[gen

eral

man

ager]a

irsou

ttheco

nflict,an

dby

theproce

ssof

hisow

nwillingn

essto

listen

,hisab

ilityto

refineit,refoc

usit,h

ege

tspeo

ple

whowereon

multiple

pathsto

beon

onepath.”

(VPInnov

ation,S

oftw

are2)

“The[gen

eral

man

ager]has

anintegrated

strategy

,that

hehas

builtov

eralongperiodof

time.”(Chieftech

nical

officer,Softw

are2)

“Ourem

phasis

was

onportfolio

man

agem

ent.”(G

eneral

man

ager,S

oftw

are2)

“Theseniorteam

ismorerisk

taking,

moreco

llab

orative,

beca

use

webe

liev

ethat

thesu

ccessor

failure

oftheinnov

ationis

not

mysu

ccessor

failure,b

utis

thewholeteam

s.”(V

PInnov

ation,S

oftw

are1)

Dec

isionpattern

Con

sisten

tlyinco

nsisten

tdec

isionpattern

“Therewas

aloto

fculture

ofhow

totrac

klineitem

san

dinput.W

eeffectivelymov

edke

ythinke

rsov

erto

thenew

product.I

wou

ldmak

ethe

decisionto

pullpeo

ple

back

.”(V

PInnov

ation,S

oftw

are2)

“W

eareco

nstan

tlyalloca

tingan

drealloca

tingresources.”

(VPInnov

ation,S

oftw

are1)

“W

ehav

eto

mak

esu

rethat

theresources

arealloca

tedeffectively.

Wearealway

slook

ingat

wheretheresources

arebe

ingutilize

d,andhow

we

canalloca

tethem

moreeffectively.”(V

PResea

rchan

dDev

elop

men

t,Softw

are1)

“[Thege

neral

man

ager]is

mak

ingdec

isions…

It’s

alotof

mov

ingresources

arou

nd.”

(VPExistingProduct,ITServices)

“W

enee

dmoreex

perim

ents

[withou

rresources].”(V

PBusinessDev

elop

men

t,IT

Services)

“Untilw

eca

ndem

onstrate

that

these[innov

ations]aresu

ccessful,wenee

dto

temporarilydefineapersondrivingasolution

,andthen

connect

allof

theparticipan

tsof

thedec

ision,rather

than

create

abu

nch

ofnew

roles.”(G

eneral

man

ager,S

oftw

are1)

“W

edev

elop

edSWATteam

sforev

eryo

neto

betalkingab

out[theinnov

ation].”(G

eneral

Man

ager,S

oftw

are1)

“Theinnov

ationis

curren

tlyash

adow

[profitan

dloss

statem

ent],insidean

exploitativebu

siness…

Wemay

spin

them

outfrom

thecu

rren

t[lines

ofbu

siness]

when

they

reac

hace

rtainstag

eof

grow

th.”

(Gen

eral

man

ager,ITService

s)

TABLE6

Individual

Dec

isionsin

Respon

seto

Key

Issu

es

Case

Key

Issu

eIndividual

Dec

isionsin

Respon

seto

Key

Issu

es

Softw

are1

1Resou

rcealloca

tion

:HR

Alloc

atesalespeo

ple

toex

istingproduct

orinnov

ation?

Exp

loit:M

ovesalesteam

mem

bers

toex

isting

2Organ

izational

design:S

tructure

Integrated

ordistinct

innov

ationunit?

Exp

lore:C

reateinnov

ationsu

bunitwithdesignated

lead

ers

3Organ

izational

design:S

kill

Existingen

ginee

ringskills

ornew

skills?

Exp

lore:H

ireen

ginee

rswithinnov

ationskills

4Organ

izational

design:S

tructure

Integrated

ortargeted

salesteam

?Exp

lore:C

reatetemporarysalesteam

forinnov

ation

5Resou

rcealloca

tion

:Finan

ceBudge

tcu

tsto

existingproduct

orinnov

ation?

Exp

lore:M

inim

izeresourcecu

tsforinnov

ation

6Resou

rcealloca

tion

:HR

R&D

resources

forex

plore

orex

ploit?

Exp

lore:M

oveen

ginee

rsto

dev

elop

innov

ation

7Resou

rcealloca

tion

:HR

R&D

resources

forex

plore

orex

ploit?

Exp

loit:M

oveen

ginee

rsto

existingproduct

8Organ

izational

design:S

tructure

Integrated

ortargeted

salesteam

?Both:U

nifysalesteam

tocrosssellbo

thex

istingproduct

andinnov

ation

9Product

design:T

echnolog

y/target

marke

tsExp

andto

new

innov

ation?

Exp

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long-term benefits. As Software 1’s innovation vicepresident summarized:

We are in cost cutting mode. Still, when the financepeople came in and said that you have to take out$30M of the [innovation], the general manager said,“You don’t get it, this is an innovation business.”Weare so constrained on cost right now, that she has tostart cutting the bone off the other division … And,she is really serious about the innovation.

Leaders further acknowledged stability and flex-ibility tensions in resource allocations. Leaderswanted to shift resources flexibly, yet could do sobetter when stable resource commitments fosteredconfidence that they were invested in the product.Software 2’s general manager noted: “We wereconstantly moving headcount … yet we needed toprotect the innovation.” Software 1 leaders talkedabout “[m]aking a lot of decisions to shore up in-dividual products … but saying no to reducing theinvestments.” IT Services’ vice president of busi-ness development talked about “ensuring the inno-vation that we are behind it … but being cautiousabout investing too much.”

Organizational design issues raised paradoxicaltensions between experience and novelty. To in-novate effectively, leaders wanted to leverageexisting knowledge, relationships, and processes,but also to develop novel design features in re-sponse to specific innovation needs. Relatedly,leaders experienced tensions of uniformity orspecificity in issues of organizational designs asthey sought to benefit from uniform design fea-tures, but wanted designs that fit each strategicdomain. As the general manager of Software 1noted: “I had two different cultures that wereclashing, [one] wanted to build something that waslean and mean. [The other] was a lower designpoint, … but we needed both.” Software 1’s in-novation vice president further explored the ten-sions around financial metrics:

Finance needs to cut costs across the whole business.I’ve taken the equal amount of cuts as my peers. But[the general manager] is not saying to me, “you make40% less in revenue so you should have 40% less inresources.”

A Software 2 leader noted that, to respond to thecompetitor’s product:

We built [our innovation] within a year. If we hadgone through the normal process, with all the gatesand sign offs, it would have taken three years tobuild … but the existing product engineers did notunderstand the process.

