Organizational Learning-Exploitative and Exploratory

Why do intelligent organizations do dumb things?

According to Stewart Clegg, of the University of Technology in Sydney, Australia, the answer may be that organizations are guilty of too much cleverness and not enough intelligence. In a recently published essay,

Clegg cautions organizations against falling prey to the lure of short-term gain through clever strategies, rather than choosing a more intelligent path leading to long-term sustainability.

Clegg suggests that competitive advantage is gained through two distinct kinds of organizational learning-exploitative and exploratory. How these are handled within organizations, and which form of learning is given precedence, is largely a matter of the organizational power structure.

Exploitative learning, which has its foundations in classical management, suggests that the detailed prescription of tasks is the best basis for production efficiency. This approach to learning is best accomplished through explicitness of rules and routines. Exploitative learning is most effective when a rule-enabling setting is achieved, where continuous improvement develops through the structuring of desire, understanding, and trust. Ideally, workers share with management a desire for continuous improvement.

Exploratory learning, on the other hand, allows for complex searches, innovation, variation, risk-taking and more relaxed controls, providing flexibility, investments in learning, and the creation of new capabilities. Distant time horizons and uncertain benefits are valued.

Clegg argues that a critical managerial dilemma is how to manage the relationship between exploratory and exploitative learning. An emphasis on exploitative learning and the necessary explicitness of rules may restrict experimentation and crush innovation. Steadfast attention to task accomplishment can be punitive and stifling. At worst, it can threaten the survival of the organization, as increasingly outmoded processes are slavishly and uncritically adhered to.

On the other hand, an overemphasis on exploratory learning is also not optimal



Clegg, S. 1999. Globalizing the intelligent organization: Learning organizations, smart workers, (not so) clever countries and the sociological imagination. Management Learning, 30 (3): 259-280.

HBR Case Study November 2006

The Reign of Zero Tolerance. By: Gerson, Ben, Parker, Janet, Volokh, Eugene, Halloran, Jean, Cherkasky, Michael G., Harvard Business Review, 00178012, Nov2006, Vol. 84, Issue 11

Actions that damage a company and its employees should be stamped out, everyone would agree. But should the people responsible be stamped out, too?

Teams HBR 2006

Teams

Lift Outs: How to Acquire a High-Functioning Team
Boris Groysberg and
Robin Abrahams
December
Reprint R0612J

Managing Multicultural Teams
Jeanne Brett, Kristin Behfar, and
Mary C. Kern
November
Reprint R0611D

When to Let Them Duke It Out
Tony Simons and
Randall S. Peterson
Forethought, June
Reprint F0606E

Organization and Culture - HBR 2006

Organization and Culture

Business Lessons from Leeches
Marc Abrahams
Forethought, October
Reprint F0610B

Conquering a Culture of Indecision
Ram Charan
January
Originally published in 2001
Reprint R0601J

The Decision to Trust
Robert F. Hurley
September
Reprint R0609B ♦ OnPoint 1056;
OnPoint collection "Winning
Your Employees' Trust" 1052

Ending the War Between Sales and Marketing
Philip Kotler, Neil Rackham, and
Suj Krishnaswamy
July–August
Reprint R0607E ♦ OnPoint 1014;
OnPoint collection "Supercharge
Your Sales Force" 1005

Evidence-Based Management
Jeffrey Pfeffer and
Robert I. Sutton
January
Reprint R0601E ♦ OnPoint 298X;
OnPoint collection "To Make the
Best Decisions, Demand the Best
Data" 3048

Extreme Jobs: The Dangerous Allure of the 70-Hour Workweek
Sylvia Ann Hewlett and
Carolyn Buck Luce
December
Reprint R0612B ♦ OnPoint 1685

Facing Ambiguous Threats
Michael A. Roberto, Richard M.J.
Bohmer, and Amy C. Edmondson
November
Reprint R0611F ♦ OnPoint 1499

The HBR Interview: Ideas as Art
James G. March
Interviewed by Diane Coutu
October
Reprint R0610E

