Ambidexterity in the narratives

“She understands that the new and uncertain business opportunity might be a failure, but the opportunity is too exciting to pass by.” – Story about Ulla

Ulla has a passion to create something new and exciting, but at the same time she takes care of the current business to be able to generate enough cashflow for her exploring activities.

Ulla represents quite a reactive person, as she is ready to go for a new business if the opportunity is attractive. It seems that she calculates the risk and tries to avoid failure, but she is not afraid of making mistakes. It seems that Ulla has a passion for exploring new opportunities, and quite much of her time is focusing on these activities. At the same time, the employees are running the current business and helping to exploit current capabilities.

However, improving current business needs decision-making authority and investments, and therefore Ulla has to pay attention to these activities as well. Ulla has identified the need to improve current capabilities by investing in the systems to exploit current capabilities more efficiently. Investments in the new business and the current business are made from the cashflow from current operations.

The situation at Reijo’s company is different since he acquired the company about six months ago and there is quite much to do to get the business on track. Reijo has a growth-oriented mindset and ideas on how to grow the business by exploring new opportunities and exploiting current capabilities. However, the focus in the short term is more on exploiting current capabilities rather than expanding to new opportunities. For Reijo, it seems that returns that are more certain and near in time are preferred because of the situation of the company. Even if Reijo is interested in pursuing new opportunities, he has to take care of the current business and profitability. Reijo is exploring new opportunities with limited resources by doing the research by himself and proceeding with smaller steps. In Reijo’s company, employees are crowded with the activities related to the current business. It seems that the history of having an owner who was not interested in exploring new opportunities and a tight financial situation has led to a situation where employees’ innovativeness has declined. It seems that the previous entrepreneur has not kept the eye on competition, some of the products seems to be outdated and the ideas from employees has not been realized. Reijo tries to develop his own expertise and has started many initiatives to improve communication inside the company to build trust between employees and himself. His knowledge and experience from larger corporations helps the company to exploit current capabilities more efficiently, e.g., by changing the ERP system to a less complicated version and removing bottlenecks from the processes.

“Even the business has started with certain products and those represent a large portion of their current revenues, it is self-evident that they do not have to keep importing products that add no value” – Story about Reijo

While balancing exploiting and exploring activities, there is a risk of using scarce current resources inefficiently. Ulla and Reijo are not running ambidexterity in a simultaneous manner—the activities related to both exploitation and exploration are not evenly distributed

or executed simultaneously—but rather, sequentially (Chen, 2017; Nickerson & Zenger, 2002; Boumgarden et al., 2012; Chou et al. 2018, Nölleke-Przybylski et al., 2019). This is a natural consequence based on the fact that the entrepreneur is a key person in both exploiting and exploring tasks in the mentioned stories. Venugopal et al. (2020) suggest SME managers to pursue exploration and exploitation combined. Information exchange helps to combine exploitation and exploration and joint decision-making enhances firm financial performance.

Both entrepreneurs are planning to use their human resources more efficiently to pursue these projects simultaneously, but at this point, the resources of the entrepreneur are too dominating to be able to efficiently run ambidexterity simultaneously. Both entrepreneurs tend to switch back and forth between exploration-and exploitation-related activities as the current situation requires (Volery et al., 2015). The previous literature explains this behavior to be more reactive and situation-based than well-planned and controlled. However, as Ulla explains in her story, it can also be well planned and scheduled and include activities from both sides that have to be carried forward: “You must be master in scheduling. The day includes activities related to improving current business and fine tuning it and at the same time creating something new and exciting”.

4.4.1 Exploration as a personal challenge

“We have to keep our eyes open and look for possibilities to improve the industry or at least be awake if new opportunities arise.” – Story about Reijo

“Ulla sees herself as a risk taker, it is natural to go for a high risk with a high reward” – Story about Ulla

Both Ulla and Reijo see exploration as a personal challenge, and they feel that it includes more opportunities than exploitation, even though exploitation can be seen as a less risky and easier area to grow (Govindarajan & Trimble, 2011; March 1991). Ulla and Reijo have lots of things to do daily, and the challenge is how they can put enough effort into executing current capabilities efficiently and use enough resources to build something new by exploring

attractive opportunities. Entrepreneurs tend to see more opportunities in a new business than in traditional business areas. The entrepreneurs at growth-oriented SMEs see exploration as a possibility to reach higher revenue and profit levels than is possible by exploitation.

Growth-oriented entrepreneurs seek opportunities to explore and exploit from both product and market domains.

“Ulla is chasing her passion to create something new and exciting while simultaneously ensuring that the current business is competitive and creating enough cashflow for her exciting endeavors.” – Story about Ulla

The core business area seems to be important for both entrepreneurs. Growth-oriented entrepreneurs develop both exploring and exploitation capabilities simultaneously. However, the balance differs from each other in the two stories. In the first story, Ulla seems to focus on exploration and exploitation more equally than Reijo. In the second story, Reijo seems to use his own resources and time to explore new opportunities, but rather executes exploitation and development of current capabilities on the company level. The situation between the companies is different. Ulla has more resources to explore new opportunities. Reijo has to focus on running his current business and making it profitable before he is able to explore.

Employees at Reijo’s company are more afraid of innovating or trying something new because of the heritage of limited resources the company has had for years. Therefore, the balance and resources are different, and Reijo respects more certain profits than uncertain opportunities.

“Ulla weighs a few key things as she decides whether to go for a new business or not. First, she considers the competition; too much competition reduces the attractiveness. Next, she evaluates the profits.

If it is profitable and she is able to cash in quickly, that would be great.

Lastly, she assesses scalability”. – Story about Ulla

“He is especially interested in scalable business models, but it seems that these are quite hard to apply to the industry of his business.” –

Story about Reijo

The entrepreneurs are thinking about returns while they assess whether they should go for a certain business area. The entrepreneurs might have a certain growth target or ambition, but not an exact plan or understanding about exact percentages or growth per business area. The growth might also be experimental; if it seems that there is opportunity to grow, the resources are then allocated where growth has been identified. The entrepreneurs take the key role in pursuing exploration and exploitation, and both focus on different aspects while balancing ambidexterity. On the exploitation side, the entrepreneurs are focusing on cost control, profits and seamless production, and on the exploration side, they are focusing on the biggest available profit and high growth opportunity.

To explore new opportunities, the entrepreneur and employees are playing key roles, and entrepreneurs have noticed that the role of employees is vital to achieve ambidexterity (Zimmermann et al., 2015; 2018; Yu et al., 2020). To explore new capabilities, exploitation of existing capabilities is needed. Growth-oriented SMEs cannot neglect exploitation while exploring new opportunities. As these entrepreneurs go for exploration, new capabilities are added to their companies. This seems to be in line with Katila and Ahuja (2002), Birkinshaw and Gupta (2013), Nosella et al. (2012), and O’Reilly and Tushman (2008). In Reijo’s company, it seems that there is urgency to explore as they add new capabilities to the organization. The company could use external advisors or experts, given most of the employees have only worked at the company during their career. In Ulla’s company, employees are involved in planning and are keen to take on more responsibilities. The company culture is forcing employees to take more responsibilities, helping the people to adapt to new circumstances.