Buat Bab4 - Design Thinking Implementation For Innovation

Accepted Article Design Thinking Implementation for Innovation:
An Organization's Journey to Ambidexterity
Krithika Randhawaa
Natalia Nikolovab
Sumati Ahujac
Jochen Schweitzerd
a krithika.randhawa@uts.edu.au (corresponding author), Tel. +61-410-911125, University of

Technology Sydney PO Box 123, Broadway, NSW 2007, Australia
b natalia.nikolova@uts.edu.au University of Technology Sydney PO Box 123, Broadway, NSW
2007, Australia
c sumati.ahuja@uts.edu.au University of Technology Sydney PO Box 123, Broadway, NSW 2007,
Australia
d jochen.schweitzer@uts.edu.au University of Technology Sydney PO Box 123, Broadway, NSW
2007, Australia
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differences between this version and the Version of Record. Please cite this article as doi:
10.1111/JPIM.12599
This article is protected by copyright. All rights reserved

Accepted Article
Biographies
Dr Krithika Randhawa is Senior Lecturer of Innovation, Strategy and Entrepreneurship at the
Business School, University of Technology Sydney (UTS). Her research examines innovation in
context of strategy and digital technologies, with a focus on open innovation, crowdsourcing,
digital platforms, ecosystems and business models. Her work appears in leading journals such as
the Journal of Product Innovation Management, Journal of Business Research, California
Management Review, Journal of Knowledge Management and R&D Management, and as book
chapters and industry reports. Krithika carries out research for corporates, SMEs, start-ups, and
public sector organisations helping them implement innovation in digital, collaborative settings to
deliver business and societal impact. Her work has been recognised with several awards at UTS
and internationally.
Dr Natalia Nikolova is Associate Professor in Organization Studies at the University of

Technology Sydney Business School. Her research focuses on organization practices, strategy,
innovation, and leadership. She is passionate about bringing insights from various disciplines to
explore complex issues and phenomena and translate these into practical insights for industry.
Natalia has published widely in academic journals, books and industry reports.
Dr Sumati Ahuja is Senior Lecturer in Management at the Business School, University of

Technology Sydney, Australia. With over 25 years of experience of working as an architect, she
brings cross-functional perspectives from design and innovation to management and organization
studies. Her research spans digital transformation and the increasing use of human centered design
in private enterprise, from SMEs to Fortune 500 companies and government agencies, among
others. Her research has been published in a range of leading international Management and
Design journals, including Human Relations, Management Learning, Construction Management
and Economics, Journal of Professions and Organization and The International Journal of Design
in Society
Dr Jochen Schweitzer is Associate Professor of Strategy and Innovation and Director of

Entrepreneurship at the University of Technology Sydney Business School. Trained as both an
engineer and a social scientist, his research focuses on issues of strategy, entrepreneurship, and

Accepted Article
innovation with a special interest in design thinking, emerging technologies, and the future of
work. His research is industry involved and applied, looking at how organizations and managers
navigate complex business environments at the intersection of strategy, design and technology.
His work has been published widely in academic journals, books and industry reports.

Accepted Article
DR. KRITHIKA RANDHAWA (Orcid ID : 0000-0001-6972-2827)
DR. NATALIA NIKOLOVA (Orcid ID : 0000-0001-5916-3822)
Article type : Original Article
Design Thinking Implementation for Innovation:
An Organization's Journey to Ambidexterity
Krithika Randhawaa
Natalia Nikolovab
Sumati Ahujac
Jochen Schweitzerd
a
krithika.randhawa@uts.edu.au (corresponding author), Tel. +61-410-911125, University of
Technology Sydney PO Box 123, Broadway, NSW 2007, Australia
b
natalia.nikolova@uts.edu.au University of Technology Sydney PO Box 123, Broadway, NSW
2007, Australia
c
sumati.ahuja@uts.edu.au University of Technology Sydney PO Box 123, Broadway, NSW
2007, Australia
d
jochen.schweitzer@uts.edu.au University of Technology Sydney PO Box 123, Broadway,
NSW 2007, Australia
Accepted Article
Biographies
Dr Krithika Randhawa is Senior Lecturer of Innovation, Strategy and Entrepreneurship at the

