Strategic Coherence and Company Ambidexterity – a Necessity or a Delusion?

Abstract

Organisations have to take into account rapid, non-linear changes in their environment that build pressure on the company‘s development strategy. Therefore, one of the key challenges and paradoxes is to how maintain mutual coherence between different areas of the organisation and simultaneously leverage being ambidextrous so as to continue with exploration and exploitation activities. The main goal of this paper is to present research results on the relation between strategic coherence and company ambidexterity. Strategic coherence is a proprietary concept allowing for measurement of the balance between the vertical and horizontal adjustment of an organisation. Vertical adjustment is the relation between strategy and the elements of the business model measured by: 1) the cascading of goals, 2) feedback on matching elements of the business model according to strategy, and 3) control over financial results and strategy implementation. Horizontal adjustment refers to matching the business model components measured by: 1) creating value, 2) capturing value, and 3) creating a synergy effect) Meanwhile, ambidexterity is determined by four areas: 1) company goals, 2) products, 3) market and 4) competitive advantage for both exploration and exploitation activities. The research survey was conducted with the use of the CATI method. Altogether, 400 medium-sized and large Polish companies were included in the study. To calculate the dependencies, the Pearson correlation coefficient was applied. The companies studied achieved similar results in terms of strategic coherence dimensions, as the vertical adjustment was 6.47, and the horizontal was 6.29 on a scale of 1–10. Meanwhile, in terms of ambidexterity, the companies achieved a moderate level, with the average value for exploration being 4.26, and that for exploitation 4.51 on a scale from 1 to 7. Based on correlation analysis, the relation between both variables has the shape of an inverted “U” with the most favourable point for ambidexterity at the “high strategic coherence” level. This study is a comprehensive guide for practitioners, and presents development guidelines for companies. The value of this research is an empirically validated framework that describes relations based on a dynamic balance between strategic coherence and two types of adjustment in the area of regulation – vertical and horizontal, as well as ambidexterity with two types of activity in the area of operations: exploration and exploitation. This study is unique and explores uncharted areas of strategic management.