Complex Business Models: Managing Strategic Paradoxes Simultaneously

Presented by: Mohamed Gamal AfifiPresented to: Prof. Dr. Eduard Heindl

Agenda

• Introduction• Paradoxical Strategies and Complex Business

Models• Managing Paradoxical Strategies• Teams Structures• Conclusion

Introduction

• 1990’s USA Today was the highest market share

• Introduction of New Product by USA Today

• Threat of Yahoo and AOL

• Differences between printed and online paper

Introduction

• Contradiction faced by USA Today

• Either/Or Approach

• Both/and Approach

Paradoxical Strategies and Complex Business Models

• Organizations that faces contradictions

– Ambidextrous organizations

– Social enterprises

– Learning organizations

Ambidextrous organizations

• Contradictions between it’s exploratory and exploitive strategy

• Analog Devices Contradiction– Analog Semi Conductor chip– Digital Signal Processing and micro electronic ship– Different subunit for every revenue stream

Social Enterprises

• Contradiction between social goods and Financial

profit

• Digital Divide Data– It’s mission is to provide growth opportunities for our staff and

high quality services to our customers through sustainable technology-related enterprises.

– Tensions:• Selection and socialization• Motivation and incentives• Identity

Learning Organizations

• Tensions in this type are:– Learning and Performance– Stability and change– Control and flexibility– Alignment and adaptability

• Toyota Tensions– Traditional or Innovative– Hierarchal or flat structure

Senior leadership team processes

• Dynamic decision making

• Building commitment to an overarching visions and agenda specific goals

• Actively learning about each agenda and the relationships between them

• Engaging conflict

Dynamic Decision Making

• How to best design the organization

• Achieve synergies between the exploratory and exploitive

• Management teams made quick, frequent and flexible decisions

Building commitment to an overarching visions and agenda specific goals

• Committing to Paradoxical strategies simultaneously requires:– define an overarching vision that integrates both exploratory and

exploitative strategies– Articulate clear and differentiated goals, and applied distinct

objectives and metrics, specific to the different agendas

• Analog Device defined the following:– "market leadership through technical innovation and superior

customer service“ Overarching vision– Metrics concerning market share, revenues and profits for

exploitive strategy– time to market, quality and new customers metrics for

exploratory strategy

Actively learning about each agenda and the relationships between them

• Learning behavior enables executive to expirement:– Risk taking

– Alter routines and strategies

– Decision making

• Learning Focuses differs in the two strategies:– Exploitative learning focuses on refinement, execution,

selection and choice

– exploratory learning focuses on adaptation, experimentation, risk taking, search and variation

• Hercules company– Offsite meetings for exploratory business

– Two days meeting to discuss the differences between the two models

Engaging (and encouraging) Conflicts

• Complex business models face extensive conflict between their contradictory strategies

• Senior leaders have to recognize and engage in conflicts– Articulate and learn from tensions– Relieve emotional stress

• Engaging in such contradictions requires– Distinct roles to raise and discuss different perspectives– Having the skills to manage the conflict

• Analog Device company conflict– CEO focus more on big picture– COO focus on operational efficiency– Sound proof room was built to facilitate their different opnions

Team Structures

• Leader-Centric

• Team-Centric

Leader-Centric

• Individual Leader is the integrator

• Senior teams serves as advocates

• Team members focus on achieving clear and consistent goals

• High cognitive burden on the leader

Team-Centric

• Integration happens at the team level

• Members of the team:– Manage cognitive paradoxes– Share mental model and cognitive frames

• Conflict is an important tool for managing contradictions

Conclusion

• Managing the contradicting strategies became a mandatory due to hypercompetitive and fast paced

world• Three teams were found

• Balanced team is the most suitable

QUESTIONS