Business School, University of Technology Sydney (UTS). Her research examines innovation in
context of strategy and digital technologies, with a focus on open innovation, crowdsourcing,
digital platforms, ecosystems and business models. Her work appears in leading journals such as
the Journal of Product Innovation Management, Journal of Business Research, California
Management Review, Journal of Knowledge Management and R&D Management, and as book
chapters and industry reports. Krithika carries out research for corporates, SMEs, start-ups, and
public sector organisations helping them implement innovation in digital, collaborative settings
to deliver business and societal impact. Her work has been recognised with several awards at
UTS and internationally.
Dr Natalia Nikolova is Associate Professor in Organization Studies at the University of

Technology Sydney Business School. Her research focuses on organization practices, strategy,
innovation, and leadership. She is passionate about bringing insights from various disciplines to
explore complex issues and phenomena and translate these into practical insights for industry.
Natalia has published widely in academic journals, books and industry reports.
Dr Sumati Ahuja is Senior Lecturer in Management at the Business School, University of

Technology Sydney, Australia. With over 25 years of experience of working as an architect, she
brings cross-functional perspectives from design and innovation to management and organization
studies. Her research spans digital transformation and the increasing use of human centered
design in private enterprise, from SMEs to Fortune 500 companies and government agencies,
among others. Her research has been published in a range of leading international Management
and Design journals, including Human Relations, Management Learning, Construction
Management and Economics, Journal of Professions and Organization and The International
Journal of Design in Society
Dr Jochen Schweitzer is Associate Professor of Strategy and Innovation and Director of

Entrepreneurship at the University of Technology Sydney Business School. Trained as both an
engineer and a social scientist, his research focuses on issues of strategy, entrepreneurship, and
innovation with a special interest in design thinking, emerging technologies, and the future of

work. His research is industry involved and applied, looking at how organizations and managers
Accepted Article
navigate complex business environments at the intersection of strategy, design and technology.
His work has been published widely in academic journals, books and industry reports.
DESIGN THINKING IMPLEMENTATION FOR INNOVATION:

AN ORGANIZATION'S JOURNEY TO AMBIDEXTERITY
ABSTRACT
Implementing design thinking for innovation (DTI) is seen as a way to balance exploration
and exploitation, and thus attain an ambidextrous innovation portfolio. Yet, transitioning to
ambidexterity is challenging, and is often met with inertia. So how can managers implement DTI
as a path towards ambidextrous innovation? In this article, based on an in-depth longitudinal case
study of a leading Australian property development firm and drawing on rich primary and
secondary data collected over four years, we examine how middle managers leveraged DTI to
respond to inertia generatively, and how this process helped shift the cognitive frame of the
organization toward ambidexterity. In our case, the middle manager flexibly implemented three
DTI practices— (1) creative problem-solving, (2) sprint execution, and (3) creative confidence
—in response to inertia and transition the organization’s cognitive frame from an explorative to
exploitative, to ultimately an ambidextrous innovation frame. Our argument is that these DTI
practices trigger three generative mechanisms—frame flexibility, co-optation, and collective
sensemaking—that underpin the cognitive integration that supported this transition. Drawing on
these insights, we develop a process framework of how different DT practices and related
generative mechanisms can be deployed flexibly to adapt to the interim (explorative and
exploitative) innovation objectives over time. We argue that freezing the innovation frame in
each phase can trigger a generative response to inertia, which enables the organization to

