Ambidexterity in Service Organizations: Reference Models from the Banking Industry

Abstract

This paper reviews the literature on ambidexterity in service organizations with a specific focus on the banking industry. We identify three key, cross-unit bank processes: governance (bank headquarters), sales (branch processes) and operations (ICT and facilities to support local (branch) and inter-unit (headquarters-to-branch) tasks). We suggest a framework that incorporates three main “reference models”, from an organizational design perspective. Model 1 (exploitative model) applies when the bank's headquarters work to formalize branch sales processes supported by operations processes. Model 2 (exploratory model) applies when the bank's headquarters allows flexibility in branch sales processes and uses operations processes to decentralize tasks. Model 3 (ambidextrous model) applies when a branch incorporates the characteristics of Models 1 and 2 simultaneously. We ground our claims using fieldwork conducted in 2004–2005 that involved a number of major Italian banks. We show that while large organizations, such as banks, base their ambidextrous innovation on organizational design, contextual elements such as trust and commitment, and management styles and leadership play a role in dealing with efficiency-oriented vs. flexibility-oriented tasks within the same bank branch.