The role of innovation narratives in accomplishing organizational ambidexterity

Explaining ambidexterity

At the heart of research on organizational ambidexterity is management of the paradox of innovation that stems from the need for leaders periodically to destroy significant elements of tried-and-tested organizational designs. Future success, as Tushman and O’Reilly (1996) graphically put it, depends on leaders being “prepared to cannibalize their own business at times of industry transitions” (p. 28). In this way, the competing logics and time horizons of exploration and exploitation generate potentially debilitating tensions as organizational members with differing priorities and agendas simultaneously confront the demands of each (Andriopoulos and Lewis, 2009; Zimmermann et al., 2018). Yet, as Mantere et al. (2012) caution, overturning strategic priorities in times of transition may hold far-reaching adverse consequences for the organization. Accomplishing ambidexterity, therefore, is problematic, exploration and exploitation conflicted, the former premised on path-breaking technological change and the latter on path entrenching incremental improvements to products and processes (Lavie et al., 2010; Raisch and Birkinshaw, 2008). Yet organizational survival demands that executives press forward, striking a fresh balance between innovation pathways, while abating organization tensions though appropriate management actions. Ambidexterity is thus the expressed capability of an organization to manage the tensions generated by the contradictory demands of exploration and exploitation.

How, then, might this capability be developed? Three main solutions abound in the literature, referred to here, following O’Reilly and Tushman (2013), as structural, contextual, and sequential. Structural separation of exploration and exploitation is the primary solution offered in the literature (Cao et al., 2009; Jansen et al., 2009; Simsek, 2009; Tushman and O’Reilly, 1996). According to this prescription, the best means of pursuing exploration and exploitation simultaneously is to separate activities into highly differentiated units with different mandates, time horizons, and cultures. The contextual solution, in contrast, recommends that TMT members focus not only on structures but also on enabling people beneath them in the corporate hierarchy to cope with conflicting demands by fostering a combination of stretch, discipline, support, and trust (Gibson and Birkinshaw, 2004). A third possibility is to reduce the tensions emanating from the exploration–exploitation paradox by temporal separation. Under this prescription, senior managers cyclically switch priorities and resources between innovation pathways, such that either exploration or exploitation dominates for a time before giving way to the other (Eisenhardt and Brown, 1997; Lavie and Rosenkopf, 2006).

A large number of theoretical and empirical studies have built on this threefold classification. Nosella et al. (2012) reviewed 137 papers published since Tushman and O’Reilly (1996), building on Duncan (1976) and March (1991), established ambidexterity as a distinct field of enquiry. They confirm the predominance of studies of structural and contextual ambidexterity and point to emerging themes dealing with enablers of ambidexterity within and beyond the boundaries of the organization. In a meta-analysis of 69 papers, Junni et al. (2013) find a positive relationship between organizational ambidexterity and corporate performance, subject to strong moderating effects related to contextual and methodological choices. O’Reilly and Tushman (2013) take this as strong support for numerous other studies using a wide variety of methods showing that ambidexterity is positively associated with firm performance, subject to the caveat that it is more common in large firms with the required resources to locate exploration and exploitation in separate units. In taking stock of the evidence, these authors find strong support for structural ambidexterity, but that research of sequential ambiguity is less persuasive because microhistories conducted over long periods fail to show what transitions look like and how they occur (Boumgarden et al., 2012).

The literature on ambidexterity recognizes that TMTs play a crucial role in devising and implementing solutions to tensions arising from the contradictory logics of exploration and exploitation. We contend, however, that it is not enough for researchers simply to identify the solutions adopted by organizations; we also need to know how TMTs enact those solutions, and what differentiates those who succeed from those who fail. This observation motivates our own research alongside that of other scholars like Lubatkin et al. (2006), whose study of 139 small and medium-sized Chinese technology firms finds that TMT members play a crucial role in integrating knowledge and promoting ambidexterity. In a similar vein, Mom et al. (2009) find that manager participation in cross-functional interfaces and the connectedness of a manager to other organization members positively relate to ambidexterity. Jansen et al. (2009), in a study of Dutch financial firms, alight on a strong and compelling shared vision and teams with transformational leaders as critical in reconciling conflicting demands and debate arising from the exploration–exploitation paradox, confirming the position taken by O’Reilly and Tushman (2008) in their theorization of ambidexterity as a dynamic capability. Chen et al. (2019), in their study of 146 small and medium-sized firms, reach the conclusion that vision, interpreted as a long TMT time horizon, promotes organizational ambidexterity when accompanied by strong CEO temporal leadership.

Quantitative studies of the kind reported here are valuable in confirming the importance of TMT characteristics to the accomplishment of ambidexterity. What they cannot do, however, is identify the specific TMT practices that actually deliver results. The qualitative research of Zimmermann et al. (2018) elegantly makes this point by exploring 10 innovation initiatives at three multinationals, both top-down and bottom-up. Importantly, they find that in dealing with persistent tensions surrounding innovation initiatives, what mattered most in enabling organizations to cope was the agency of frontline managers in constantly adapting and aligning initiatives to organizational contexts. This finding is at odds with the dominant structural view of ambidexterity. However, it is consistent with our own view that initiatives taken by TMTs to deal with tensions resulting from the conflicting demands of exploration and exploitation must find a way to percolate throughout the organization. If they do not, then persistent tensions will take their toll in dysfunctional behavior and diminished performance. It is for this reason that we came to study the role of innovation narratives in accomplishing organizational ambidexterity. Narratives have the power to connect, to flow across organizations, and when convincing, to be performative (Dunford and Jones, 2000; Sonenshein, 2010; Vaara et al., 2016), carrying the ideas of TMT members to frontline managers who, empowered to use their initiative, might align top-down initiatives to local contexts. P&G’s transformation from international to global enterprise, we argue, sprang in large measure from the successful deployment of innovation narratives, enabling it to overcome potentially debilitating tensions arising from the exploration–exploitation paradox.

