EDO 812 Module 7 Systems and Structures That Sustain Innovation Example

A Lab Apart or a Habit Everywhere? Structures for Exploring and Exploiting in University Outreach

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Doctor of Education Program, Aspen University

EDO 812: Innovation and Entrepreneurship

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Month Day, Year

A Lab Apart or a Habit Everywhere? Structures for Exploring and Exploiting in University Outreach

Plains State Extension spends about $38 million a year. Nearly all of it pays for programs the service already knows how to run: county educators, campus specialists, publications, 4-H clubs and long-standing courses. About $1.1 million, mostly the internal venture seed grants proposed in Module 5, goes to work whose outcome is genuinely unknown. Earlier modules showed that the service generates ideas freely but rarely turns them into lasting programs, that its most successful venture began without approval and that its leaders open well and close badly. This paper asks what systems and structures could make innovation a steady capability. The budget, like the service, is fictional.

The Basic Tension

March (1991) described organizational adaptation as a balance between two activities. Exploration involves search, variation, risk taking, experimentation and discovery; exploitation involves refinement, efficiency, selection and implementation. Organizations need both, but they compete for scarce resources, and the returns differ: returns to exploitation are more certain, quicker and closer to the organization, while returns to exploration are uncertain, slower and often distant. Because adaptive processes learn from feedback, they tend to favor exploitation, which reliably shows results, and so organizations drift toward refining what they know at the expense of what they might learn. March warned that this drift can trap an organization in competence that becomes obsolete.

The service's budget process illustrates the drift. Each program reports participants served and outcomes achieved, and budgets follow those reports. A new program in its first year cannot show the same results, so it competes poorly against established programs, and each cycle shifts money further toward exploitation. The service's share of spending on exploratory work has fallen from about 6% a decade ago to under 3% today.

Separating the Explorers

Tushman and O'Reilly (1996) studied firms that had sustained success through both incremental and revolutionary change. They argued that such firms were ambidextrous: they operated multiple, internally inconsistent architectures, competencies and cultures at once, with exploratory units organized very differently from the mature core, small, flexible and entrepreneurial, while the core remained efficient and disciplined. What held the organization together was a senior team that integrated the units, a shared vision and values and leaders able to manage the contradictions. Separation protected exploration from the core's routines, and the senior team ensured that exploration served the whole.

For the service, structural ambidexterity would mean a small innovation lab at headquarters with its own budget, hiring rules and evaluation methods, reporting directly to the director.

Ambidexterity in Context

Gibson and Birkinshaw (2004) proposed a different route. Surveying employees in dozens of business units across several multinational firms, they found that units could achieve contextual ambidexterity, a capacity of the unit's members to demonstrate both alignment, coherence in pursuing current goals, and adaptability, the capacity to reconfigure activities to meet changing demands. Contextual ambidexterity was fostered by an organizational context combining performance management, high standards and accountability, with social support, trust and backing. Units with that context were more ambidextrous, and ambidexterity was associated with better unit performance. Individuals, not separate units, made the choices about dividing time.

For the service, contextual ambidexterity would mean county teams that both deliver existing programs and spend part of their time experimenting, supported by a climate that expects results and protects experiments.

Comparing the Designs

A Hybrid Design

The proposal combines both, with four supporting systems. Structurally, a four-person lab at headquarters will run a small number of larger explorations, such as the digital advisory work from Module 2, and will be staffed half by people rotated in from counties for two-year terms, so that it stays connected to local knowledge. Contextually, every county educator's annual plan will include one exploration objective, a small experiment with a new method or audience, worth about 10% of the year.

The supporting systems matter as much as the boxes. First, budget protection: 5% of the service's budget, about $1.9 million, will be set aside for exploration and cannot be cut to cover program shortfalls. Second, different evaluation: exploratory work will be judged on what was learned and on a decision to scale, change or stop within two years, not on participants served. Third, a transfer route: every lab project will name a county partner and a plan for moving successful work into regular programs. Fourth, senior integration: the director's leadership team will review the exploration portfolio twice a year, as Tushman and O'Reilly's model requires.

Why Not Simply Add More Seed Grants

A simpler answer would be to enlarge the Module 5 seed grants and leave the structure alone. March's argument explains why that would not be enough. Seed grants fund individual experiments, but the budget process that judges programs by participants served would still starve each experiment when it tried to grow, because it could not yet match an established program's numbers. Exploration needs not only money at the start but a different way of being judged until it is ready to compete, and a place in the organization where that different judgment applies. The hybrid design supplies both, while the seed grants continue as the entry point for ideas from anywhere in the service.

Ways the Design Could Fail

The lab could become isolated, producing work counties ignore; rotation and county partners guard against that. Exploration objectives could become paperwork, satisfied by relabeling routine work; supervisors will review them against the definition of innovation from Module 1. And the protected budget could erode in a lean year; making it a board-approved policy, rather than an annual decision, is the defense.

Conclusion

March explains why the service's spending drifts toward what it already knows. Tushman and O'Reilly offer a protected unit for exploration, and Gibson and Birkinshaw show how ordinary units can explore within a context of discipline and support. A hybrid of a small rotating lab, county exploration objectives, a protected 5% budget and evaluation fitted to learning gives the service structures that can make innovation continuous.

References

Gibson, C. B., & Birkinshaw, J. (2004). The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal, 47(2), 209-226. https://doi.org/10.5465/20159573

March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71-87. https://doi.org/10.1287/orsc.2.1.71

Tushman, M. L., & O'Reilly, C. A. (1996). Ambidextrous organizations: Managing evolutionary and revolutionary change. California Management Review, 38(4), 8-29. https://doi.org/10.2307/41165852