Balancing Exploration and Exploitation in The Service Sector: Ambidexterity in a Norwegian Company with a Value Shop Configuration

The research question in this thesis is ?How does Making Waves balance explorationand exploitation?? which is based on our desire to study a Norwegian servicecompany with an innovative edge and long-term profitability. Our thesis is writtenwithin the field of innovation management.The most central theories covered in this thesis are related to exploration,exploitation, and ambidexterity, which is the ability of organizations to balanceexploration and exploitation. We have created a model of four different ways acompany can approach ambidexterity: architectural, contextual, combinatorial, andmanagement approaches.We have employed a qualitative research strategy, and designed a single-case studyof the Norwegian consultancy company Making Waves. We interviewed 18employees, from top management to non-management, and used a method foranalysis inspired by open coding and grounded theory. Our theoretical foundation isa literature review we conduced in the fall of 2012. Based on the theoreticalfoundation and the empirical data, we have created a set of propositions that weused to shed light on specific elements of our research question.From the analysis of our empirical data, we created three main categories that weused in the discussion: Company culture, knowledge management, and strategicorientation. We presented empirical data within these three categories, andexplained how Making Waves uses the four approaches to ambidexterity. We alsoestablished that Making Waves can be defined as a value shop, which enabled us totheorise about which other companies that might benefit from our results.We have used the insight we gained from the discussion of our propositions toanswer the research question. The overall answer to the question is that MakingWaves balances exploration and exploitation by having managers that combinearchitectural and contextual approaches to ambidexterity. More specifically, we foundthat Making Waves achieves ambidexterity through customer projects, and that theyrely more and more on architectural approaches as they are growing. The CEO ofMaking Waves is directly involved in the contextual approaches, which he affectsthrough his leadership style. The management in Making Waves does not preferexploitative projects to explorative projects, and they do not use the performancemanagement aspect of contextual approaches. We also found that Making Waves donot use spatial separation as an architectural measure when being ambidextrous.The most important implications of our research are that value shops seem toemploy more architectural approaches to ambidexterity by default when they grow interms of number of employees, that the CEOs of companies with flat structuresstrongly affect contextual approaches to ambidexterity, and that thorough knowledgemanagement is essential for achieving ambidexterity in value shops. We also believethat a combined view on ambidexterity and management theory would benefit bothfields