Narratives of innovation

Within the increasingly prominent “linguistic turn” in organizational scholarship, scholars have explored the performative role of narrative in strategy practice (Balogun et al., 2014; Barry and Elmes, 1997; Boje, 1991, 1995, 2001, 2008; Brown and Thompson, 2013; De La Ville and Mounoud, 2010; Fenton and Langley, 2011; Holstein et al., 2018). A burgeoning field has built on the foundational work of Boje (1991, 1995) and Barry and Elmes (1997), who assert that strategy can usefully be seen as a series of texts, authored by organizational participants, where the “tellings of strategy fundamentally influence strategic choice and action” (Barry and Elmes, 1997: 432). These texts enable and constrain the ongoing activities of actors (Fenton and Langley, 2011) because they encode lessons for success (the moral or theme of the narrative) as the ongoing justification for progressive future-oriented action. As Boje (1991) asserts, such texts purvey “recognizable, cogent and seemingly rational collective accounts” that create precedent for individual beliefs and courses of action (p. 106). Such accounts must be coherent, plausible and acceptable to succeed (Kaplan and Orlikowski, 2013).

A focus on strategy narratives is particularly appropriate in exploring the dynamic framing of innovation because, as Bartel and Garud (2009) suggest, accounts vary depending on the emphasis given to organizational knowledge practices of exploration or exploitation (Lavie et al., 2010; Levinthal and March, 1993; March, 1991). Barry and Elmes (1997) draw a similar distinction in identifying novelty and familiarity as fundamental polarities in strategic narratives. Here, we equate novelty with exploration in emphasizing a necessary departure from past organizational practice. Such narratives convey the potential for progress based on the “exciting and captivating” and rejection of entrenched, inertial routines and perspectives (i.e. bad past), leading to the “creative” conception of problems to be addressed (i.e. good future; Barry and Elmes, 1997: 439). Likewise, we equate familiarity with exploitation in narratives suggesting that future success will follow from continuity with worthy practices from the organizational past (i.e. good past). These dwell on pragmatic, tangible phenomena in the here and now, conveying the potential for progress through the apparent neutrality of formal, analytical techniques for performance improvement (i.e. better future; Barry and Elmes, 1997).

Our identification of the competing strategic narratives through which contrasting approaches to innovation are justified provides further insight into the challenge of building upon while countering the past in order to construct the future (Smith and Lewis, 2011). Attention to narrative justifications of innovation priorities recognizes that responding to the challenge of ambidexterity depends on contingently interrelating competing meanings of innovation to engage and sustain differing strategic approaches (Papachroni et al., 2015; Smith, 2014; Smith and Lewis, 2011). Although any particular narrative is potentially inertial and resistant to disconfirmation (Boje, 1995; Geiger and Antonacopoulou, 2009), we cannot assume that managers are heedless of the requirement to adapt and interweave narratives as events unfold (Jørgensen and Boje, 2010). On the contrary, managers are likely to foster narrative understanding as a continuing process (Czarniawska, 1997; Dalpiaz and Di Stefano, 2018), reflecting diverse (Buchanan and Dawson, 2007; Holstein et al., 2018) and changing motives or reasons for action (Sillince et al., 2001; Sillince and Mueller, 2007).

Hence, strategy narratives can be read as ongoing constructions that make and remake convergent organizational programs of action (Brown and Thompson, 2013; Fenton and Langley, 2011; Holstein et al., 2018; Robichaud et al., 2004). Interactions among narratives reflect what Barry and Elmes (1997) term the “polyphonic” expression of organizational purpose (p. 444), in which strategists seek to articulate, justify, and juxtapose contrasting organizational narratives. Through interactions, skillful political actors shape the strategy narratives that win approval in the organization (Kaplan, 2008). Considered thus, authoring organizational strategies involves interrelating and reconciling the separate and distinctive value positions of protagonists (Czarniawska, 1997; Kuhn, 2008; Taylor, 2014), orienting organizational members around a collective construction of “core activities and outcomes, what knowledge is valued, roles, duties and authority” (Kuhn, 2008: 1236).

It follows that how tensions among rival narrative formulations are negotiated is a fundamental issue for empirical inquiry (Brown and Thompson, 2013; De La Ville and Mounoud, 2010; Fenton and Langley, 2011). As Cunliffe and Eriksen (2011) suggest, the focus is to reveal how strategic narratives throw into relief divergent views, meanings, and values while “respecting differences and shaping new meanings and possibilities for action from those differences” (p. 1465). In what follows, we explore the role of polyphonic narration in the framing of organizational ambidexterity. We base our study on senior management speeches to internal audiences over 15 years at P&G, an organization strongly associated with innovation (Dyer et al., 2004). The objective of our research is to uncover how organizational leaders, TMT members, narrate the paradoxical innovation themes of exploration and exploitation as coexistent priorities with periodically shifting emphases to guide and motivate strategic initiatives while remaining open to new and emergent possibilities. Thus, we pose the following research question: given persistent tensions arising from the exploration–exploitation paradox, how do discursively constructed and communicated narratives of innovation support the accomplishment of organizational ambidexterity?