IT Services leaders also wanted to leverage exist-ing metrics to the innovation to ensure compara-bility and fairness, yet recognized that the “businessmodels are very different.”

Finally, leaders depicted product design choicesas paradoxical. Leaders found that they valued free-dom to develop the new product, but wanted toalign the innovation with the existing product,which constrained their freedom. For example,Software 2 leaders recognized that time constraintsto develop the innovation quickly resulted in in-troducing a lower quality product, but allowed themto be a legitimate competitor:

[The competitor] put a product in the market… [Thegeneral manager] realized that if we were going tocapture somemarket share, we would have to put outa product that might be less quality. But it was con-fusing to the [existing product engineers].

Product design decisions further raised paradox-ical tensions around certainty and uncertainty. In-novating inherently demanded uncertainty as newproducts unfolded over time. Yet being comfortablewith such uncertainty required confidence and cer-tainty. Software 2’s innovation leader noted that thegeneral manager “had a strong vision,” while alsorecognizing that “his vision was evolving, becausewhere he was going was a moving point.” As a re-sult, Software 2 leaders were enmeshed in deepdiscussions about the innovation’s design to meetthis vision. Similarly, as IT Services’ innovationvice president noted: “As the innovation grew, italso challenged the existing products to shift theirown business models. They wanted the growth ofthe innovation, but didn’t want the have to changewhat they do.”

Leadership Practices

Differentiating leadership practices. Analyzinghow leaders responded to tensions between theexisting product and innovation brought to the sur-face various categories of practices. One categoryinvolved several practices to clarify how the exist-ing product and the innovation differed from oneanother, and to advocate for each domain sepa-rately. I label these as “differentiating” practices.First, the leaders in these three top managementteams all created domain-specific senior leadershiproles. Each strategic business unit included seniorleaders with only responsibility for the existingproduct and other leaders with only responsibilityfor innovation. Software 1 leaders described the

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value of these domain-specific leaders. When theyinvested in the innovation, each leader managed afunction and had responsibilities for both domains.These roles challenged leaders to allocate their owntime and resources. As the research and develop-ment vice president noted, “the innovations weren’tgetting much traction,” because of “distractions bythe demands of current clients.” Software 1 leaderscreated an innovation subunit with distinct leaders.Doing so freed the leaders from splitting their timeand commitments between both strategic domains,and allowed them to focus only on one. One leadernoted the value of dedicated innovation leaders:“Our problem is that if we say we all own [the in-novation], then nobody does. We need to clarify whoowns these products.” Similarly, both Software 2and IT Services created a position of a dedicated in-novation leader, who reported to the general man-ager. These leaders raised issues and advocated fortheir products. For example, the IT Services’ in-novation leader faced aggressive “stretch targets,” butfelt that the other senior leaders eschewed theircommitment to the innovation. She went to the othersenior leaders and “spit the dummy,” demanding—and subsequently receiving—support for the inno-vation. In these teams, the existing product leadersalso ensured that the team maintained commitmentsto their exploitative goals. One Software 1 seniorleadership meeting involved an extensive exchangeduring which the existing product sales leader laidout his needs to ensure continued success.

Second, conversations among the senior leadersinvolved explicit comparisons between strategicdomains, which raised critical distinctions be-tween them. In both formal discussions at meetingsand informal conversations, leaders discussed thespecific needs of each domain and raised issues ofhow these products differed from one another. InSoftware 1, the general manager frequently ques-tioned the innovation and existing product leadersas a way in which to surface the distinct productneeds. In one senior leadership meeting, an issuearose around sales resources for the innovation.The general manager asked:

Do you guys think that we have plans [for the in-novation] that are going to get us to where we need togo? I don’t know what you guys think, but this is justa feeling. Are we taking actions that are really goingto allow us to make progress? I’ve had this gnawingfeeling all morning.

This question sparked a long conversation abouthow the innovation’s business plan differed from

that of the existing product. Senior leaders alsoengaged stakeholder groups outside of the seniorteam—including clients, leaders from other units,and subordinates—to better clarify uniqueness anddistinctions. As a Software 1 senior leader noted:“[The general manager] spends an incredibleamount of time with customers … She learns fromour customers what we are doing right or wrong torealize next steps.” When the IT Services’ generalmanager first arrived in the organization, he went tolearn from its clients—“I made calls on our top 10customers to find out how they felt about us”—noting that doing so helped to realize some of thekey differences in how the clients understood theexisting product and how they understood the in-novations. In addition, Software 1 senior leadersfrequently invited executives from other parts ofthe organization to present at their senior leader-ship meeting. This additional information provedparticularly useful in helping them to sort throughcritical issues. Similarly, Software 2 leaders fre-quently reached out to other experts outside then-own unit to better assess and compare the needs ofeach of their products.

Finally, senior leaders sought information abouteach domain independently of one another. All threetop management teams allocated monthly meetingtime to each strategic domain. In Softwares 1 and 2,product leaders updated their fellow senior leaders,which was followed by extensive questions. ITServices partitioned its meeting, allocating half tothe operational needs and the existing product, andhalf to the strategic development and the innova-tion. The vice president of business developmentnoted the value thus: “We realized that we wantedto make strategic decisions as a team … Everymonth at our meetings, we now spend half the timeon [existing] business, and half the time on [inno-vation] businesses.” These leaders also used offsiteconferences, “white papers,” or small group con-versations to learn more about the existing productor the innovation. For example, Software 2 leadersdebated whether the innovation should adopt theexisting product’s software, thereby benefiting fromcomplementarities across products, or a totallynew software platform with different functionality,but also associated with different technical skills.Several senior leaders held strong, opposing beliefsabout this decision and, facing a deadlock, theybrought the decision to the general manager. Hepunted the decision back to them. One of the leaderswrote a white paper to explore the issue, facilitatingnew insight, as well as commitments from the other


leaders. In another example, IT Services’ leadersgrappled with how to structure the organization tobetter accommodate the innovation. They hosted athree-day offsite conference with 40 leaders fromacross the organization to raise issues and to clarifythe innovation needs.