Home Depot's Blueprint for Culture Change
Ram Charan
April
Reprint R0604C ♦ OnPoint 4079;
OnPoint collection "CEOs on
Leading Change" 4117

Off-Sites That Work
Bob Frisch and Logan Chandler
June
Reprint R0606H ♦ OnPoint 4494;
OnPoint collection "Strategy
Meetings That Work" 4532

Procurement as Strategy
Carlos Niezen and Wulf Weller
Forethought, September
Reprint F0609D

Rethinking Political Correctness
Robin J. Ely, Debra E. Meyerson,
and Martin N. Davidson
September
Reprint R0609D ♦ OnPoint 1068

Shut Up and Stop Whining
A conversation with Larry Winget
Gardiner Morse
Forethought, December
Reprint F0612F

The Tools of Cooperation and Change
Clayton M. Christensen, Matt
Marx, and Howard H. Stevenson
October
Reprint R0610D ♦ OnPoint 1458;
OnPoint collection "What You
Really Need to Know About
Change" 1454

Why It's So Hard to Be Fair
Joel Brockner
March
Reprint R0603H

The Why, What, and How of Management Innovation
Gary Hamel
February
Reprint R0602C ♦ OnPoint 3420;
OnPoint collection "Staying
Ahead of Your Competition" 3455

Management Development HBR 2006

Management Development

Making Mentoring Pay
Marc Abrahams
Forethought, June
Reprint F0606B

Lift Outs: How to Acquire a High-Functioning Team. By: Groysberg, Boris, Abrahams, Robin,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12


By hiring away whole teams from a competitor, companies can quickly gain capacity without all the headaches of a merger or acquisition. It's a high-risk, high-reward move.

Today, lift outs are increasingly common in many professional-services industries – law, advertising, investment banking, consulting, general management, and even medicine. They enable a quick ramp-up in talent without the logistical and psychological stresses of an acquisition or the sociodynamic challenges of creating teams from scratch. The advantages of long-standing relationships and trust help an experienced team make an impact much faster than could a group of people brought together for the first time.

Boris Groysberg (bgroysberg@hbs.edu) is an assistant professor at Harvard Business School in Boston. His most recent HBR article, coauthored with Andrew N. McLean and Nitin Nohria, is "Are Leaders Portable?" (May 2006). Robin Abrahams (rabrahams@hbs.edu) is a research associate at Harvard Business School.

72 hour work week executive

Extreme Jobs: The Dangerous Allure of the 70-Hour Workweek.
By: Hewlett, Sylvia Ann, Luce, Carolyn Buck,
Harvard Business Review,
Dec 2006, Vol. 84, Issue 12

Our research on extreme jobs is a project of the Hidden Brain Drain Task Force, which we launched in February 2004 and now head up. In late 2005, four of the task force's member companies – American Express, BP, ProLogis, and UBS – sponsored two large surveys with the intent of "mapping" the shape and scope of high-level, high-impact jobs these days. We also conducted indepth qualitative research–focus groups and interviews – to get at the attitudes and motivations that lie behind the extreme-work model.We then considered the data in relation to the large-scale structural shifts that have made high-stakes employment a more prominent feature of the U.S. economy and culture. What emerges from this inquiry is a complex picture of the all-consuming career – rewarding in many ways, but not without danger to individuals and society.

The first thing that becomes clear is that successful professionals are working harder than ever. The 40-hour workweek, it seems, is a thing of the past. Even the 60-hour workweek, once the path to the top, is now practically considered part-time, as a recent Fortune magazine article put it. Our data reveal that 62% of high-earning individuals work more than 50 hours a week, 35% work more than 60 hours a week, and 10% work more than 80 hours a week. Add in a typical one-hour commute, and a 60-hour workweek translates into leaving the house at 7 am and getting home at 9 pm five days a week. If we focus on the subset of those workers who hold what we consider extreme jobs (a designation based on responsibilities and other attributes beyond pay), the hours are even more punishing. The majority of them (56%) work 70 hours or more a week, and 9% work 100 hours or more.