Case study

P&G is a US company widely respected for its numerous innovations within the fast moving consumer goods sector (Dyer et al., 2004). We selected 1987 as the starting-point for our case study on strategy innovation narratives because in that year the company suffered a severe net earnings reversal, prompting a flurry of debate within its TMT about how best to get back on track. An equally natural end year is 2001 when, after a further period of intense debate, P&G’s new CEO, Alan Lafley, consolidated a radical new corporate strategy focused on open innovation and the cultivation of billion-dollar brands. We reasoned that a 15-year study period is long enough to observe significant shifts in narratives, but short enough to conduct in-depth documentary research. Over the period, P&G grew its annual sales from US$17 billion to US$39 billion and its net profit from US$327 million to US$3 billion (Dyer et al., 2004: 418). The company transitioned from a domestically focused organization with an international division to become a globally integrated multinational enterprise, marketing and manufacturing branded household goods across the world. It spent an average of US$1.15 billion annually on R&D, equivalent to 3.8% of sales or 108.8% of dividends paid, ¹ to maintain its enviable record of incremental and path-breaking innovation (Brown and Scott, 2011).

Data collection

We secured privileged access to various classes of documents at P&G’s corporate archive in Cincinnati, Ohio, USA. Most valuable of these for exploring strategy innovation narratives is an extensive collection of speeches, with supporting materials, given by members of the TMT to executives lower down the corporate hierarchy. The speeches communicated strategic and organizational changes and the logic underpinning them to decision makers across the organization. As proactive statements of policy and exercises in persuasion and conviction building, they are key constitutive texts, yielding rich textual data for analysis (Cheney et al., 2004). Crucially, the recovery of language usage enabled a temporal dimension to be incorporated into the research design, facilitating intertextual study of language usage and the negotiation of meaning through the interplay between texts produced at different times (Alvesson and Kärreman, 2000; Holstein et al., 2018; Maclean et al., 2018a).

We engaged in purposeful sampling, copying selected documents in preparation for later analysis. Our sampling rationale was to gather a continuous record of contextually significant texts (Phillips and Hardy, 2002), notably speeches made by CEOs and other TMT members at meetings with senior managers one rung below them in the corporate hierarchy. In this way, we were able to meet the selection criteria for a valid textual corpus defined by of relevance (thematic focus), homogeneity (broadly similar form and perspective), and synchronicity (occurring at regular and locally determined time intervals). Discussion of innovation in technology, products, brands, and operational processes features prominently in our body of 142 speeches, with a combined length of approximately 215,000 words, confirming P&G’s reputation for continuous engagement with the complex dynamics of innovation.

Data analysis

From the 142 speeches, we identified 260 text extracts referencing the pursuit of innovation at P&G. We next coded the data to identify the underlying narrative framing implicit within each text extract, capturing narrative justifications of innovation practices in the form of “success stories” whose meaning justified future action (Corbin and Strauss, 2015). As Benoit (1997) argues, a success story is “a narrative that interprets a behavior (or action) as a success, selects and orders events related to that success, and includes a causal attribution for that success” (p. 23). We classified the P&G success stories in the 260 extracts as identifying with exploration, exploitation, or integration of exploration and exploitation. Consistent with Barry and Elmes (1997), in narratives valorizing a necessary and desirable break from the past, we find success attributed to exploration, favorable outcomes resulting from the disruption of entrenched routines and perspectives. By contrast, in narratives valorizing continuity with the past, we find success attributed to exploitation, favorable outcomes resulting from incremental development based on the application of validated analytical techniques. In other narratives, exploration and exploitation complement one another with success credited to the two pulling together.

Strategy innovation narratives championing exploration speak of “new,” “breakthrough,” “unique,” “transformational,” and “revolutionary” technologies, products, or concepts, which had created new or dramatically enlarged markets for P&G. TMT members frequently highlighted the importance of individual “creativity,” “risk-taking,” “perseverance,” and unexpected sources of inspiration and learning as crucial to past success. Innovation narratives championing exploitation use very different language. TMT members then speak of “exploiting key technologies,” “expansion of our best technologies and concepts,” “re-application of breakthrough technology,” and “leveraging our technology advantage.” The exploitation mindset likewise urges “standardization of products and brands across markets,” “speed of product or technology transfer between markets,” “local tailoring of global technology,” replication of “best practices,” “success models,” and “winning formulae” for products, production processes and consumer branding. Integrative narratives speak of the need for both “predictable and unpredictable rewards” and the “virtues of planning allied to providing time for pursuing big ideas and individual passions.”

Having coded the innovation narratives embedded in text extracts as “exploration,” “exploitation,” or “integrative,” we next ordered them chronologically to identify significant temporal shifts in the framing of innovation in a process described by Rowlinson et al. (2014) as inductive periodization. This led to the identification and more detailed coding of four sets of narrative practices, clustered within distinct subperiods across the 15-year study period: 1987–1989, 1990–1993, 1994–1997, and 1998–2001. We then derived a typology of innovation narratives, each relatable to a particular subperiod (Dalpiaz and Di Stefano, 2018). Iterating abductively between data and analytical constructs, in a process of summation inspired by the Gioia methodology (Gioia et al., 2012), we grouped observed narrative practices into first-order categories, second-order concepts, and aggregate themes, as illustrated in Figure 1. Each of the aggregate themes, labeled contextualizing, mutualizing, dramatizing, and focalizing, equates to an innovation narrative constituted by a set of narrative practices.

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Figure 1.

Data structure.

