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

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The key organizational paradox of DA in the norms dimension is how to maintain the mechanistic norms needed to ensure efficient exploitation without undermining the organic norms needed for creative exploration. Mechanistic norms are needed to ensure reliable coordination between specialized roles, while organic norms are needed to ensure that ideas flow freely among people. The value-rational organizational form relies on the principle of substantive rationality to resolve this paradox. This principle of substantive rationality can be operationalized if actors at all levels manage their interdependencies through a combination of (a) direct negotiation and dialogue aimed at deciding how best to pursue their shared goals, and (b) formal procedures that are themselves the product of direction negotiation and dialogue aimed at deciding which procedures might best support such shared goals. We call this combination “interactive process management and design.” This interactive process generates norms—both mechanistic and organic ones—that are widely experienced as “enabling” rather than as coercively imposed or merely ceremonial (Adler, 1999a; Adler & Borys, 1996, building on Gouldner's (1954) distinction between representative, punishment-centered, and mock bureaucracy). Such norms afford the value-rational organization the DA capability for disciplined exploitation without impairing creative exploration.

In a small, collegial group, such as a top-management team, interactional norms can remain informal without losing too much efficiency; but across a larger collectivity, coordination requires more formalized norms. This formalization was a major factor motivating Weber’s skepticism: he feared that formalization would be the occasion for specialized staffs to impose standardized procedures on the operating core. Formalization would thus undermine the salience of the organization’s ultimate values, replacing the ethic of contribution with a bureaucratic ethic of instrumental-rational conformance, and replacing substantive rationality with formal rationality.

Since Weber’s time, however, management techniques have been developed to side-step this danger by fostering collaboration in the process of formalization itself. Protocols such for kaizen, process mapping, brainstorming, participatory meeting management, decision-making with multiple stakeholders, and project management now allow the value-rational organization to mobilize sizeable cross-functional and cross-organizational teams towards both managing their current interdependencies and designing formal systems that can facilitate that management. The formalization of these protocols generates systems—both formal and informal—that are experienced as enabling—facilitating the fluid movement of people among projects in order to bring specialized knowledge to bear at the right times and places, and the fluid formation of project teams, consistent with the demands of DA (see for ex. Geraldi, 2009; Mom et al., 2009). Such norms facilitate DA by providing a platform for the deliberate and continual renegotiation of working relations in combining exploration and exploitation; they make it possible for people to adjust their expectations of each other as task demands shift (Juillerat, 2010).

Andriopoulos and Lewis capture the idea of this enabling synthesis in their characterization: “Well-defined development process that empowers contribution” (2009: p. 714). In one organization they studied, a director says: “I think that the answer is to develop the right kind of flexibility, first of all, so that you can customize the process to address the particular client problem, and then secondly, just to communicate well enough within the team to make the new criteria and milestones clear in every case.” And in another: ”I see the structure of the process, I understand the process, and how I can contribute to the process…We don’t want to say, ‘this is our process, just memorise it’. It’s like a living body… it keeps changing.” These characteristics correspond precisely to the model of enabling systems proposed by Adler and Borys (1996).

What is at stake here is therefore not so much the extent of formalization but the type—whether it satisfies norms of substantive rationality by its visible connection to the ultimate purposes and as a result, whether it gives an enabling quality to organizational systems, both formal and informal. Our argument is consistent with the finding in Mom et al. (2009) that while formalization has no direct effect on individual managers’ ambidexterity, the interaction of formalization with connectedness and with participation in cross-functional efforts both have positive effects.

Kaiser illustration. The fabric of norms at Kaiser exemplifies several features of the value-rational model and the operationalization of the substantive rationality principle. While Kaiser physicians are managed under relatively formalized procedures, Kaiser’s leadership has sought to ensure that these systems are experienced as enabling collaboration rather than as coercive bureaucratic constraints. Clinical guidelines illustrate the point. Where many doctors in private practice chafe under the bureaucratic constraints of medical guidelines imposed by government or insurance companies, Kaiser’s doctors collaborate with their Kaiser peers and with other clinical and non-clinical personnel to define guidelines. When the activity is entirely within purview of a medical specialty, the relevant group of doctors will develop these guidelines themselves or review and adapt nationally-established guidelines. When the activity involves multiple specialties and other staff, these guidelines are developed and refined with input and participation of a broader range of occupations (Whippy et al., 2011).

The labor/management partnership, too, both in its strategic and operational forms has shaped norms to support DA. As a labor relations strategy, the partnership helps Kaiser meet its DA challenges through its reliance on norms of “interest-based bargaining” (McKersie et al., 2008). Interest-based bargaining is a nice example of how substantive rationality can be operationalized and institutionalized through interactive process management and design. Under these norms, management and labor negotiate to find areas where they can find common ground and craft win-win solutions that create a bigger pie (“integrative” bargaining). In situations where there are no win-win solutions, they bargain over the relative shares of the pie (“distributive” bargaining). Taking the integrative part seriously means that the union gets deeply involved in helping shape the organization’s goals as well as its operations. Taking the distributive part seriously means that, even as they engage with management on these issues, unions work to preserve and strengthen their capacity for independent action.

As an operations strategy, labor-management partnership has led to the creation of “unit-based teams,” where unionized staff, management, and physicians cooperate in examining every step of the work process to analyze why, when, and how people perform their tasks, and to ask if there might be a more efficient and effective way to operate (Cohen, Ptaskiewicz, & Mipos, 2010). This team-based innovation effort also embodies substantive rationality, as these unit-based teams work on improvements that they see as most relevant to their work, choosing targets that contribute in some way to one of the over-arching strategic priorities defined by the Value Compass. (The collective bargaining agreement protects union members from being laid off as a result of any of these improvement efforts: where changes in services or technology have made jobs redundant, the agreement provides relatively generous provisions for retraining and a commitment to doing whatever is feasible to find employment elsewhere within Kaiser.) By 2013, over 80% of departments at Kaiser had at least one such team. Working in these teams, physicians have been challenged to give up their hierarchical, status-based authority and to work collaboratively with nurses, technicians, cleaners, and administrators (Cohen et al., 2010). In 2013, about a quarter of these teams were focused on improving service quality, about a quarter on reducing costs without impairing quality, and about 10% on improving clinical performance through prevention and disease management.

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