Dan Kennedy - Wealth Attraction for Entrepreneurs Seminar

Managing strategic contradictions: Top management teams balancing existing products and innovation simultaneously

Managing strategic contradictions: Top management teams balancing existing products and innovation simultaneously

In a dynamic world, long-term organizational performance demands both exploration and exploitation—incremental improvements to existing products for today and development of innovations for tomorrow. Leaders cannot choose between these different time horizons, but rather must strive for both simultaneously. This dissertation explores how a top management team—the senior executive leadership group of an organization—effectively does so. Specifically, I ask (1) What strategic decision patterns are associated with managing existing products and innovations simultaneously? (2) How do top management teams cognitively process information associated with the existing product and the innovation? (3) How are top management teams structured to balance existing products and innovation? An in-depth qualitative study of 12 top management teams reveals three sets of findings. I find three different types of teams—balancing , where the team’s decisions supported both products; changing , where the team’s decisions supported the innovation at the expense of the existing product, and sustaining , where the team’s decisions reinforced the status quo. Balancing involved dynamic decision making—frequent decisions to shift resources between each product. Balancing teams were also associated with increased existing product and innovation performance, compared with changing or sustaining teams. I further find that balancing both products involves cognitive information processing at the team level that includes differentiating and integrating . By recognizing how the innovation is different from the existing product, top management teams can support this new opportunity without the burden of existing strategies and structures. Integrating identifies the potential for shared resources and synergies between the products. Finally, I find that top management teams can balance these contradictory agendas successfully when they are structured as leader-centric groups , where the senior leader makes the decisions and there is minimal interaction among the executives, and team-centric groups , where the senior executives work interdependently to make strategic decisions. Less effective are non-centric groups , where the decision making roles and processes are unclear and ambiguous. Taken together, these findings not only suggest that top management teams can balance contradictory strategies, but also indicate how these executives can effectively do so.

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