Contextualizing narrative of innovation (1987–1989)

A notable disruption in the strategic framing of innovation at P&G is evident in the speeches of TMT members following the company’s announcement in 1987 of its first steep decline in net earnings in the postwar era. This involved both a critique of the past and the reframing of innovation priorities, shifting the balance away from exploration toward exploitation. A marked difference existed between the successful development of new technologies, new products, and new market categories—based on the “talent” (Smale, Oct 1987), “ingenuity” (Artzt, Apr 1988) and “interdisciplinary” (Smale, Jun 1987) perspectives of P&G people—and declining market share and profit margins in established categories. P&G had many big innovations to its credit, so the critique went, but it had singularly failed to exploit these to the full.

This critique served in 1987 to justify major organizational changes, as confirmed by the quotations in Table 2. By introducing “category organization,” cutting across divisions, P&G sought to restore an ambidextrous balance between exploration and exploitation. CEO John Smale insisted that focusing on markets would “strengthen performance in established categories, while we grow, at the same time, in new businesses” (Smale, Jun 1987). However, TMT members avoided extremes, seeking instead to maintain the tension between exploration and exploitation. Indeed, as Smale stated, increased emphasis on exploitation, expressed as commitment to profit growth based on benchmarked financial goals and profit centers, carried “the real risk that it can direct us to err on the side of short-term performance” (Smale, Apr 1988). A contextualizing narrative that served to situate the business in its wider context, emphasizing its embeddedness within different markets, product fields, and jurisdictions, enabled the TMT to keep to the fore the continuing need for both exploration and exploitation. Thus, while immediate financial problems had to be addressed by better exploiting prior innovations, organizational members were reminded that the company’s long-term future depended on its continued ability to lay “golden eggs” like Tide, the world’s first effective laundry detergent that had propelled the growth of the company for decades. Accordingly, innovation narratives became more plurivocal, comprising autonomous and variegated opinions indicative of different viewpoints (Zilber, 2006).

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Table 2.

1990–1993: Mutualizing (to break down boundaries between exploration and exploitation).

Critique: challenging prior approach to innovation
Functional separation of exploration and exploitation has led to internal conflicts and indecision	“We need to improve at closure. Not just on conflicts between global and geographic strategies, but also on technology and marketing issues.” (Blanchard, Aug 1990). “We need sharp management processes that will allow us to be quicker and more effective, all the time. The way we organize our people, establish our approval systems, our benchmarks and checks and balances, all have to take on a different dimension . . . not to use energy against internal enemies—Department X that spends too much or Division Y that gets in the way. Maybe some of these complaints are valid. But the solution is to move on and focus on doing a better job against our real competitors in the [global] marketplace.” (Jager, Jun 1990)
Resolution: mutualizing exploration and exploitation
Exploration and exploitation mutually constituted to deliver global mega brands	“We want to focus the future development of the company on businesses where our capacity to invent superior or novel products gives us competitive advantage and the opportunity to attain market leadership. We want to focus on businesses where the return our R&D investments can be realized on a worldwide or at least multi-regional basis” (Artzt, Apr 92) “We’re seeing the growing importance and opportunity in establishing mega brands in our key categories. This is well illustrated by our decision to put color technology on Ariel. We’re now even considering putting fabric softener performance on Ariel . . . rather than introducing a separate brand. We need to think creatively and carefully about what our key brand franchises can represent and provide. Olay. Vicks. Sassoon. Pantene.” (Pepper, Jun 1992)
Capitalize on local innovations to speed market growth	“We continue to see how important regionally developed ideas are as a source of new, strong global success models. We should recall that Pantene was a product of local and regional innovation—in the U.S., Europe and the Far East. That the Head &Shoulders success model came out of Mexico,” (Pepper, Jun 1993) “We need to introduce 14 new brand technologies successfully [in the Health Care sector] by the end of the decade. A step change in productivity like this requires new ways of working in the future—markedly better than both our current approaches and our competition. For the past year, we have been working as a sector to achieve a competitive advantage in cycle time—our speed to market—aiming for an improvement of up to 50%.” (Moore, Oct 1993)
Gain synergies from seeing connections between exploration and exploitation	“Our technical base from years and years in the bar soap, dishwashing detergent and shampoo businesses has given us a great depth of knowledge in skin care products. It’s that expertise that makes [organizational entry into] beauty care products such a good fit for P&G.” (Dirvin, Mar 1991) “We don’t have to invent an idea to win with it. Look for good ideas—like compacts—that have universal appeal—everywhere. Then really understand consumer needs—articulated needs and the ones consumers don’t or can’t articulate. Deep understanding enabled us to recognize (Kao’s) compact detergents as a worldwide big idea.” (Lafley, Jun 1993)

Under category management, delineation of roles, responsibilities, and expectations was by market type, emerging (exploration oriented) or mature (exploitation oriented). On one hand, in emerging product fields, leadership meant pursuit of “leading edge” basic research (Brunner, Nov 1989), developing “proprietary technology” (Donovan, Nov 1988), “to fundamentally change the game” (Blanchard, May 1988), “fully tapping every person’s talent and ability” (Pepper, Jun 1989), through a spirit of “inspiration . . . pioneering and entrepreneurship” (Martin, Jul 1989). On the other hand, in established categories, leadership implied driving “faster payouts on new products, including our flanker and line extensions . . . of established brands” (Artzt, Apr 1988), seeking opportunities to “standardize name and basic package design” (Blanchard, Nov 1989), improve “new measurement systems” (Swanson, Oct 1988), and “continually improving consumer satisfaction” (Pepper, Mar 1989). Contextual differentiation of product categories emphasized the importance of balancing exploration and exploitation, as Gordon Brunner, senior Vice president for R&D, reflected,

