Tensions in the narratives

“It is quite hard to identify which parts of the business should be cut out and where to focus since the business is quite complicated and cutting out some part of old business might close a door for new business.” – Story about Reijo

Tensions in Ulla’s and Reijo’s companies are related to knowledge, communication, and resources. Ulla and Reijo have an ambidextrous mindset and quite clear insight into how they could improve both exploitation and exploration in their companies, but tensions arise when the employees do not share the same insight or feel that their inputs are not important (Wareham et al., 2014). Scarce human resources in both stories lead to gaps or difficulty in balancing ambidexterity (Gibson & Birkinshaw, 2004; Smith & Tushman, 2005; Wareham et al., 2014) and to more tension (Miron-Spektor, 2018). These tensions are managerial challenge for both Ulla and Reijo.

“Reijo had tried to persuade one of the key employees to take more responsibility for the sales of a new product idea, which he had rejected because the sales is not an agreed part of job description.” – Story about Reijo

Ulla and Reijo do not have separate structures for exploitation and exploration; they seem to switch between task-oriented (exploitation) and change-oriented (exploration) activities, as they try to simultaneously achieve the benefits of both poles. Due to scarce resources, entrepreneurs have to excel in scheduling and managing, as efficiently handling tensions related to managing human resources can avoid internal conflicts and bottlenecks. To avoid tensions, entrepreneurs need to focus on executing activities based on resources available and trying not to exceed the capacity.

“Team needs more experience and understanding about opportunities outside the company. Many of the employees have not worked in other job areas than their current workplace.” – Story about Reijo

The way they try to achieve ambidexterity leads to tensions. Allocating resources and balancing the resources to efficiently exploit current capabilities and explore new opportunities seems to be a complex task and limited by scarce resources. Due to the small size of both companies, entrepreneurs need to use the same workforce for both exploitation and exploration in a demanding and quickly shifting environment.

“It is sometimes frustrating to discuss with employees that have indicated they do not have time to think about ‘new fancy things’, because they have so many things to do in the current activities.” – Story about Reijo

“Pekka says that if he has to focus so much on the new concept, he does not have time to lead other workers and take care of incoming orders.”

– Story about Ulla

The dilemma confronting managers and organizations is that in the short run, they must constantly focus on exploitation, but in the long term, they may be required to destroy old constructions to reconstruct new organizations better suited for the next wave of competition (Tushman & O’Reilly, 1996). In both stories, there is a lack of communication. The employees are not aware of the meaning, benefits, and importance of exploitation and exploration tasks. Employees are uncertain about the necessary steps and efforts required by both poles, and they do not know how they should adapt to the situation (Andriopoulos &

Lewis, 2009). In both companies, ambidexterity needs to be created together with the employees. It is vital for both entrepreneurs to get employees to share their vision and goals.

“He had once heard that bunch of employees had some ideas how they could develop the company and offerings, but the previous entrepreneurs were not very keen on investing in new ideas.” – Story about Reijo

The tensions related to ambidexterity in the stories were mainly related to the personnel who raise issues of the need for a constant change and the way in which exploitation and exploration are being executed simultaneously. Activities related to exploitation and exploration are in both Ulla’s and Reijo’s case simultaneous rather than sequential, which causes tensions due to scarce resources and in some cases due to knowledge gaps. Tensions are present especially while restructuring because change spurs tensions between old

structures and the need for different organizational learning models, architectures, and processes (Voss and Voss, 2013; Jarzabkowski, 2013; Lüscher & Lewis, 2008; Smith &

Lewis, 2011).

“She likes to read articles on LinkedIn to get new business ideas and reads business papers on weekends.” – Story about Ulla

To achieve ambidexterity, small and medium-sized businesses need to build capabilities to balance exploration and exploitation and manage tensions. To explore new opportunities and exploit current capabilities, small and medium-sized companies rely on internal resources (employees) and external resources (e.g. customers, networks and advisors). Employees with proper knowledge and shared understanding about future requirements are a bottleneck while balancing ambidexterity in both cases (e.g. Yu et al., 2020). In the stories, the same person in production takes care of current business and is at the projects related to exploring new opportunities. This setting leads to a paradox where employees need to learn new skills and at the same time focus on exploiting current capabilities efficiently. Especially when moving toward exploration, the need to gather new knowledge intensifies in growth-oriented SMEs.

Entrepreneurs as frontline managers need to improve their communication skills and make shared goals more visible. To support the ambidexterity of their enterprises, entrepreneurs need to make sure that the employees have the required skills and are confident in using their knowledge.

The capabilities to organize the company properly in a growth-oriented SME lean strongly toward the entrepreneur. Ulla and Reijo have different ways to acquire and manage their companies’ capabilities. For small and medium-sized growth-oriented enterprises, it is crucial that the entrepreneur has capabilities to balance ambidexterity at the organization level, manage knowledge, and acquire knowledge if needed. The exploitation and exploration of the stories are strongly dependent on the entrepreneur and his or her resources.

“The current, quite tight situation of the bank account is limiting opportunities, but perhaps growth and success can be found by geographical expansion.” – Story about Reijo

“If everything does not start smoothly, more money will be needed to run the operations and perhaps to add marketing costs. It is also still unclear what the success rate will be.” – Story about Ulla

While balancing ambidexterity in growth-oriented SMEs, the entrepreneur faces tensions related to the lack of resources (money, time, human resources) and due the risk, especially related to the exploration. Exploitation is seen as a reliable source of returns, but more uncertainty is seen in exploration. However, the entrepreneurs acknowledge the importance of both poles and need to develop their organizations’ skills to execute both poles.