Integrating practices. A second category ofleadership practices in response to tensions broughtto the surface the synergies and connections be-tween exploration and exploitation. I label theseas “integrating” practices. First, all three strategicbusiness units included at least one senior leaderwith responsibility for the overarching businessplan, and overseeing both exploratory and exploit-ative businesses. The general managers of each unitheld this role. In addition, Software 2’s chief tech-nology officer also assumed responsibility for in-tegrating the products’ technologies, and IT Serviceshad a vice president of business development re-sponsible for developing a coherent market strategyacross products. The general managers of Software 1and IT Services expected each of their domain-specific leaders to understand overall organiza-tional needs along with their own domain needs.One leader described this as “wearing two hats.”Integrative leaders advocated for the overarchingstrategic business unit. For example, soon after thegeneral manager arrived at IT Services, he realizedthat it faced a critical issue because the existingbusiness and innovation competed directly with oneanother—and neither was succeeding. He realizedthat the organization could continue to invest inonly the existing product, but that doing so wouldoffer only a short-term solution to its problems. In-stead, he offered a long-term insight to his seniorleaders that required building and developing bothbusinesses.

Second, all three strategic business units identi-fied and stressed overarching goals that dependedon both the existing product and the innovation forsuccess. It is interesting to note that these goals werenot always necessarily formal vision statements forthe organization. Often, the senior leaders commu-nicated a sense of addressing both businesses inmore informal ways. For example, several of thesenior leaders in this study used rhetorical devicesto communicate effectively that the unit’s successdepended on both exploratory and exploitativeperformance. Software 1 leaders described theirorganization as a portfolio with multiple contribu-tions, while Software 2 leaders depicted their strat-egy as an onion with multiple layers. Both of theseimages pervaded multiple strategic conversations.

Comparing to other competitors further emphasizedthe critical role of both exploratory and exploitativesuccess. The general managers talked about beingpatient, to gain the rest of the senior leaders’ buy-into these overarching goals over time. A Software 2leader noted the general manager’s patience inletting people “come to the overall vision at theirown pace… as it takes a good amount of time to geteveryone to evolve in their own time.” Similarly,the Software 1 general manager gained buy-in tothis integrative vision by starting each meetingstating the strategic business unit’s overarchinggoals, noting how this goal depended on the inno-vation’s success and existing product’s success,and then evaluating the progress of each domain.She further noted that she took every opportunitypossible to get the other senior leaders to connectwith this overarching vision. As she stated, part ofher role was to:

… get people to view the business the way I view it.You have to get them to identify with the wholething, because they are usually passionate about theone piece that they have. There is a leadership abilityto get people to get to that point with you. You haveto be really good at getting them to link the piece thatthey have to the whole thing. They have to think whyis [the innovation] important to the overall business?Because the customers are important to the overallbusiness. We want to extend those customers, cus-tomers who we have had for over 30 years. You haveto look for ways to draw everybody into what they aredoing andwhy it is important to the overall growth ofthe business. You have to be really good at commu-nicating it … and look for ways to communicate it atevery chance that you have.

One instance depicts how the general manager ofSoftware 1 linked the team members’ efforts to theoverarching goal. The innovation leader was beingattacked by the other leaders for how she woulddevelop this domain. The general manager steppedin, saying:

Let me make one thing clear. The [innovation vicepresident] is taking responsibility for [the in-novation] on behalf of our whole strategic businessunit. But make no mistake; everyone in this room hasresponsibility for this product and for the overallsuccess of the business.

The general managers also eventually fired seniorleaders that were too myopically focused on theirown domain and could not, over time, buy into thisoverarching goal. As the IT Services’ general man-ager reflected:

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We needed people who were going to play in thesame game… [Some people] were not thinking aboutthe group as a whole but rather thinking, “I can do itbetter in my organization.”We eliminated these folksin under 30 days.

As one Software 1 leader noted:

There is not a lot of individual grandstanding. We aremade or broken by how our business does. If ourbusiness is going into the toilet, and I’m doing a greatyear, then I don’t get much benefit from this. Theright answer is for us to rally behind common goals,and just do well enough as we can in the midst of allthat. If our personal goals get in the way of all that,we just don’t do well together. I think that part of thathas to do with the kinds of people that [the generalmanager] has chosen for her board.

Finally, leaders stressed integration by solvingexploratory and exploitative problems jointly.Juxtaposing domains in conversation forced leadersto confront issues between them, reinforcing thevalue of each product and surfacing synergies. Eachtop management team allocated formal meeting timeto addressing overarching issues. IT Services usedpart of its business meetings for considering itsoverall portfolio. A small group of Software 2 lead-ers met with the general manager to discuss issuesacross the strategic business unit. Leaders also heldjoint problem-solving sessions in response to spe-cific tensions. For example, Software 2 leaders fre-quently met in the general manager’s office to workthrough issues. IT Services and Software 1 leadersreflected on working through problems one-on-onewith each other. As one Software 1 leader described:

We all agreed that [the innovation] was a critical busi-ness in our portfolio review. But we all required moreresources from development than [the research anddevelopment vice president] had. [The researchand development vice president] developed a plan—and my development director came back and saidthat we are going to have to cut some of our resour-ces. I called the [research and development vicepresident] and said, tell mewhat your problem is thatyou are trying to solve and let me help you solve it.

Decision-Making Contexts

Differentiating and integrating practices fostereda context to inform the leaders’ decisions that in-volved two key themes. Senior leaders valued eachdistinct strategic domain and its contribution to theiroverall organizational success, as well as the inter-connections between domains. This context high-lighted the product (exploration or exploitation) and

organizational levels of analysis, facilitating dynamicand iterative decision patterns.

Valuing distinct strategic domains. Differentiat-ing and integrating practices encouraged leaders tounderstand and support both the exploratory andexploitative products. Practices such as identify-ing specific roles among senior leaders and carv-ing time in which to focus on each domain provedparticularly important. For example, the Software1 innovation vice president noted how one-on-onemeetings with other leaders fostered a deeperknowledge for an innovation plan that he was de-veloping, which in turn informed their decisions:

I will go to the others in the unit before I bring theplan to the General Manager … I can get the tensionsout on the table and then we will sit as a group … Ifeveryone is in sync, then we will agree on it and thenmove on. But if not, everyone will have been briefedand we can get these ideas out on the table and dis-cuss them.

Similarly, IT Services’ senior leaders recognizedhow salient the innovation’s needs were after athree-day offsite: “The [offsite] session identified[some of our needs]. Some of the senior leaders wereat the [offsite] session. I identified requirements fora couple of very senior folks.”

Differentiating and integrating practices furthercatalyzed ongoing support for each domain. In thesestrategic business units, the senior leaders talkedabout being “serious” about the exiting product orinnovation. Leadership practices signaled this sup-port. For example, domain-specific roles—particu-larly for the innovation—reinforced commitmentto these products. As one of the IT senior leadersnoted: “When we elevate something to [the generalmanager’s] level, we protect the investment … Itshows people that we need this.” Software 1’s in-novation vice president further noted that creatinga distinct subunit with its own leader for the inno-vation showed the top management team that theywere “really serious about the innovation.” The ITServices three-day innovation offsite further solidi-fied this support. Before the meeting, the IT Serv-ices’ innovation vice president felt that the rest ofthe senior leaders were not “living up to their sideof the bargain” and investing in the innovation’ssuccess. After the offsite meeting, she felt that “they[were] really committed to this business.”