Our company’s worldwide research and product development is being directed . . . by product sectors . . . [For example] Laundry and Cleaning is oriented more short term than the others. This sector is currently in a phase heavily tilted toward implementing technology developed some years earlier and I expect R&D will need to shift toward the longer term to create the discontinuities that will fuel growth into the late 90s. (Brunner, Nov 1989)

Differentiation between US and international operations further served to contextualize the themes of exploration and exploitation. International operations were frequently associated with priorities based on the theme of exploitation. For example, rolling out US innovations to other jurisdictions offered opportunities for growth through “worldwide exploitation of the Company’s . . . technologies and concepts” (Blanchard Nov 1989), “exploiting key technologies” (Pepper, Jun 1989) and “transfer of learning” (Place, Sep 1989). In comparison, the United States and other countries with advanced technical expertise, like Britain and Germany, were conceived as sources of “world product initiatives” (Brunner, Nov 1989), “technology breakthroughs” (Martin, Jul 1989), and “big edge technologies” (Artzt, Jun 1988).

In sum, during this subperiod, P&G’s innovation narrative, communicated through the contextualization of exploration and exploitation as dual pathways, affirmed that both exploration and exploitation were essential for organizational success, justifying reorganization as a means of resisting the tendency for the former to dominate the latter. TMT speechmakers made the case in explaining the separated presence of exploration and exploitation in the structural differentiation of functional units and geographical operations, in the sequential differentiation of markets, and in the differentiation of leadership roles.

Mutualizing narrative of innovation (1990–1993)

In 1990, following the departure of John Smale as CEO and his replacement by Ed Artzt, P&G embarked on a radical change in strategic direction. Under Smale, the company had been US-centric, but under Artzt—longtime head of international operations—P&G was to become a global enterprise. There were profound implications for innovation. Very quickly, TMT members began to criticize the contextualizing narrative of innovation. This had the virtue of legitimizing both innovation pathways, but it had also surfaced problems. As the quotations in Table 2 indicate, separating exploration and exploitation functionally and geographically had adverse consequences in encouraging internal rivalries and limiting potential sources of innovation. TMT members contended that P&G suffered from a “local inward focus” (Place, Apr 1990), rivalry between “internal enemies” (Jager, Jun 1990), and a plethora of “global category strategies and regional or local geographic strategies” (Blanchard, Aug 1990), suggesting need for unity in order to “plan businesses on a worldwide basis” (Artzt, Jan 1990).

A new mutualizing narrative of innovation, emphasizing complementarities and shared dependencies between exploration and exploitation, displaced the contextualizing narrative of innovation. Under the label “global planning,” CEO Artzt repeatedly asserted that organizational success increasingly depended on readily exploitable exploration: “Globalization means increasing the focus of Research and Development on technology that can be readily reapplied and tailored to fit our business needs everywhere” (Artzt, Jan 1990). Equally, accelerating exploitation of global brands through standardization, measurement, and reapplication depended on “investment in science and technology (and) by tapping into the best ideas of our people in each part of the world” (Pepper, Oct 1991). Recognizing the inherent mutuality between innovation pathways was in Artzt’s view fundamental to the logic of globalization:

You’ve heard me talk about many global initiatives . . . Most of these results didn’t grow magically as some great global initiative. No typically, they grew out of an individual or group of individuals identifying a need, hot housing it, getting experience with it somewhere, proving that it works [exploration]. Only then was it recognized as a success and seized as something that could be a regional or global initiative [exploitation]. (Artzt, Apr 1992)

A striking illustration given in TMT speeches during the subperiod is that of compact detergents. This was recognized as one of P&G’s outstanding successes in “revolutionizing” (Donovan, Nov 1990), “category leading” (Donovan Jun 1991), and “breakthrough” transformations of the global laundry market (Pepper, Jun 1992). Yet, although celebrated as P&G’s “compact discontinuity” (Lafley, Jun 1993), TMT members acknowledged that the basic concept originated with Kao (a major competitor) in Japan. As Lafley admitted,

You don’t have to invent an idea to win with it . . . We must be FIRST with big ideas. Speed is a strategic weapon. The really big share and profit rewards come from excellent execution AHEAD of competition. (Lafley, Jun 1993, original capitals)

As the above extract reveals, the implication of the subsequent success of P&G’s proprietorial technology, and the leadership position that it held in the United States, Latin America, and European markets, was that success actually depended on interactions between exploration and exploitation, of swiftly exploiting the new product idea.

Dramatizing narrative of innovation (1994–1997)

The drive to globalize P&G intensified during the mid-1990s, driven in part by increasingly vocal shareholders exacting higher total shareholder returns. Executives with international experience and committed to the agenda led by Ed Artzt as CEO gained in influence, of whom three subsequent CEOs, John Pepper, Durk Jager, and Alan Lafley, stand out. Innovation, given its potential to both increase efficiency and propel growth, remained pivotal to corporate strategy. However, the mutualizing narrative of innovation came under fire as lacking in intensity and directedness, ceding too much to soft negotiation between responsible parties. This challenge initiated a fresh cycle of critique and response, as captured in the quotations in Table 3. Central to this was the charge that mutualizing had led to an excessive inward innovation focus, variously defined as “preoccupation with internal process” (Artzt, Nov 1994), “inadequately focused leadership” (Moore, Mar 1994) and “trappings of bureaucracy” (Pepper, Jun 1995). According to Artzt, this required “a total change in mindset” (Artzt, Jan 1994).