transition more radically to an ambidextrous innovation portfolio. We thus contribute to the
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limited design thinking research on the role of cognition in DTI implementation, and more
generally to innovation management and ambidexterity research on how leveraging DTI to
achieve an ambidextrous innovation portfolio is an emergent and adaptive process.
Practitioner points
 Organizations seeking to leverage DT as a strategic approach to ambidextrous innovation
should:
 Recognize that implementing DT to develop an ambidextrous innovation portfolio is an
emergent and adaptive process
 Use DT practices flexibly to negotiate inertia in a generative way when transitioning to
ambidextrous innovation
 Acknowledge the central role of middle managers for the effective implementation of DTI.
 Put in place systems and processes that encourage innovation managers to work toward
integrating cognitive frames of business unit managers and frontline employees
 Embed practices that augment the cognitive abilities of frontline employees and business unit
managers involved with DTI to accelerate the adjustment of an organization’s collective
cognitive frame toward ambidexterity.

DESIGN THINKING IMPLEMENTATION FOR INNOVATION:
Accepted Article AN ORGANIZATION'S JOURNEY TO AMBIDEXTERITY
INTRODUCTION
Design thinking (DT) is the application of design methods and tools to innovation challenges
(Micheli et al., 2019; Seidel and Fixson, 2013; Verganti, 2008, 2017). Deploying design thinking
for innovation (DTI) has emerged as a way for organizations to develop a portfolio of product
and service innovations (Perks, Cooper, and Jones, 2005), innovation strategies (Dell’Era and
Verganti, 2010), and competitive advantage (Liedtka and Kaplan, 2019). Although implementing
DTI is often difficult (Ben Mahmoud-Jouini, Fixson, and Boulet, 2019; Hölzle and Rhinow,
2019; Micheli, Perks, and Beverland, 2018), researchers have acknowledged that DT can help
organizations overcome cognitive challenges when transitioning to new innovation approaches
and outcomes (Kolko, 2015; Liedtka, 2015).
A critical cognitive challenge is the transition to ambidextrous innovation —that is, balancing
explorative and exploitative innovation while managing competing objectives (He and Wong,
2004; O’Reilly and Tushman, 2013). Explorative innovation refers to radical advances to enter
new product-market domains that meet emerging user needs, while exploitative innovation refers
to incremental improvements in existing product-market efficiency that meet the needs of
existing users (He and Wong, 2004; Jansen, van den Bosch, and Volberda, 2006; O’Reilly and
Tushman, 2013). However, the simultaneous pursuit of both requires managers to shift their
organization’s innovation frame—the shared cognitive map or mental model of innovation
(Kaplan, 2008; Narayanan, Zane, and Kemmerer, 2011)—to one that copes with the competing
cognitive agenda of ambidexterity (Karhu and Ritala, 2019; Karhu, Ritala, and Viola, 2016). We
refer to such a cognitive frame as the ambidextrous innovation frame.
Research has shown that a shift towards an ambidextrous innovation frame is challenging
(Raish et al., 2009) and often met with inertia (Benner and Tushman, 2003; Kaplan, 2008;
Randhawa et al., 2021a). As a result, few organizations succeed in achieving explorative and
exploitative innovation simultaneously (He and Wong, 2004; Tushman and O’Reilly, 1996). In
particular, managers struggle with the “exploratory” side of ambidexterity (O’Connor and Rice,
2013), given it involves coping with ambiguity and unpredictability (Vedel and Kokshagina,
2020; Robbins and O’Gorman, 2014). DTI has been conceptualized as a way of balancing
exploration and exploitation (Martin, 2009) in situations where ambiguity and uncertainty are
high (Liedtka, 2015) and as a cognitive driver of ambidextrous innovation (Zheng, 2018). Yet,