In contrast, senior leaders in the other three busi-ness units that only differentiated or only integratednoted significant gaps in understanding and sup-porting both strategic domains. For example, in Life


Sciences, the role of vice president for the existingproduct remained unfilled for more than a year anda half. When the unit hired a leader, he noted thatthe existing product “had taken a back seat.” ForSoftware 3, the innovation faltered. As its researchand development vice president said: “We are notdelivering business results on [the innovations].The problem is—we don’t understand these prod-ucts … Most of the top management team are livingin today.”

Valuing interconnections Between strategicdomains. Differentiating and integrating practicesfurther fostered a context focused on interconnec-tions between strategic domains, valuing collabo-ration and linkages. First, practices to identifydistinct domain needs, while also supporting anoverarching role, drive leaders to create a context ofcollaboration. Leaders talked about how exploratoryand exploitative products both needed to contributethe strategic business unit’s success. Software 2’sresearch and development vice president capturedthis idea:

I thought that [the general manager] should give meall his money. I felt that I had a premium part of thebusiness. But I really had some more business acu-men than that, and I realized that there were otherproducts that were important to the business. I alsoknow that we needed some of these products (for theinnovation to succeed).

Software 1’s executive assistant further noted thiscontext, suggesting that the general manager con-sistently stressed the overarching portfolio that theteam sought to achieve, creating a context of col-laboration: “What happens on the team? Each ofthem wants to see their team contribute to the bot-tom line, and their bottom line is the success of theentire business.”

Differentiating and integrating practices led lead-ers to expose conflicts between strategic domainsand to seek compromises. In Software 1, probing foradditional insight encouraged leaders to addressconflicts. As the research and development vicepresident noted:

The General Manager wants to invite some level ofconflict into the process … If I was going to say thisplan is wonderful, she would say, “What do youthink about this?” to the head of sales. Then wewould spend the next 45 minutes [sorting] out whywe think what we think … We raise a lot of conflict.We get to get in there and get into issues.

Similarly, IT Services leaders recognized howthe value of addressing conflicts enabled further

connections among each, in contrast with theirprevious culture of avoiding conflicts:

[The previous general manager] was a very non-confrontational—don’t want to hear the issues, don’twant to work through the real problems, avoid itat all cost—type of individual. Probably one of themost non-confrontational: In his senior team meet-ings, I mean, it was like people smiling at each otherand you knew the background, none of the problemswere getting out on the table. [The current generalmanager] addresses things head-on. No questionabout it. As a result, he personally has created anenvironment where he’s made it very clear that we’resupposed to be a team—that we are supposed totackle these roadblocks, and work together. He’smade that very clear.

The Software 1 chief technical officer noted: “Wetend to run a very proactive debating society. Theidea is to debate these things out. Those that comefrom the outside are always surprised at the free forall nature.” Software 2 leaders dealt with conflict bydiscussing it in small groups in the general manag-er’s office. As the innovation vice president noted:“[The general manager’s] style is to handle theconflict in his office. He is not a big conflict guy ina full meeting. If it broke out in a meeting, he wouldsay that he would take it off line.”

In response to key conflict, senior leaders depic-ted a context of compromise. They were willing towork together to seek beneficial solutions to bothstrategic domains. As Software 1’s innovation vicepresident noted:

The team has to be willing to forgo their own busi-ness for the benefit of the total business. I know thatI’m in [Software 1]. If something in [my innovation]doesn’t get invested in, I’m going to have to go backinto my own business and disinvest. Who signs yourpaycheck? We are in this together.

IT Services’ leaders offer another example. Tra-ditionally, IT Services’ organizational design wassiloed and fostered competition between lines ofbusiness such that leaders frequently rejected op-portunities for cross-selling services to the sameclient. As one senior leader noted:

I’m not even sure I would have had the conversationand attended the meeting, because I know that hewould have intentionally tried to suck up every pieceof business that would have otherwise flown to myorganization into his.

This dynamic created problems for the innova-tion, which relied on cross-line business support.Yet the senior leader recalled a more recent

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conversation that suggested a dramatic shift in thismindset: “I just said [to the existing product leader]‘if I can secure more business, I’m happy to con-tribute to the total. Done.’We didn’t even talk aboutmath of how to allocate revenue. It’s just done.”As the business development leader noted: “Theleaders are now seeing the appropriate cross-[linesof business] assistance in helping getting their jobdone.”

In contrast, the three strategic business unitsthat only differentiated or integrated described sup-pressing and avoiding key conflicts, and fosteringa context of competition and mistrust. Often, thesesuppressed conflicts burst out in a frustrated out-rage. In one meeting, the Software 3 general man-ager banged on the table, shouting his frustration atthe lack of progress for the innovation. As he noted:“Right now, everyone’s attitude is, I’mhere to protectmy turf.” Semiconductor senior leaders found thatthe tensions built up for so long that they requireda full-day emergencymeeting in a “war room” to sortout their problems.

Decision Patterns

In response to the issues that emerged betweenstrategic domains, leaders made choices. Thesechoices predominantly supported exploration orexploitation, with only a few decisions supportingboth simultaneously. For example, in response toa debate about organizational design, Software 1senior leaders reorganized their business unit tosupport the innovation. To address existing cus-tomers’ demands, IT Services’ senior leaders allo-cated more resources to develop their existingproducts. Software 2 senior leaders grappled withthe technology platform for their innovation, ulti-mately deciding to adopt a new platform to supportthe innovation.

Making decisions in response to individual issuesspurred new issues. For example, after Software 1senior leaders decided to create a subunit for theirinnovation, additional issues arose around whetherto hire a leader for that unit from the existing teamor someone from outside, whether or not to havean integrated sales team across the existing productand the innovation, and how to allocate research anddevelopment resources. These issues persisted overtime. As a senior leader in IT Services noted, “therewere issues throughout the process,” while anotherin Software 2 pointed out that “battles continuedthroughout.” A critical insight was that addressingboth exploration and exploitation simultaneously

was reflected in the patterns of decisions that leadersmade over time, not in understanding the responsesto individual decisions. The key pattern for sup-porting both exploration and exploitation involvediteratively shifted support between the two strategicdomains. Table 6 depicts this pattern of decisions byidentifying for the full year each issue that arose andthe leaders’ decisions.