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Table 3.

1994–1997: Dramatizing (to harness dual innovation themes in competitive conflict).

Critique: challenging prior approach to innovation
Emphasis on negotiated understanding leads to complacency and indecision	“How did we get to a point where we have too much bureaucracy and wasted effort, too many layers, too much capacity, too much cost, leading to overpriced products? . . . We have recognized the symptoms early enough to achieve reversal. Bureaucracy, inward focus, preoccupation with internal process—these things erode the characteristics of an organization that creates value.” (Artzt, Jan 1994) “Every business has story to it. This is one of squandered opportunities on our part due to inadequately focused global leadership that led us to ‘miss the boat’ more than once.” (Moore, Mar 1994)
Resolution: dramatizing the contest for blended themes of exploration and exploitation
Markets are arenas of fierce contest between organizations with blended innovation themes	“Every week we hear announcements from other major competitors—Unilever, Colgate, Henkel and Kimberly-Clark. Product innovation [must] do better, move faster . . . to say competitive in a highly value-conscious world.” (Artzt, Jan 1994) “Private label . . . brands are growing because consumers question the value of paying a higher price for . . . brands like ours . . . We have focused on giving consumers the best possible product performance. We don’t intend to abandon that successful approach. But we must complement this with an even more aggressive attack on our cost structure.” (Einsmann, Nov 1994) “We are in a fierce competitive battle every day, everywhere . . . We need to get consumer-meaningful breakthrough technologies on our leading brands expanded much more quickly across the world. That’s the primary mission of R&D, PSO [Product Supply], and our global and regional category teams.” (Pepper, Feb 1997)
Competitive contests are resolved by superior blend of innovation themes	“The pharmaceutical business play[s] to P&G strengths and competencies . . . [in] chemistry, life sciences, technology reapplication and marketing . . . This will be a very competitive package for P&G, bringing high value to physicians, patients and payers.” (Moore, Dec 1994) “In Asia, as in the rest of the P&G world, our objective is to give Asian consumers outstanding branded products that deliver superior value. If we do this, then we will build the leading brand in core categories in every Asian country in which P&G competes.” (Lafley, Jan 1995) “P&G places overriding importance on product quality and value. Consistently the Company’s periods of greatest business progress are associated with products which have marked performance advantages over their competition.” (Pepper Mar 1995) “Tide has succeeded because we developed a technological breakthrough against a broad consumer need [getting clothes clean], housed it in a brand equity that we’ve maintained quite consistently over time, and have stayed the innovation leader and kept costs sufficiently competitive that . . . we are rated as best value.” (Pepper, Oct 1996)

In response to perceived complacency and absorption with internal process, TMT members situated innovation within an unstable external world of threat and opportunity. We label this narrative practice as dramatizing, emphasizing the need to raise the stakes to spur ambition and performance. This was a term top executives used themselves in speaking about the “dramatized . . . need . . . to stay ahead of competition” (Einsmann, Nov 1994), “the dramatic high stakes, high-pay-off game” (Cloyd, Dec 1994), and “data dramatizing the size of our profit loss” (Pepper, May 1995). According to TMT speechmakers, the organization was in a “race to leadership” (Pepper, Oct 1994) against “aggressive” (Moore, Mar 1994), “stiffened” (Donovan, Sep 1994), “committed,” (Pepper, Oct 1995) and technologically capable competitors (Blanchard, Feb 1996). Hyper-competition meant that more had to be made of research and product development to “win” consumers (Pepper, Oct 1997) and increasingly powerful consolidated retailers (Einsmann, Nov 1994).

According to the dramatized narrative of innovation stated most forcefully after Pepper became CEO in 1995, the ultimate purpose of innovation was to create superior consumer value and to beat the competition P&G must outperform its rivals. The priority was to produce technologically superior, distinctive products (exploration) at affordable prices, which in turn demanded higher levels of efficiency (exploitation). Thus, as Pepper argued, consumers should ultimately decide the right balance between exploration and exploitation:

Leadership brand equity is founded in the marriage of deep insights into consumer needs, superior technology that creates a product to meet those needs, pricing that consumers judge offers “best value” and a package design and outstanding advertising that communicate our benefits. When we get this mix right, consumers respond enthusiastically. (Pepper, May 1996)

The narrative practice of dramatizing, by drawing on an external perspective, fostered a complex synthesized understanding of contradictions. Guided by the perception of consumer value as the determining factor for market dominance, innovation priorities must be responsive to market feedback. As one TMT speechmaker observed,

Standing back . . . I believe we’ve been “out-ideaed” this past year, as competition has launched innovative new, concept-driven products. The keys to recovery will be to reestablish product superiority and lead the market with meaningful new concepts. On the product front, we will open new test markets this spring. (Blanchard, Feb 1996)

Likewise, if sales of a new product proved disappointing, exploitation offered the best means of improving the value proposition and increasing sales. When P&G failed to meet its volume expectations in laundry, for example, the remedy lay in standardization, simplification, and reapplication so that P&G could “selectively take [its] prices down where [its] value was in question” (Pepper, Oct 1995). In this way, the TMT argued that reconciling tensions between exploration and exploitation was no longer simply a matter of internal judgment. Rather, by responding appropriately to market signals, the organization could continuously rebalance priorities, oscillating as necessary between the poles of exploration and exploitation.

