A Project Portfolio Management Approach to Tackling the Exploration/Exploitation Trade-off

Abstract

Organizational ambidexterity (OA) is an essential capability for surviving in dynamic business environments that advocates the simultaneous engagement in exploration and exploitation. Over the last decades, knowledge on OA has substantially matured, covering insights into antecedents, outcomes, and moderators of OA. However, there is little prescriptive knowledge that offers guidance on how to put OA into practice and to tackle the trade-off between exploration and exploitation. To address this gap, the authors adopt the design science research paradigm and propose an economic decision model as artifact. The decision model assists organizations in selecting and scheduling exploration and exploitation projects to become ambidextrous in an economically reasonable manner. As for justificatory knowledge, the decision model draws from prescriptive knowledge on project portfolio management and value-based management, and from descriptive knowledge related to OA to structure the field of action. To evaluate the decision model, its design specification is discussed against theory-backed design objectives and with industry experts. The paper also instantiates the decision model as a software prototype and applies the prototype to a case based on real-world data.