The senior leaders described how they experi-enced this pattern, noting that their decisions wereflexible and temporary. These leaders depicteddecisions as dynamic, referring to their resourcesas flexible and to organizational designs as tem-porary. For example, one leader in IT Servicesdescribed decisions in general as “experimental.”Both Software 1 and Software 2 senior leaderstalked about moving sales resources. Similarly,as Software 2’s innovation vice president noted,engineers were a critical resource for developingboth the existing product and innovation, andleaders were “frequently moving headcount.” Theyalso thought of the organizational design as flexi-ble. An issue emerged for Software 1 about how tosell the innovation when the skills, knowledge,rewards, and contacts of the sales team reinforcedexisting product sales. While they needed a dedi-cated sales team, they eventually wanted to cross-sell their existing products and innovations to thesame clients. Rather than create a new perma-nent team, they developed a “SWAT” team to fo-cus temporarily on innovation sales, to integrateknowledge back to a broader sales team, andeventually to disband the SWAT team itself. Sim-ilarly, in IT Services, the general manager notedthat, to support the innovation, leaders “createda shadow profit and loss structure so that it couldstart tracking its own finances, without yet creatingan entirely new unit.” They used this temporaryunit to support the innovation, to learn about howto manage it, and to decide whether to create anindependent line of business or to integrate thisproduct with other existing lines of business.

In contrast, the teams that did not sustain com-mitments to both exploration and exploitation madedecisions that consistently supported one domainover time. Tracking the patterns of decisions byleaders in Life Sciences or Semiconductor revealsa pattern of frequent decisions shifting resource anddesigns from the existing product to the innovation.As the vice president of human resources summa-rized: “We are focusing our decisions on supportingthe innovation. There is no focus on the existingbusiness.” For Software 3, the senior leaders made


relatively few decisions to shift resources or to alterdesigns. Those few decisions that they made allreinforced the existing product and the status quo.Software 39s vice president of strategy noted: “Wehave some nice ideas for the [innovations], but havedone nothing to build them out.”

A DYNAMIC DECISION-MAKING MODEL

Up to this point, I have described how leadersexperienced and responded to issues of explorationand exploitation to sustain commitments to bothstrategic domains. Combining these insights withexisting literature informs a model of dynamic de-cision making, depicted in Figure 2. Decision mak-ing can be considered dynamic because leaders shiftresources and designs between the existing productand innovation to support both. I now develop thismodel in more depth.

Scholars argue that organizations inherently hostparadoxical tensions (Ford & Backoff, 1988; Smith &Lewis, 2011). The act of organizing creates dis-tinctions, but binds these dualities within a unifiedsystem, resulting in inherent paradoxes. Exploringand exploiting present one type of paradox: Thesestrategic domains are inconsistent with one another,yet are both necessary for long-term success (March1991; Smith & Tushman, 2005). Moreover, explo-ration and exploitation define one another as theseeds of exploration emerge from exploitation, andvice versa (Farjoun, 2010). These tensions oftenremain latent—existing in the organization, but notparticularly challenging for leaders or members ofthe organization. However, several conditions cansurface these tensions. For example, Smith andLewis (2011) suggest that tensions become salient inresponse to an individual’s adopting paradoxicalframes, or in response to environmental conditionsdefined by plurality, scarcity, and change. The datain this study identify an organization’s annualstrategic commitments as an additional factor thatcan render latent tensions salient. In this study,these dual commitments created pressure to suc-ceed in each business, and raised increased conflictand tension between them. As Figure 2 depicts,strategic paradoxes embedded in an organization’sannual plan surfaced issues between competingdomains and triggered dynamic decision making.

The data from this study revealed three types ofissue that emerged for top management teams be-tween exploring and exploiting, including issuesof resources allocation, organizational design, andproduct design. The responses to each of these issues

critically impact success. A key insight from thesedata depicts how senior leaders experienced theseissues as both dilemmas and paradoxes. Dilemmasare “either/or” tradeoffs resolved by choices, whileparadoxes involve tensions that are imperviousto resolution (Cameron & Quinn, 1988; Smith &Lewis, 2011). Leaders experienced issues as both.Responding to “either/or” dilemmas became criticalfor effectively managing tensions. As the data shows,senior leaders raised a number of issues in the threecases that did not sustain paradox, but they madeno choices in response. As a result, senior leadersfelt unable to advance the innovation or extend theexisting product. At the same time, leaders alsodepicted these key issues as paradoxical tensionsthat persisted over time and recognized that theywere impervious to resolutions. This idea informedan understanding of managing paradox through a“consistently inconsistent” decision pattern, inwhich leaders could address individual issues withan “either/or” choice, but maintain commitments toboth tensions over time.

To sustain exploration and exploitation, leadersresponded to these experienced dilemmas and par-adoxes with differentiating and integrating practices.Differentiating practices raise distinctions betweenexploration and exploitation, and stress their uniquecharacteristics, whereas integrating practices em-phasize synergies, connections, and interdependen-cies (Andriopoulos & Lewis, 2009; Smith & Tushman,2005). As Figure 2 depicts, I identified three dif-ferentiating practices and three integrating practicesthat leaders in this study adopted. Differentiatingpractices included allocating domain-specific roles,comparing domains to raise novel distinctions, andseeking information about domains independently.Integrating practices included allocating integrativeroles, stressing overarching goals, and solving prob-lems jointly. Yet research suggests other possibilities.For example, mindfulness scholars describe practicessuch as cultivating uncertainty and developing newcategories to facilitate novel distinctions (Langer,1989). Organizational learning studies point towardpractices for experimentation, reflection, and prob-lem solving to surface differences (Edmondson,Bohmer, & Pisano, 2001). Other literatures identifypractices for encouraging integrating. Studies onintegrative thinking involve fostering synergiesthrough practices such as depicting connections(Suedfeld, Tetlock, & Streufert, 1992), or consideringmultidirectional relationships (Martin, 2007).

Differentiating and integrating practices enabledleaders to sustain commitments to strategic paradox

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by creating a flexible context to support decisionmaking. Differentiating focuses leaders on explor-ing and exploiting independently of one anotherby communicating substantive and symbolic in-vestments in each domain (Ocasio, 1997), whilealso surfacing new knowledge, ideas, and insights(Langer, 1997). Information and commitmentsmotivated decisions to support each strategic do-main. At the same time, by stressing overarchinggoals and exploring connections between domains,integrating practices elevate leaders’ attention tothe organizational level. Juxtaposing both domainsbrings conflict to the surface, and motivates con-nections and compromises between strategic do-mains (Suedfeld et al., 1992). Critical to dynamicdecision making are differentiating and integratingpractices that together urge leaders to shift atten-tion consistently—both between the differentproducts and from the product level to the orga-nizational level. This shifting focus facilitatedan adaptive context, which motivated flexibilityin decisions.