Focalizing narrative of innovation (1998–2001)

The strenuous push for global growth and increased profitability at P&G in the event proved difficult to maintain. Problems of coordination emerged as the organization grew in scale and scope, leading to a thoroughgoing organizational redesign, Organization 2005, begun in 1998. The new structure, a matrix with seven product global business units and eight territorial market development organizations, constituted “a deliberate effort to change P&G’s culture, which the architects deemed too slow, cautious and risk averse for a highly competitive environment” (Dyer et al., 2004: 296). At the same time, the dramatizing narrative of innovation came under assault as too cautious, too focused on exploitation to deliver the step change in growth and profitability sought by the TMT. This demanded instead, as the quotes in Table 4 confirm, a new, more focused approach to innovation that prioritized exploration to deliver robust, game-changing innovation (Lafley and Charan, 2008). Durk Jager, who became CEO in 1999, took responsibility for delivery, replaced by Alan Lafley after just 1 year when he lost the confidence of shareholders.

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Table 4.

1998–2001: Focalizing (to rank exploration and exploitation in value hierarchy).

Critique: challenging prior approach to innovation
Blended appeal to consumers leads to lack of organizational distinctiveness	“While we typically pride ourselves on our superior consumer understanding—we have a history of missing important opportunities. Baking Soda and Whitening in Tooth Paste, Training Pants and Value added taped diapers, Whole Bean Coffee and Color Stay Lipstick Technology in cosmetics are just a few examples of innovations that were led by competitors—because we did not recognize them in time.” (Berndt, Jul 1998) “Status quo is leading to a crisis . . . earnings up but based on cost reductions. . .Performance and reward system perpetuates worst aspects of current culture: short term focus; risk aversion . . .We’re stagnant . . . not only are we not making progress, we’ve actually been declining in the last couple of years. It’s clear this is not going to work.” (Pepper, Sep 1998)
Resolution: establishing a value hierarchy for themes of exploration and exploitation
Prioritize exploration focused on consumer needs	“Consumers are smarter and far more informed today than ever before. That makes them far more sophisticated shoppers . . . All of which raises the bar for innovation. Companies have to get bigger ideas to market faster, and they have to do it continually.” (Berndt, Jun 1999) “In the spirit of breakthrough . . . I want to share a simple message today . . . we are going to have to challenge all of the functional attitudes, beliefs, behaviors we’ve learned over the course of our careers and get focused on one thing—doing whatever it takes to delight a consumer who will only become more demanding.” (Lafley Nov 1999) “Our internal definition of innovation . . . starts with relentless focus on the consumer. We are passionate about making consumers’ lives better. The consumer is our boss . . . the way we keep our brands vital and growing and is also the engine with which we introduce new brands.” (Lafley, Oct 1901)
Prioritize exploration to create breakthrough megabrands of the future	“Let me put our innovative capability into a competitive context . . . Our strongest technical competitor, Unilever, has significantly reduced its patent productivity. We see this in the quality and quantity of their patents. There has never been a better time for us to leverage out our technological innovation into business growth, game-changing . . . in our traditional business and in new ones.” (Sakkab, Dec 1999) “What truly is this Company’s point of competitive distinction? At our heart P&G is a technology company. Look carefully at our history. You’ll see that we have always grown the fastest when we were innovating the most . . . We’ve won the biggest with superior products. Products that set the performance standards in our categories. And innovations that create entirely new categories.” (Jager, Jun 1999) “Yes, we’re a big Company. But we are really a collection of smaller companies, led by the spirit of innovation and entrepreneurship to deliver breakthrough results.” (Lafley, Aug 1999) “In the end, at P&G, innovation is our lifeblood. We win or lose based on our ability to create new products that create new categories and keep established categories growing.” (Lafley, Jun 2000)

The familiar cycle of critique and response played out in executive speeches as TMT members sought to get senior managers behind Organization 2005 and the pursuit of breakthrough innovations. Compared to the disruptive innovations championed by Internet-based companies, for example, P&G had become “stagnant” (Pepper, Sep 1998), “unresponsive to consumer demand” (Lafley, Nov 1999) and “typically . . . doing the same things as the competition . . . rather than doing very different things” (Berndt, Jul 1998). In short, contrary to previous assertions, exploitation predominated:

Even in perennially under-performing categories, the strategic debate almost never extended to a discussion of radically different, breakthrough alternatives . . . Discontinuous, out of the box alternatives rarely made it to the discussion . . . A sure sign that the strategic exploration wasn’t divergent enough at the outset. (Berndt Jul 1998)

The new focalizing narrative of innovation, emphasizing a more focused approach to innovation that prioritized exploration over exploitation and infused it with value creation for consumers, grew out of this reflexively generated critique. TMT speechmakers now shifted emphasis from the intensity of competition to the relationship between the organization and its consumers. In speeches, “the consumer” was no longer an abstract category, but increasingly personified through use of adjectives such as “demanding” (Lafley, Nov 1999), “responsive” (Pepper, Sep 1998), and “smarter and more sophisticated” (Berndt, Jun 1999). Lafley frequently reminded colleagues “the consumer is boss” (Lafley, Oct 2001) and of the challenge to “delight the consumer” (Lafley, Nov 1999).

