The value-rational organizational form as the context for distributed ambidexterity By

Values

The key organizational paradox of DA in the values dimension is the ability of an organization to sustain values that honor simultaneously creativity and efficiency. The value-rational organizational form does this by stabilizing an ethic of contribution—of contribution to the organization’s ultimate value, to its social purpose—thereby creating an end-goal that is superordinate to the intermediate goals of creativity and efficiency. The salience of this shared purpose can then motivate and guide exploration and exploitation efforts, as well as the DA effort to synthesize these two. Several management techniques have evolved since Weber’s time that operationalize such an ethic of contribution and thereby create a context that supports DA.

Some of these techniques help focus internal discussion on the external customers’ needs. These needs are, of course, a necessary (although not sufficient) component of our concept of ultimate value. These techniques have blossomed in recent decades as companies orient themselves away from manufacturing products and towards providing integrated solutions. This solutions-orientation encourages firms to develop tools to understand better their clients’ needs and to maintain their members’ focus on those needs (Brady, Davies, & Gann, 2005; Galbraith, 2002). These techniques help the organization orient itself to the creation of the “use-values” required by customers rather than only to the creation of the “exchange-value” that returns as material gains for investors. To repeat the qualification noted above: while these techniques, like others discussed below, have sometimes proven useful beyond the context of DA, our contention is that these techniques, implemented in a sufficiently systematic manner, effectively operationalize value-rationality as an organizing principle.

Other techniques help orchestrate a broader variety of voices in the strategy discussion. For value-rationality to be truly rational, the ultimate values themselves, like the means of achieving them, must be subject to discussion based on public standards of validity (Habermas, 1992). In this respect too, history has overtaken Weber. Where Weber assumed that value-rationality relied on non-rational commitments—Nietzschean acts of will (Hennis, 1988)—to the ultimate values, Habermas and later scholars have identified a range of techniques for making value-rational discourse more thoroughly rational through an elaboration and operationalization of the “ideal speech situation” (Habermas, 2001). In the practical world of industry, we find the strategy process—defining, implementing, monitoring, and adjusting strategy—sometimes taking a dialogical and deliberative form that corresponds closely to Habermas’s model. A range of techniques are now available to support this strategy dialogue both within the organization, as participative strategy processes (Forester, 1999), and beyond the organizational boundaries, in the form of multi-stakeholder strategy dialogues (Roloff, 2008; Zadek, 2008).

A third set of techniques aims to ensure that strategy and shared purposes orient the daily work of everyone in the organization rather than leaving these as the purview of top management. We are referring to techniques such as the Balanced Scorecard (Kaplan & Norton, 2001), Quality Function Deployment (Akao, 2004), and Hoshin Kanri (Cole, 1999), which articulate complex value priorities in ways that allow everyone to connect them to their daily work.

This constellation of techniques can operationalize an ethic of contribution and therefore engender a shared commitment to the organization’s ultimate purpose. The importance of anchoring values around shared purpose and operationalizing such an ethic of contribution has surfaced in several studies of ambidexterity. Smith and Tushman (2005) make the case for the importance of shared vision and purpose to ambidexterity, writing: “Shifting to the superordinate level (the organization) and linking to the overarching frame reinforces the cooperation between contradictory agendas and enables teams to better make trade-offs.” (We note that shared vision may or may not support DA depending on the content of that vision and on whether the participants are rationally committed to it.) Andriopoulos and Lewis’ (2009) inductive study of new product development consultancies identified tensions at both the strategic and personal levels regarding key values. These consultancies achieved DA by “cultivating a paradoxical vision” of the firm’s strategy—one that embraced both creative breakthrough (representing here the exploration dimension) and commercial success (representing exploitation)—and in individual designers’ identities as “practical artists” rather than pure creatives or pure business people. In a related paper, Gotsi et al. (2010) highlight the roles of selection, mentoring, and constant communication—communication that reiterates the theme of embracing these paradoxes—in socializing employees and helping them internalize identities and values that enable DA. For example, in one firm, project reviews after each project reiterate the DA goals: “We try to do a review after every project, and there are three things that need to be satisfied. One is,
did the studio make money? The secondary reason is, did we make the world a better place with this design? And the third thing is, did we help our client make money?” (p. 797). Such socialization is part of the fiduciary role that Parsons attributes the Latency function and the associated values subsystem.

Kaiser illustration. Kaiser illustrates the key role of an ethic of contribution in creating a shared purpose that can facilitate the synthesis of exploration and exploitation values. Somewhat controversially, Kaiser’s doctors are expected to consider not only patient outcomes but also the economic consequences of their treatment decisions. Where many doctors in private practice long refused any role in controlling healthcare expenditures, Kaiser’s doctors participate in that effort. Kaiser aims to encourage DA—here in the form of a synthesis of health and cost goals—among its doctors, and these doctors’ sense of shared purpose enables them to pursue this synthesis.

This synthesis effort is supported by numerous forums where Kaiser’s physicians discuss the meaning of this complex, multi-dimensional value-commitment. Doctors outside Kaiser are often left to make their own cost versus quality tradeoff choices in the diagnostics and treatments they order; increasingly often, they are penalized financially for ordering the more expensive option even when that option promised better clinical results. At Kaiser, in contrast, there is a strong commitment that these choices will not degrade clinical outcomes; however, where there is an equally effective option that is less expensive, doctors are encouraged to consider it. For example, Kaiser does its own research on the clinical equivalence of generic medications and disseminates those results to its doctors. These cost/quality choices and the associated research are discussed in weekly or monthly meetings of physicians at the medical-office building level, in monthly meetings of physicians in their specialty departments, and in bi-monthly off-site retreats for doctors from the entire service area. As one doctor expressed it: “At Kaiser there will be no cost/quality tradeoffs. But we must be good stewards of our members’ dollars.” Where doctors elsewhere are the targets of extensive “drug detailing” efforts by pharmaceutical companies, Kaiser banned drug detailing in its facilities. Conversely, when Kaiser’s doctors choose a questionable path of diagnosis or treatment, they are likely to receive a call from a colleague asking for a peer-to-peer discussion of their choices. (The process is called “academic detailing”: see, for ex., Postlethwaite, Shaber, Mancuso, Flores, and Armstrong (2007).) Kaiser thus carefully cultivates an ethic of contribution.

The operationalization of an ethic of contribution and the institutionalization of value-rationality at Kaiser have also benefitted from the definition of the “Value Compass” in 2010 (Whippy et al., 2011). The Value Compass operationalizes several of the key features of value-rational organizational form. First, it defines the shared purposes of the organization in use-value terms, that is, in terms that identify the specific contributions of Kaiser to society—“Best quality, best service, most affordable, best place to work”—rather than only in financial, exchange-value terms expressing instrumental material advantage. The Compass shows these four goals at its four points, with “patient and member focus” at the center. Second, these goals were not dictated by top management; instead, they were jointly defined through intensive dialogue among and between management and unions (Kaiser Permanente & Coalition of Kaiser Permanente Unions, 2012). Finally, people at all levels are engaged in working out how they can translate the top-level Value Compass goals into their local work processes, giving them a unity of purpose in their daily work and their daily improvement efforts.