there are particular challenges with implementing DT as a path toward ambidexterity (Carlgren,
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Elmquist, and Rauth, 2016; Butler and Roberto, 2018). Against this backdrop, we lack clarity
about if and how managers can use DTI to help organizations attain an ambidextrous innovation
portfolio.
There are three specific gaps in the literature. First, the discussion of DT has mostly focused
on defining how DT tools work (Liedtka and Ogilvie, 2011; Seidel and Fixson, 2013), with an
emphasis on the implementation of such tools at the team or project levels (e.g., Ben Mahmoud-
Jouini, Midler, and Silberzahn, 2016; Hölzle and Rhinow, 2019), leaving us with little
knowledge of the organization-level processes of DTI implementation (Micheli et al., 2019;
Wrigley, Nusem, and Straker, 2020). As a result, despite notions of the relevance of DT to
organizational practices (Brown and Martin, 2015; Gruber, de Leon, George, and Thompson,
2015), we lack insights on how DT can be leveraged for broader organization-level innovation
outcomes (Elsbach and Stigliani, 2018), particularly ambidextrous innovation (Zheng, 2018).
Second, existing DT research has focused on the structural rather than cognitive aspects of
DTI. From a structural perspective, researchers have considered where a DT function should be
located within an organization (D’Ippolito, 2014), how a design function should be organized
(Perks et al., 2005), and what practices could elevate the strategic positioning of design in
organizations (Micheli et al., 2018). However, there is limited research using a cognitive
perspective to study the thinking side of design; a few notable exceptions (Cross, 2011) focus on
how DT tools activate individual cognitive aspects of designers, such as reducing their cognitive
biases (Liedtka, 2015), enabling them to blend analytical and intuitive thinking (Martin, 2009) or
draw on “generative sensing” (Dong, Garbuio, and Lovallo, 2016) to inform strategic decision-
making (Garbuio et al., 2015). We know far less about how managers use DTI to shift the
collective cognitive frames of organizations (e.g., Stigliani and Ravasi, 2012) and reduce inertia
that may constrain organization-level approaches to ambidextrous innovation (Nagaraj et al.,
2020; Danneels et al., 2018). This is a critical omission because achieving an ambidextrous
innovation portfolio via DTI calls for a collective cognitive transition.
Third, the ambidexterity literature has also primarily focused on structural aspects rather than
cognitive processes. The majority of studies examine structural factors of exploration and
exploitation, such as how organizations can be designed for ambidexterity (Csaszar, 2013) and
the extent to which explorative and exploitative activities can be produced by the same
organization through, for example, distinct organizational units via so-called structural
ambidexterity (Jansen et al., 2006; Tushman and O’Reilly, 1996) or by designing systems and
processes for their simultaneous pursuit within the same unit via contextual ambidexterity

(Gibson and Birkinshaw, 2004; Randhawa, Wilden and Gudergan, 2021b) or by organizing
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activities over time in sequential explore-exploit cycles via temporal ambidexterity (Siggelkow
and Levinthal, 2003). While some studies have identified DT as an antecedent of ambidextrous
innovation (e.g., Zheng, 2018), others have questioned the capacity of DT to stimulate
ambidexterity, particularly considering the inertia that impedes organizations in shifting to an
ambidextrous innovation portfolio (Butler and Roberto, 2018; Nagaraj et al., 2020).
To address these gaps, in this study, we ask, how do managers leverage DTI to support their
organization in its shift to achieve an ambidextrous innovation portfolio? Specifically, we
examine how middle managers (MM) use DTI to shift the cognitive frames of their organization
to ultimately attain an ambidextrous innovation portfolio. Drawing on abductive research design
(Dubois and Gadde, 2002; Langley, 1999) and rich primary and secondary data collected over
four years, we document the findings of an in-depth longitudinal case study of a leading
Australian property firm’s journey to ambidexterity.
In our case, MMs progressively and flexibly implemented three practices of DTI— (1)
creative problem-solving, (2) sprint execution, and (3) creative confidence (cf. Dell’Era et al.,
2020)—to respond to inertia and negotiate the transition of the organization’s cognitive frame
from an explorative to exploitative, to ultimately an ambidextrous innovation frame. We theorize
that these DTI practices trigger three generative mechanisms—frame flexibility, co-optation, and
collective sensemaking—that underpin the cognitive integration required to support this
transition. Drawing on our insights, we develop a process framework showing how DTI practices
can be used flexibly across phases. We contend that freezing the innovation frame in each phase
can trigger a generative response to inertia. Ultimately, this allows the organization to conceive
and implement the more radical transition to an ambidextrous innovation portfolio.
We make four contributions to both DT and innovation management research. First, we
respond to the calls for more research on DTI implementation from a cognitive process
perspective (e.g., Micheli et al., 2019; Liedtka, 2015). The process framework we develop shows
how different DT practices and related generative mechanisms can be deployed flexibly to
respond to inertia and adapt to the interim (explorative and exploitative) innovation objectives
over time. Second, our study demonstrates how DT can drive broader organizational outcomes
(Elsbach and Stigliani, 2018; Micheli et al., 2019)—in our case, ambidextrous innovation. We
show how DTI can be used in a phased manner for shifting organization-wide cognitive frames
toward ambidexterity (e.g., Lin and McDonough, 2014; Beverland et al., 2015). Third, we
provide a nuanced understanding of the strategic role of MMs in leveraging DT as a process for
innovation project portfolio management, thereby contributing to innovation management