Elevating the consumer perspective within the organizational drama underlined the primacy of exploration:

Companies like Amazon.com are creating fundamentally new business models. And once consumers are exposed to the Amazon shopping experience they expect that same level of service from other transactions. In addition to this companies like Intel and Netscape have established an unprecedented standard for the pace of innovation. (Berndt, Jun 1999)

Instead of performance metrics, TMT members stressed the need for “creative energy” (Pepper, Sep 1998), a “spirit of entrepreneurship” (Lafley, Aug 1999), and “personal bonds” with consumers (Lafley, Oct 2001). “Totally new-to-the-world categories,” observed one speechmaker, “create organizational passion” (Egasti, Jun 1999). Referencing the “golden era” of disruptive P&G innovation further reinforced the message:

Simply put, innovation is a pre-requisite for growth. There is no other path. Let me use Tide as an example of how innovation drives brand growth. Note how every case of significant business growth was stimulated by a new technology. Enzymes, 1968; Liquids, 1985; Bleach, 1988; Ultra Tide, 1990 Lipolase, 1993; Carazyme, 1994; Ultra II agglomeration, 1996; and Tide Disinfecting, 1999 . . . And innovation has to occur across the enterprise . . . on our big global brands, on new brands with global potential, on entirely new lines of business, on new alliances and joint ventures, everywhere. (Lafley, Jul 2000)

In embracing the focalizing narrative of innovation, TMT members resolved the tension between exploration and exploitation through recommitment to P&G’s historic values (Maclean et al., 2014). Organizational priorities, couched in the uplifting theme of exploration, were presented as “core” (Pepper, Aug 1998) unchanging “values, principles and purpose” (JE Pepper, Sep 1998). Far-reaching changes in organizational structures and processes were justified by the overarching need “to generate the flowering of new innovation” (Pepper, Sep 1998) in “a future which we now set out to create and own for ourselves and the Company as never before” (Pepper, Aug 1998).

Limitations and implications for future research

It is not possible to draw strong empirical conclusions from research based on a single case study, given obvious limits to generalizability. How common are the innovation narratives found at P&G? Was the cycle of critique and response in operation elsewhere? Is TMT reflexivity typically a critical variable in generating performative narratives of innovation? Answers to these and other questions require extensive research. Thus, we conceive our study as illustrative of the processual understanding that narrative analysis provides rather than yielding generally applicable conclusions (Pentland, 1999). Our case provides insights into how TMT members avoid ensnarement by particular approaches to innovation, but our data cannot establish whether and to what extent managers at different levels, in different functions and locations within the organization responded positively to these shifts in interpretation. Further “antenarrativist” (Boje, 2014) and “living story” (Rosile et al., 2013) research is needed to establish how, when, and where narratives of innovation are adopted, and how and why resistance to a particular narrative practice emerges.

Furthermore, while we offer a model of critique and resolution by which senior managers at P&G navigated contingently appropriate approaches to innovation, we do not see this as the only way in which senior executives in similar circumstances might proceed. Further research might discover the use of other narrative practices in response to the exploration–exploitation paradox or whether innovation narratives identified at P&G could occur in a different order and with different effects. There is also no a priori reason why the interpretive process should begin with the contextualizing narrative practice observed in our case study of P&G. Hence, subsequent work could uncover alternative ways in which progressive or regressive cycles of interpretation emerge (Smith and Lewis, 2011), and how and why managers may deliberately or inadvertently foster a potentially inertial focus on a particular narrative practice.

Related to the previous opportunity for research, we chose to focus on the strategizing of innovation. However, as Sheep et al. (2017) contend, this corresponds more with the chosen theoretical objective of researchers, and neglects the frequently nested, or “knotted,” interpretation of contradictions and tensions in organizations. The narrative practices we highlight may also convey movement between an organizing paradox (Lewis, 2000; Smith and Lewis, 2011) of empowerment (implied by contextualizing and mutualizing narrative practices) versus control (implied by dramatizing and focalizing narrative practices).

Finally, we view our narrative perspective as complementary to the varied structural, behavioral, and cognitive approaches to ambidexterity. Our approach has highlighted the interpretive work that precedes, accompanies, and reflects on the structures, routines, and mindsets developed to address challenges involved in accomplishing ambidexterity. It is beyond the scope of our article and data to measure and evaluate the extent to which such endeavors met with success. Yet, as Sillince (2005) contends, differentiation or integration between discursive devices and structures, routines, and mindsets may have significant performance effects among teams (Lubatkin et al., 2006). We agree with Fairhurst et al. (2016) that a meta-perspective on organizational contradictions drawing on variegated paradigms and theories that position them in dialogue with each other could prove fruitful.

Practical implications

As a long-lived and consistently profitable organization, P&G has a reputation for developing highly effective organizational leaders (Dyer et al., 2004; Pepper, 2005). Our research suggests that one of the qualities these leaders possess is the ability to embrace, not simply accept, the pervasive presence of organizational contradictions. This requires the discursive awareness needed reflexively to evaluate, in a timely fashion, the consequences of approaches adopted in engaging with contradictory situations (Putnam et al., 2016). Their skills are not those lauded in heroic, romantic models of leadership, but more prosaically those needed convincingly to articulate contextually contingent and necessarily provisional priorities for action (Fairhurst, 2007). By means of reflexive and creative interpretations of complex situations, P&G TMT members overcame the inertial constraints of established innovation narratives through a process of critique and resolution (Geiger and Antonacopoulou, 2009). The challenge then is to sustain complex, variegated arrangements of intersecting perspectives, to recognize their relative appropriateness, and to remain sensitive to their provisional status within cycles of strategic change (Boje, 2008). This involves practical authoring of the polyphonic contradictions of the organizational domain (Barry and Elmes, 1997; Boje, 2008; Brown and Thompson, 2013; Cunliffe, 2001; Maclean et al., 2018a). Indeed, it is through multifaceted interpretations of prevailing social situations that narrative interpretation makes possible the justification of complex responsive actions (Cunliffe et al., 2004).