We identified ten common characteristics of extreme jobs and decided to classify a respondent as an extreme jobholder if he or she is confronted by at least five of them, on top of working 60 hours or more per week By this standard, 21% of the high earners in the U.S. whom we surveyed have extreme jobs. (In our separate survey of professionals working in global companies, this figure rises to 45%.)

Senior leadership of organizations should take note: The attributes that give a workplace an advantage in recruiting and retention can change dramatically over time. The culture that celebrates the extreme ethos today may tire of it–quite literally–tomorrow. At a minimum, senior executives should think carefully about the work behaviors they are rewarding, encouraging, or requiring. More than anything, the signals they send will determine whether jobs become extreme–and if so, whether those jobs remain exhilarating or simply become exhausting.

Why people are doing extreme work?

The reasons given are

Stimulating/challenging/gives me an adrenaline rush
High-quality colleagues

High compensation

Receive recognition for work

Power/status

Sylvia Ann Hewlett is the president of the Center for Work-Life Policy, a New York–based nonprofit organization. She also heads the Gender and Policy Program at Columbia University's School of International and Public Affairs, in New York. Carolyn Buck Luce is the chair of the Hidden Brain Drain Task Force and the global pharmaceutical sector leader at Ernst & Young, in New York.

When you take over a Division

When a New Manager Takes Charge.
By: Gabarro, John J.,
Harvard Business Review,
Jan 2007, Vol. 85, Issue 1

Fewer publications address what happens when general managers take over a division or function in large organizations. Yet these are the transitions through which a manager becomes -- or fails to become -- a leader.

More than 20 years ago, Harvard Business School professor John J. Gabarro conducted a research project to examine what happens when general managers take on big new jobs.

In this 1985 article (reprinted now once again), he reported on his findings: Managers took much longer than predicted to get up to speed; successful transitions followed predictable stages (including two sit-back-and-watch periods of immersion and refinement); industry insiders took charge much faster than outsiders; and a good working relationship with a boss dramatically increased the likelihood of success. Gabarro's most important finding overall was that taking charge takes a long, long time. Given the now common practice of shortened general-management assignments, are organizations paying a huge, hidden cost?


John J. Gabarro is the UPS Foundation Professor of Human Resource Management in Organizational Behavior at Harvard Business School in Boston.

Project-based organizations, or PBOs,

As project managers are asked to take a more strategic focus and as organizational managers look for better strategy delivery results both with mitigated success, a well-integrated PBO could be a possible answer provided their structures give horizontal integration from business strategy to operational benefits and vertical integration between corporate objectives and the prioritized portfolio of projects. It is also very likely that the adoption of an integrated wide-scale project approach, including a governance-oriented project management office, will enable organizations to deliver value consistently for all their stakeholders and therefore promote the organizational project management concept.

Value delivery, Industrial Engineer June 2008,

Author
Michel Thiry is managing partner of Valense Ltd. Thiry has more than 30 years of experience in strategic project management, value program support, and organizational change for large multinational organizations. He is a visiting professor at Henley Management College in the United Kingdom, University of Technology in Sydney, Australia, and Polyfinance Business School in Casablanca, Morocco. Thiry has been awarded the PMI Fellowship for his continued contribution to project management and was elected fellow of the Association for Project Management in 2007.

The pervasiveness of complementary leadership

THE LEADERSHIP TEAM.
By: Miles, Stephen A., Watkins, Michael D.,
Harvard Business Review,
April 2007, Vol. 85, Issue 4

The limitations of people's information-processing capacity, which are well documented, make it impossible for one individual to manage a large and complex enterprise. Bruce Chizen, CEO of the software and technology company Adobe Systems, says of his own position, "The job is simply too big for any one person." Bringing together two or more people with complementary strengths not only compensates for the shortcomings of each but also results in a team in which the whole is much greater than the sum of the parts.

Complementary leadership generally manifests itself in four ways.

One familiar split assigns one leader (usually the CEO) the job of managing the external environment, while her counterpart (often the COO) concentrates on internal management issues.

A second fairly clear-cut division of responsibilities is expertise complementarity. For example, Chizen, Adobe's CEO, has a background in sales and marketing, and Shantanu Narayen, the company's president and COO, came up through the engineering and product ranks.