research (e.g., Spieth and Lerch, 2014). By being flexible in their use of DT practices, MMs can
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act as a critical conduit between top management, frontline employees, and peers, reconciling
their varied interests to achieve the collective cognitive (re)framing required to deliver an
ambidextrous innovation portfolio (Roth, Spieth, and Lange, 2019; Radaelli et al., 2017). Finally,
we contribute to research on ambidextrous innovation by clarifying that DT can be used as an
enabler of ambidextrous innovation by helping overcome inertia in transitioning to an
ambidextrous innovation frame, in settings involving heterogeneous organizational levels
(Birkinshaw and Gupta, 2013).
In what follows, we provide a background on implementing DT for ambidextrous innovation,
and the role of MMs, with a particular focus on related cognitive aspects. We then outline our
research methodology before presenting the empirical findings and a process framework. We
conclude with a discussion of the key theoretical and managerial implications.
THEORETICAL BACKGROUND
Design thinking implementation for innovation
DT is seen fundamentally as an exploratory process (Brown, 2009) that helps organizational
members “think like a designer” (Simon, 1969) to solve “wicked problems” (Buchanan, 1992).
More recently, DT has emerged as a way to draw on “designerly tools” to drive innovation
(Seidel and Fixson, 2013; Verganti and Dell’Era, 2014), organizational competitiveness (Liedtka
and Kaplan, 2019; Martin, 2009), and performance (Gemser, Candi, and van den Ende, 2011) in
large multinationals as well as small and medium-sized enterprises (Carlgren et al., 2014;
Micheli et al., 2018). DT can be implemented in various ways: from a process in innovation
projects to a set of principles driving organization-level change (Brown and Martin, 2015;
Gruber et al., 2015). However, its decontextualization from the discipline of design and a largely
practical focus in deploying DT tools in innovation projects has left the concept of DT
disconnected from management theories (Kimbell, 2011; Micheli et al., 2020).
Most DT studies have focused on defining design tools and methods (e.g., Ben Mahmoud-
Jouini et al., 2016; Hölzle and Rhinow, 2019) to generate innovative solutions for problems
(Brown, 2008; Liedtka and Ogilvie, 2011). Seidel and Fixson (2013) classified DT tools into (1)
need-finding tools (i.e., ethnographic observations, in-depth contextual interviews, or customer
journeys to empathize with and understand user needs), (2) idea-generation tools (i.e.,
brainstorming to generate possible solutions to problems), and (3) idea-testing tools (i.e., rapid
prototyping and experimentation to test ideas on a small scale for desirability, technical
feasibility, and business viability). These align with Liedtka’s (2014) description of tools across