Contrasting the three cases that adopted a dy-namic decision-making approach with the otherthree cases highlights the necessity of both differ-entiating and integrating practices. By adoptingonly one type of practice, senior leaders fall prey todefensive responses and vicious cycles of paradox.Differentiating without integration fostered conflict,resulting in leaders consistently choosing only oneoutcome—in this case, the innovation. Differentiat-ing practices helped to emphasize the uniqueaspects of the innovation, to avoid inertia, and todetach the past from the future. However, in theabsence of integrative practices that sought to createsynergies between time horizons, these leaders paidattention only to the future. Conflicts between ex-ploration and exploitation emerged. Leaders adju-dicated conflicts and tensions by stressing onlyexploration. Classic change management studiesemphasize this approach, in which leaders expli-cate a vision for the future and then align the orga-nization to achieve this goal (Tushman & Nadler,1997). Doing so depends on liberating the futurefrom the shackles of the past (Leonard-Barton, 1992;Sull, 1999; Tripsas, 2009), resulting in more radicalchange (Tushman & Romanelli, 1985). However,these radical changes occur at the expense of theexisting product. In this study, both the Life Sciencesand Semiconductor strategic business units dem-onstrate how an overzealous emphasis on creatingdistinctions can enable change, but diminish theexisting products.

Integrating in the absence of differentiatingproved equally problematic for sustaining paradox.In an effort to leverage value and engage synergiesacross domains, cognitive commitments and myo-pic thinking overemphasize exploitative demandsand keep leaders focused on the present (Benner &Tushman, 2003; Leonard-Barton, 1992; Levinthal &March 1993). Leaders may become entrenched inexisting cognitions and fail to see unique innovationneeds (Taylor & Helfat, 2009; Tripsas & Gavetti,2000). Ineffectively adopting practices from theexisting product to the innovation can result in afalse synergy. For example, Tripsas and Gavetti(2000) note the demise of Polaroid: In service offostering linkages, executives insisted on leverag-ing a “razor and blade” strategy from their instantcamera to apply to digital products, despite the lackof printing of digital images. In this study, Software3 depicts how integrating without differentiating ledto unwavering emphasis on existing competenciesand processes, constraining innovation.

In contrast, as Figure 2 depicts, differentiatingand integrating together fostered a context thatfocused leaders both on the needs of individualproducts and on the connections between them, andin doing so encouraged flexibility and adaptation.Fluctuating attention and focus between strategicdomains and levels of analysis urged leaders notonly to make temporary and flexible decisions, butalso, over time, to embed inconsistency into thesedecisions by alternating support between the exist-ing product and innovation. Cognitive commit-ments and focused attention drive leaders to makeeach subsequent decision consistent with pastones (Chanowitz & Langer, 1981; Tripsas & Gavetti,2000). In contrast, in this study leaders adopted amore adaptive approach by making individual deci-sions in response to specific tensions, yet allowingthese individual decisions to be inconsistent withprevious decisions. The leaders depicted thesedecisions as flexible and temporary.

This study therefore resulted in the critical insightthat managing paradoxical tensions was reflectedin the pattern of decisions over time, rather thanin each individual decision. Paradoxes persist overtime, such that making choices in response to eachissue spurs new issues (Jarzabkowski et al., 2013).Figure 2 depicts this persistence in the feedbackarrow between the individual decisions in responseto each issue and the creation of new issues. Theaggregation of individual decisions over time accu-mulated to the pattern of shifting support betweenexploration and exploitation. Following Smith and


Lewis (2011), I describe this pattern as a “consis-tently inconsistent” pattern of decision making. Ilabel this overall approach as “dynamic decisionmaking” to capture the flexibility of support forexploration and exploitation. This shifting decisionpattern allowed leaders to manage paradox by makechoices in response to specific dilemmas in theshort term, while embracing competing demandinherent in paradoxes in the long term.

DISCUSSION

Implications for Theory

If competitive contexts increasingly impose para-doxical demands on firms, then senior leaders mustbe able to address these tensions. Yet even as scholarsfind that embracing paradox can foster creativity(Miron-Spektor, Erez, & Naveh, 2011), build dynamiccapabilities (Harreld, O’Reilly, & Tushman, 2007),and enable sustainability (Cameron, 1986; Smithet al., 2011), effectively implementing strategicparadoxes is complex and challenging for seniorleaders. The data in this study highlight this diffi-culty. I interviewed senior leaders from six strategicbusiness units with annual plans to exploit existingproducts while exploring innovation, yet only threeexecuted this strategy. Therefore the main goal ofthis study was to understand how senior leaderseffectively addressed this challenge, making deci-sions to support competing strategies simulta-neously amid the intense pressures to focus on onlyone. Comparing across these six units informeda model of sustaining strategic paradox throughdynamic decision making, the details of whichcontribute to our understanding of organizationalparadox in at least three significant ways.

First, this model complicates our understand-ing of tensions, depicting the interwoven nature ofdilemmas and paradoxes. Previous research delin-eates dilemmas from paradoxes (Cameron & Quinn,1988; Smith & Lewis, 2011), in that dilemmas aresaid to involve tradeoffs that can be resolved byweighing alternatives and choosing one option,while paradoxes are contradictory elements thatpersist over time and defy resolution. Choosing oneelement sparks the alternative, creating a viciouscycle (Andriopoulos & Lewis, 2009). However, asSmith and Lewis (2011) suggested, dilemmas canbecome paradoxes if understood over a longer timehorizon. The data from this study complicate ourunderstanding of paradoxes and dilemmas by de-picting an interwoven relationship between them.

This study surfaced three types of issues thatemerged between the existing product and inno-vation around resource allocation, organizationaldesign, and product design. Leaders described theseissues as both “either/or” dilemmas that demandedchoices, as well as paradoxical tensions that eludedresolutions. For example, resource allocation issuesforced leaders to make tradeoffs between how toallocate financial resources, human resources, etc.At the same time, resource allocations fosteredparadoxes of stability and flexibility. The morestability leaders experienced in allocating resour-ces to exploring and exploiting, the more theycould entertain flexibility to shift resourcesaround. These circular and self-referential relation-ships persisted over time. This more complicateddepiction shifts our understanding of both the natureand management of tensions: Whereas paradoxscholars and practitioners emphasize that manag-ing paradox depends on changing our cognitiveframes from “either/or” thinking to “both/and”thinking (i.e., Bartunek, 1988; Martin, 2007; Smith& Tushman, 2005), this research suggests the needfor more complicated frames. Moreover, this in-terwoven nature of tensions demands more com-plex management strategies.