A third, less sharply delineated type of synergy –what we call cognitive complementarity – involves differences in how individuals process information.

Finally, leaders often play discrete and complementary social roles in organizations – a phenomenon we call role complementarity. One person can rarely assume more than one social role; it is difficult, for example, for a leader to be both feared and loved.

Stephen A. Miles (smiles@heidrick.com) is an Atlanta-based managing partner in the Leadership Consulting Practice of the executive search firm Heidrick & Struggles and a coauthor of "Second in Command: The Misunderstood Role of the Chief Operating Officer" (HBR May 2006).

Michael D. Watkins (mwatkins@genesisadvisers.com), based in Newton, Massachusetts, is a partner in the leadership development consultancy Genesis Advisers and the author of The First 90 Days: Critical Success Strategies for New Leaders at All Levels (Harvard Business School Press, 2003).

Executive Turnover related to CEO change

SURVIVING YOUR NEW CEO.
By: Coyne, Kevin P., Coyne, Sr., Edward J.,
Harvard Business Review,
May 2007, Vol. 85, Issue 5

First, the authors looked at companies where the CEO remained constant. Proxy-level senior management turnover under those circumstances had a weighted average of 16% annually. Roughly half (about 8. 5%) was voluntary, consisting of people who retired or who faced health or family issues, and that rate appeared to be unaffected by the company's performance. More important is the rate of involuntary turnover, including firings and unplanned early retirements. This averaged about 7. 5% overall, with slight differences depending on how well the company was performing.

Next, we looked at the turnover rates for companies in which an internal executive had moved up the corporate ladder to the top spot. In such cases, the news was generally bad: The rate of involuntary turnover jumped up to 12.5% --an increase of about 65%. When we included voluntary turnover as well, the chances of a senior executive's leaving grew to more than one in five.

Then we considered cases in which the new CEO came from outside the company, which generally happens only in mid-performing and low-performing firms (high-performing companies almost never replace their CEOs with outsiders). Here, the story gets much worse: Involuntary turnover averaged a whopping 26%-- almost four times the rate when the CEO did not change. A further breakdown revealed that the involuntary turnover rate at companies with average performance was 24%, while the rate at poorly performing companies was 31%. Thus, overall, if you are listed in the proxy statement and your company brings in an outside CEO after a year of sub-par performance, you have about a two in five chance of leaving your job.


How to Survive

Show your goodwill
Study the CEO's working style
Understand the CEO's agenda
Present a realistic and honest game plan

Kevin P. Coyne (kcoyne@hbs.edu) teaches strategy at Harvard Business School in Boston and serves as a senior external adviser to McKinsey & Company. Edward J. Coyne, Sr., (ejcoyne@samford.edu) is an assistant professor at Samford University's School of Business in Birmingham, Alabama.

P&G and HSBC - Talent Factories - Some Observations

Make Your Company a TALENT FACTORY.
By: Ready, Douglas A., Conger, Jay A.,
Harvard Business Review,
June 2007, Vol. 85, Issue 6


Some companies face the future with confidence because they don't just manage talent, they build what we call "talent factories." In other words, they marry functionality, rigorous talent processes that support strategic and cultural objectives, and vitality, emotional commitment by management that is reflected in daily actions. This allows them to develop and retain key employees and fill positions quickly to meet evolving business needs.

In this article, we look at the people processes in two talent factories: Procter & Gamble and financial services giant HSBC Group. We selected these companies because even though they approach talent management from slightly different directions, both illustrate the power of a twin focus on functionality and vitality. P&G has established a plethora of elaborate systems and processes to deploy talent; HSBC has worked mightily to incorporate talent processes into the firm's DNA. Both companies can claim a free flowing pipeline of current and future leaders.

P&G offers formal training and development programs and sometimes sends managers to external executive education programs. The lion's share of development, however, takes place on the job, with the immediate manager's support and help from mentors and teammates. A typical marketing manager, for example, will have worked with a number of different brands over a period of time. A finance manager will have gone through various assignments, ranging from financial analysis to treasury to auditing to accounting. Most managers are also placed on important multifunctional task forces or project teams from time to time. New postings and task force participation are expected to challenge employees, and they signal to managers that P&G will always offer new opportunities.

