Complex Business Models: Managing Strategic Paradoxes Simultaneously

1. Complex Business Models: ManagingStrategicParadoxesSimultaneously Presented by: Mohamed Gamal Afifi Presented to: Prof. Dr. Eduard Heindl

2. Agenda • Introduction • Paradoxical Strategies and Complex Business Models • Managing Paradoxical Strategies • Teams Structures • Conclusion

3. 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

4. Introduction • Contradiction faced by USA Today • Either/Or Approach • Both/and Approach

5. Paradoxical Strategies and Complex Business Models • Organizations that faces contradictions • Ambidextrous organizations • Social enterprises • Learning organizations

6. 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

7. 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

8. 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

9. 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

10. Dynamic Decision Making • How to best design the organization • Achieve synergies between the exploratory and exploitive • Management teams made quick, frequent and flexible decisions

11. 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

12. 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

13. 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

14. Team Structures • Leader-Centric • Team-Centric

15. 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

16. 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

17. 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

18. Questions