This study therefore surfaces a more complexmanagement strategy to engage tensions as bothdilemmas and paradoxes, which constitutes thesecond key contribution. Existing research depictsthree dominant approaches to paradox, includingchoosing, accommodating, and accepting. Choos-ing involves making a choice between alternativedemands. Choosing one alternative brings its op-posite to the fore, fueling vicious cycles over time(Lewis, 2000). Accommodating strategies involveaddressing specific issues by finding a novel syn-ergy between competing demands (i.e., Rothenberg,1979). For example, Eisenhardt and Westcott (1988)describe how the senior leaders at Toyota approachtensions by seeking creative solutions that engagecompeting demands simultaneously. As new issuesemerge, executives consistently look for new crea-tive synergies (see also Osono, Shimizu, & Takeuchi,2008; Takeuchi & Osono, 2008). Accepting strate-gies describe approaching paradoxical tensions byengaging, but not resolving, the tensions. For ex-ample, Luscher and Lewis (2008) suggest finding a“workable certainty” to offer a way forward with-out a specific decision. Others describe individualpractices (Hatch & Erhlich, 1993), communica-tion styles (Argyris, 1988), or organizational practi-ces (Andriopoulos & Lewis, 2009) that can expose

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paradoxical tensions and allow leaders to moveforward, without making decisions. Even as thesedifferent approaches fuel cycles over time, researchpredominantly describes a consistent application ofthese strategies.

In contrast, dynamic decision making involvesaddressing a paradox by choosing, accommodating,and accepting over time. Expanding on the dynamicequilibrium model of Smith and Lewis (2011),this approach involves making explicit choices inresponse to individual issues. These choices pre-dominantly involve “either/or” decisions betweencompeting demands, with some of the decisionsthat create a novel synergy to accommodate bothoptions. Yet these decisions are not consistent withone another; rather, they shift in their support be-tween contrasting demands over time. A key insighthere involves exploring the pattern of responsesto issues over time, rather than a response to an in-dividual issue. This pattern adopts multiple differentapproaches to paradox—choosing, accommodating,and accepting. This pattern is consistently incon-sistent because it involves frequent, consistent shiftsbetween inconsistent demands. This model chal-lenges scholars of paradox to be mindful of the timehorizon within which they explore responses totensions and shifts our understanding of managingparadox from addressing discrete issues to man-aging paradox as a pattern of responses over time.

A dynamic decision pattern echoes more his-torical decision-making literature. Early strategicdecision-making scholars acknowledged that multi-ple external and internal stakeholders impose com-peting strategic demands on organizations (Cyert &March 1963; Selznick, 1957), and proposed decisionmodels such as quasi-rationality, sequential attention(Cyert & March 1963), or logical incrementalism(Braybrooke & Lindblom, 1970) with which to man-age these tensions over time. Similar to dynamicdecision making, these models involve shifting sup-port between alternative strategies over time. A keydistinction, however, is the goals of the senior lead-ers. These more traditional models acknowledgedinconsistencies in strategic decisions over time, yetthey did so in service of overarching strategic con-sistency, which they believed to be critical for effi-ciency and long-term survival (Lamberg, Tikkanen,Nokelainen, & Suur-Inkeroinen, 2009). In contrast,a consistently inconsistent pattern assumes thatleaders adopt a shifting decision-making pattern inservice of sustaining strategic paradoxes. This insightjoins the research of others suggesting that a dynamicand contradictory response to complex challenges

enables simplicity amid complexity and supportsinconsistencies through consistency (Follett, 1996;Klein, Ziegert, Knight, & Xiao, 2006;Weick, Sutcliffe,& Obstfeld, 1999).

As a third contribution, a dynamic decision-making model describes how both differentiatingand integrating leadership practices are necessary tosustain strategic paradoxes. These insights extendour understanding of the nature and relationshipsbetween differentiating and integrating. Buildingon early insights from Lawrence and Lorsch (1967),paradox studies depict differentiating and integrat-ing as complementary. These studies demonstratedifferentiating and integrating in organizationalstructures (Tushman & O’Reilly, 1996), managerialcognition (Smith & Tushman, 2005), or organi-zational practices (Andriopoulos & Lewis, 2009).Beyond structures, cognition, and organizationalpractices, the data in this study describe leader-ship practices (Whittington, Jarzabkowski, Mayer,Mounoud, Nahapiet, & Rouleau, 2003), showingwhat leaders do to differentiate and integrate. Dif-ferentiating leadership practices include allocatingdomain-specific roles, comparing domains to raisenovel distinctions, and seeking information aboutdomains independently. Integrating leadership prac-tices include allocating integrative roles, stressingoverarching goals, and solving problems jointly.Differentiating and integrating leadership practicestogether sustain paradoxes by facilitating a multi-level, flexible, and dynamic context for framingdecisions. Contrasting three strategic business unitsthat supported exploration and exploitation withthree that did not highlights how either differenti-ating and integrating alone can lead to choosingonly one domain, with the three units unable tosustain paradox engaged in only differentiating orintegrating practices, but not both. Differentiationfocuses leaders on distinct products, but in the ab-sence of integrating, domain-specific advocates be-come entrenched in their own position. Doing soengenders increased conflict, diminishes the moti-vation to compromise, and stresses only one do-main. Integrating without distinctions also failed tosustain competing demands. Integration empha-sizes synergies between distinct elements. Yet inthe absence of recognizing nuanced distinctions,an overzealous commitment to one domain couldcloud the unique aspects of each and take pre-cedence, resulting in a false synergy. However, to-gether, these forces facilitated a context that shiftedfocus between multiple strategic domains (explor-ing and exploiting), at multiple levels (product and


organizational) to foster a dynamic, flexible ap-proach to decision making. In doing so, this studyexpands our thinking about differentiating and in-tegrating, recognizing not only that they are com-plementary (Andriopoulos & Lewis, 2009; Smith &Tushman, 2005), but also that both are necessary forsustaining paradox.