The company also pays close attention to the effectiveness of its recruiting processes. P&G interviewers record detailed assessments of each candidate and assign them a quantitative score, using uniform criteria. The company then regularly assesses performance against the baseline set during the interviews. P&G also evaluates the success rate of its key promotions, using quantitative and qualitative measures that cover a three-year period. Managers who improve the business and its capabilities are deemed "successful"; the company has a success rate that exceeds 90%. When derailments occur, P&G conducts a thorough "lessons learned" review.


Douglas A. Ready (dready@icedr.org) is a visiting professor of organizational behavior at London Business School and the founder and president of ICEDR, a global talent management research center in Lexington, Massachusetts. He is the author or coauthor of several HBR articles, including "How to Grow Great Leaders" (December 2004).

Jay A. Conger (jay.conger@cmc.edu) is the Henry R. Kravis Research Chair in Leadership Studies at Claremont McKenna College, in California, and a visiting professor of organizational behavior at London Business School. He conducts human resources research with the Center for Effective Organizations at the University of Southern California's Marshall School of Business, in Los Angeles. His most recent article for HBR is "Developing Your Leadership Pipeline," with Robert M. Fulmer (December 2003).

Raising to Top - Obstacles for Women

Women and the Labyrinth of Leadership.
By: Eagly, Alice H., Carli, Linda L.,
Harvard Business Review,
Sep 2007, Vol. 85, Issue 9

When you put all the pieces together, a new picture emerges for why women don't make it into the C-suite. It's not the glass ceiling, but the sum of many obstacles along the way

Vestiges of prejudice

Resistance to women's leadership

Issues of leadership style

Demands of family life

Underinvestment in social capital

Alice H. Eagly (eagly@northwestern.edu) is a professor of psychology and holds the James Padilla Chair of Arts and Sciences at Northwestern University, in Evanston, Illinois; she is also a faculty fellow at Northwestern's Institute for Policy Research.

Linda L. Carli (lcarli@wellesley.edu) is an associate professor of psychology at Wellesley College, in Massachusetts; her current research focus is on gender discrimination and other challenges faced by professional women. The two are coauthors of Through the Labyrinth: The Truth About How Women Become Leaders (Harvard Business School Press, forthcoming in October), from which this article is adapted.

Insider CEO is more successful

Solve the Succession Crisis by Growing Inside-Outside Leaders.
By: Bower, Joseph L.,
Harvard Business Review,
Nov 2007, Vol. 85, Issue 11

In my analysis of 1,800 successions, for instance, I found that company performance was significantly better when insiders succeeded to the job of CEO. Other researchers, including Jim Collins in Good to Great, have come to similar conclusions working from different data sets.


My research suggests that as a rule the best leaders are, therefore, people from inside the company who have somehow maintained enough detachment from the local traditions, ideology, and shibboleths to maintain the objectivity of an outsider.


Joseph L. Bower (jbower@hbs.edu) is the Donald Kirk David Professor of Business Administration at Harvard Business School in Boston. He is the author of The CEO Within: Why Inside Outsiders Are the Key to Succession Planning (Harvard Business School Press, 2007).

Why Mentoring Matters in Professional Service Firms?

Why Mentoring Matters in a Hypercompetitive World.
By: DeLong, Thomas J., Gabarro, John J., Lees, Robert J.,
Harvard Business Review,
Jan 2008, Vol. 86, Issue 1

Today's professional service firms (PSFs) are so busy making money that they've lost the art of making talent

our research reveals that 67% to 85% of all the professionals in PSFs have an extreme need to achieve.

The truth is that in today's PSFs, with their limited resources, associates can no longer just expect to be assigned a mentor; they also have to learn how to attract one.


One particularly interesting approach developed at McKinsey & Company is to encourage associates to "build [their] own McKinsey." members of the firm are counseled to seek out the subordinates, peers, and partners toward whom they naturally gravitate because of mutual chemistry, interests, and goals.

