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, we adopted the design science research paradigm and proposed an economic decision model as artefact. 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, we discussed its design specification against theory-backed design objectives and with industry experts. We also instantiated the decision model as a software prototype and applied the prototype to a case based on real-world data.

Strategic Innovation, Foresight and the Deployment of Project Portfolio Management under Mid-Range Planning Conditions in Medium-Sized Firms

“…Strategic alignment is defined as the linking of project portfolios with the organizational vision, mission, and strategy [132,133], which aligns with the strategic planning requirements of SMEs. Furthermore, project portfolios are required to support the organization's vision and strategy and should aim to maximize the probability of achieving the organizational goals, vision, and mission [134].…”

“…Other considerations for balancing a portfolio include consideration of goal conflicts within selection decisions. One example could be a focus on cost savings versus strategic technology investments, requiring a compromise that reflects the trade-off between these two goals [134]. A portfolio should also provide a balanced mix of projects, taking into account different risk levels, time frames, and project sizes [136].…”

“…There is no clear and unified view on how to measure benefits for a project portfolio [134]. The literature suggests the use of traditional financial metrics for the determination of benefits, such as the net present value (NPV), return on investment (ROI), and internal rate of return (IRR), for the valuation of financial assets [25].…”

Comparative Analysis of Effective Project Governance Practices and Benefit Realization Management for the Successful Execution of Projects in NGO Industry

“…As per the "Input-Transformation-Output model", the compulsion to acquire benefits is to be selected/nominated to a picky project team member (Zwikael et al, 2015).Major theory behind Thorp's (1998) views regarding the connection between the portfolios, programs and projects is that the task of single projects is to deliver the necessary potentials, is not adequate enough in creation of benefits. Conversely, portfolio management plays a role of maximizing this value throughout the portfolio of the programs (Linhart, Röglinger & Stelzl, 2020).…”

Building an ambidextrous organization: a maturity model for organizational ambidexterity

“…This mature knowledge underscores the need for and benefits of OA. However, there is a lack of knowledge that helps organizations put OA into practice (Linhart et al 2018;Werder and Heckmann 2019). Specifically, there is a need for knowledge about what actions help implement different OA types (Asif 2017;Raisch and Birkinshaw 2008;Simsek 2009).…”