Finally, by investigating strategic paradox in thecontext of exploration and exploitation, this studymakes several contributions to ambidexterity re-search. Ambidexterity studies argue that long-termorganizational success depends on addressing ex-ploration and exploitation simultaneously (O’Reilly &Tushman, 2008; Raisch & Birkinshaw, 2008;Tushman et al., 2010). Scholars identify paradoxicaltensions that emerge from exploring and exploiting,suggesting that ambidexterity depends on effec-tively engaging these paradoxes (Andriopoulos &Lewis, 2009; Raisch & Birkinshaw, 2008; Smith &Tushman, 2005). The data from this study expandour insight into the paradoxical nature of explora-tion and exploration, by describing specific issuesarising for senior leaders around resource alloca-tion, organizational design, and product design. Inaddition, existing empirical studies depict insightsinto the demographics and characteristics of thetop management teams, suggesting that effectivelymanaging ambidexterity is associated with trans-formational leaders (Jansen, George, van den Bosch,& Volberda, 2008) who have more decision-makingauthority (Mom, van den Bosch, & Volberda, 2009)and top management teams with more behavioral in-tegration (Carmeli & Halevi, 2009; Lubatkin, Simsek,Yan, & Veiga, 2006) or social integration (Jansen,Tempelaar, van den Bosch, & Volberda, 2009). Thesecharacteristics suggest the critical role of strongleaders that have the capability to work together tomanage the challenges of exploring and exploiting.But they offer fewer insights into what the leadersdo to work together to manage these challenges.Complementing this existing research on ambi-dexterity and top management teams, this studydescribes specific leadership practices of differen-tiating and integrating in a decision context to ad-dress the challenges and frustrations of managingexploration and exploitation simultaneously.

Implications for Practice

Practitioner literature increasingly calls for lead-ers to embrace paradox (Cronin & Genovese, 2012;Handy, 1994; Jensen, 2013). Collins and Porras (1997)suggest that great leaders are those who can reframe

strategic challenges from the “tyranny of the or”to the “genius of the and.” More recently, Martin(2007) argues that leadership success derives fromengaging an “opposable mind” to embrace contra-dictory demands simultaneously. Warnings aboutthe need to manage paradox and advice about howto do so now infuse leadership blogs across theInternet. For senior leaders, effectively managingparadoxes is critical to their success.

The data from this study offer at least two rec-ommendations. First, a dynamic decision-makingmodel proposed an alternative approach for de-cision making. Echoing the academic scholarship,managerial literature emphasizes either acceptingor accommodating strategies for managing paradoxin response to a single issue. This study encouragesmanagers to shift the time horizon for managingparadox from responding to a single issue, and in-stead to focus on the pattern of decisions over timeand to embrace inconsistencies in decisions, ratherthan to strive for consistency.

Second, existing advice to manage paradox em-phasizes cognitive strategies for framing tensions(Collins & Porras, 1997; Martin, 2007). To do so,leaders must hire or train others to be capable ofparadoxical or integrative thinking (Smith & Tush-man, 2005; Suedfeld et al., 1992). Yet leaders mightnot have the capability to hire new people or, if theycan hire, may have limited insight into potentialemployees’ capabilities for paradoxical thinking.Moreover, it may be hard to train existing employeesto adopt paradoxical frames, because this perspec-tive may reflect deeply engrained ontological beliefsdriven by societal cultures and myths (Keller &Loewenstein, 2011). Instead of depicting leadershipcapabilities, skills, and traits, this study highlightspractices for managing paradoxes—specifically,differentiating and integrating. Senior leaders whowant to sustain commitments to strategic paradoxescan focus on embedding these practices into theirtop management team.

Limitations and Future Research

The context of this study raises questions aboutthe model’s generalizability and posits possibilitiesfor future research. First, additional research couldextend these insights to a broader context beyondthe tension of exploring and exploiting. As environ-ments becomemore complex, leaders face pressuresto address multiple competing demands that arecore to their strategy and inconsistent with one an-other, including tensions between social missions

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and profits, or global demands and local needs(Besharov & Smith, 2014; Greenwood et al., 2011;Kraatz & Block, 2008). Additional research couldfurther investigate conditions that facilitate or thwartdynamic decision making. The strategic businessunits in this study were embedded in one Fortune500 corporation that encouraged and supportedstrategic paradoxes. Additional research might in-vestigate how different corporate contexts impactmodels of managing strategic paradox. In addition,each of the cases in this study launched innovationsto the market no less than six months and no morethan a year before beginning the study. As a result,many of the tensions that emerged in the study in-volved pressures to expand the innovation. Leadersmay face different types of pressure in attending toexploration and exploitation at different innova-tion phases.

This study further raises question about howleaders can engage subordinates while embracingparadoxical strategies. The results from this studystress the benefits of leaders being consistently in-consistent in their decision making to engage para-doxes. Yet extensive research suggests that doing soraises problems for subordinates. In general, re-search argues that individuals have a strong pref-erence for consistency (Cialdini, Trost, & Newsom,1995). Inconsistencies raise ambivalence and anxiety(Wang & Pratt, 2008), and lead individuals to respondby seeking to regain alignments and consistency.Specifically, in the face of inconsistencies, sub-ordinates often judge their leaders as hypocritical(Cha & Edmondson, 2006) or rationalize the decisionsof leaders to emphasize only one of the goals (Kunda,1990). These existing studies raise questions abouthow leaders can engage and communicate a para-doxical strategy embedded with inconsistencies tosubordinates who strive for consistency (Huy, 2002).

Finally, future research can consider how adynamic decision-making model informs insightinto organizational dynamism and change. Schol-ars depict a mutually constituative relationshipbetween exploration and exploitation (Farjoun,2010). Exploration embeds the seeds of exploita-tion, such that supporting exploration ultimatelyextends exploitation and vice versa. Practices tosustain both over time could provide insight into or-ganizational dynamism and flexibility (Feldman &Orlikowski, 2011; O’Reilly & Tushman, 2008).A dynamic decision-making model offers one pos-sibility of practices that fuel these relationships,and invites future research into how this modelsustains dynamism and change in organizations.

CONCLUSION

In increasingly complex environments, leaders facepressures to manage paradoxical demands. The datain this study suggest one means of doing so. If theseresults survive further empirical testing in broadersettings, they will shift our understanding of seniorleaders as offsetting organizational complexity withclarity and stability toward leaders instead embrac-ing complexity with inconsistency and dynamism.Together, these ideas contribute to existing researchand invite future research on strategic paradoxes andsenior leadership.

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Wendy K. Smith ([email protected]) is an associateprofessor of management in the Lerner College ofBusiness and Economics at the University of Dela-ware. She received her PhD in organizational behaviorfrom Harvard University and the Harvard Business

School. Her research investigates strategic paradoxes,particularly exploring how organizations and their se-nior leaders address tensions between exploring andexploiting and between social mission and financialprofit.

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