A wise leader told the group that only by supporting one another could they be competitive (in the market place). He created team metrics that encouraged them to work together not against one another.


More than any other type of organization, PSFs live and die by their intellectual capital. If you fail to nurture this talent, you will lose the heart and soul of your firm, as well as the very people you recruited to give you an edge in a hypercompetitive world.

WHAT ENABLES A BIG BUSINESS TO BE AGILE?

Transforming Giants.
By: Kanter, Rosabeth Moss,
Harvard Business Review,
January 2008, Vol. 86, Issue 1

Companies such as IBM, Procter & Gamble, Omron, CEMEX, Cisco, and Banco Real are moving as rapidly and creatively as much smaller enterprises.

At Procter & Gamble, the values and standards captured in the company's statement of purpose, values, and principles (known as the PVP) enable managers in diverse locations to respond quickly and effectively to business opportunities or crises.

A strong, broadly internalized guidance system obviates the need for controls that stress obedience and instead promotes autonomy.

People are more inclined to be creative when their company's values stress innovation that helps the world. Banco Real, the Brazilian arm of a European bank, discovered this when it put social and environmental responsibility at the core of its search for differentiation. The result was a spate of new financial products, including consumer loans for green projects (such as converting autos or houses), microfinance for poor communities, and the first carbon credit trading in the region.

If values and standards served no other purpose in a company, they would still serve as motivational tools. They offer people a basis for engagement with their work, a sense of membership, and an anchor of stability in the midst of constant change.


Rosabeth Moss Kanter (rkanter@hbs.edu) is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School in Boston. Her latest book is America the Principled (Crown, 2007). She was the editor of HBR from 1989 to 1992.

Building Blocks of the Learning Organization

Is Yours a Learning Organization?
By: Garvin, David A., Edmondson, Amy C., Gino, Francesca,
Harvard Business Review,
March 2008, Vol. 86, Issue 3

Organizational research over the past two decades has revealed three broad factors that are essential for organizational learning and adaptability: a supportive learning environment, concrete learning processes and practices, and leadership behavior that provides reinforcement.

Developing a reputation for ethical leadership

Moral person and moral manager: How executives develop a reputation for ethical leadership
Linda Klebe Trevino, Laura Pincus Hartman, Michael Brown.
California Management Review.
Summer 2000. Vol. 42, Iss. 4; pg. 128, 15 pgs

Moral Person + Moral Manager =A Reputation for Ethical Leadership

These ideas about a dual pillar approach to ethical leadership are not brand new.

Chester Barnard addressed the ethical dimension of executive leadership sixty years ago. Barnard spoke about executive responsibility in terms of conforming to a "complex code of morals" (moral person) as well as creating moral codes for others (moral manager).


Moral managers recognize the importance of proactively putting ethics at the forefront of their leadership agenda. Like parents who should explicitly share their values with their children, executives need to make the ethical dimension of their leadership explicit and salient to their employees.

Many executives are uncomfortable talking about ethics and wonder about those who do.

The Hypocritical Leader

A leader who is not perceived to be a strong ethical person but who attempts to put ethics and values at the forefront of the leadership agenda is likely to be perceived as a hypocritical leader who "talks the ethics talk" but does not "walk the ethics walk."

Cultivating a Reputation for Ethical Leadership

Given the importance of ethical leadership, we offer the following practical steps executives can take to cultivate a reputation for ethical leadership.

Share Your Values: Who You Are as an Ethical Person

Assume the Role of Moral Manager. Chief Ethics Officer of Your Organization

Strategies for managing internal competition

Strategies for managing internal competition
Julian Birkinshaw. California Management Review. Berkeley: Fall 2001. Vol. 44, Iss. 1; pg. 21, 18 pgs


Internal Competition between Technologies

Catch It Early

Bring the Competing Units Together

Accept Coexistence as a Possible Outcome

Manage the Loser

Internal Competition between Business Lines

Keep the Competing Businesses Apart at First

Monitor the Level of Cannibalization

Look for Opportunities to Integrate
While coexistence among the competing business lines can often be justified for several years, the ultimate objective is always to look for ways of integrating them.