the (1) exploration, (2) ideation, and (3) experimentation phases. More recently, Micheli et al.
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(2019) have consolidated ten attributes and eight tools and methods that underpin DT.
Beyond applying tools and methods, DTI calls for a shift to new mindsets or mental models
that embrace user-centricity, ambiguity, and risk-taking (Liedtka and Kaplan, 2019; Elsbach and
Stigliani, 2018; Schweitzer et al., 2016; Groeger and Schweitzer, 2020). This is because DT is
seen as “user experience-driven” (Liedtka, 2014) in opposition to traditional “user preference–
driven” approaches that focus on “identifying and aggregating knowledge from existing markets
quantitatively” (Meinel et al., 2020, p. 4). DT also relies on experimenting and testing several
iterations of a solution thus (re)framing failure as learning. As such, DTI tests existing ways of
innovating and is often met with skepticism (Butler and Roberto, 2018; Micheli et al., 2018). As
a result, in practice, integrating DT into project routines is not easy (Björklund et al., 2020;
Hölzle and Rhinow, 2019).
Critical perspectives of DT have cautioned that reassembling designers’ practices that adopt a
user-centered approach, as opposed to a technology-centered approach to innovation, has not
always “brought a happy synthesis” (Kimbell, 2011, p. 286). Indeed, researchers have argued
that “any innovation implies understanding of both technologies and markets” (Verganti, 2011,
p. 386) and that radical innovation may equally be driven by technology change rather than user-
centeredness. Yet, questions remain about whether DT is “a means of approaching problems or is
best understood as a professionally derived skillset” that can help non-designers (e.g., managers)
learn a “designer’s sensibilities” (Micheli et al., 2018, p. 17; Brown, 2008).
In addition, DTI is often in conflict with existing organizational structures and cultures
(Csaszar, 2013; Chang et al., 2013) making its implementation resource-demanding and
challenging (Ben Mahmoud-Jouini et al., 2019). Prior research has explored how DT influences
innovation by examining where it should be positioned within the organizational structure
(D’Ippolito, 2014) and how organizational practices can elevate it as a strategic function
(Micheli et al., 2018). The argument is that the effect of design on firm performance depends on
whether it is organized top-down–as functional specialism–or as part of new product
development- or cross-functionally integrated multifunctional teams (Perks et al., 2005; Nagaraj
et al., 2020), balancing design alongside commercial considerations (Micheli et al., 2018).
Research taking a cognitive perspective focusing on how DT influences innovation processes
and outcomes, however, remains sparse. The few exceptions have focused on “design cognition”
to show how DT tools guide particular ways of knowing (Cross, 2011) and problem-solving
through expanding problem and solution boundaries (Dorst, 2015). Dong et al. (2016) focused on
how DT tools help managers develop “generative sensing capabilities” to use abduction in

strategic decision-making. Relatedly, Martin (2009) argued that, by enabling managers to blend
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analytical and intuitive thinking, DT enables organizations to attain strategic competitive
advantage. Liedtka (2015) argued that design thinking enables synthetic, dialectical, and
abductive strategies. Liedtka and Kaplan (2019) further suggested that DT aids strategy
development by allowing organizations to perceive opportunities differently. While these studies
focus on strategy, Liedtka (2015) suggests that DT challenges nine individual-level cognitive
biases that influence innovation outcomes, and Zheng (2018) argues that DT facilitates
ambidextrous learning required for innovation, thus cultivating individual ambidexterity among
managers. Researchers have argued that innovation is related to shifts in organizational cognition
(Greve and Taylor, 2000; Kaplan, 2008) which is particularly pronounced when organizations
must balance the contradictory rationalities of ambidextrous innovation (Karhu and Ritala, 2019)
and manage the ambiguity and uncertainty related to explorative innovation (O’Connor and Rice,
2013; Robbins and O’Gorman, 2014; Vedel and Kokshagina, 2020).
Design thinking, ambidextrous innovation, and cognitive frames
Ambidexterity research offers insights into how organizations balance explorative and
exploitative innovation (He and Wong, 2004; O’Reilly and Tushman, 2013) and other related
competing objectives, such as incremental and radical innovation (Benner and Tushman, 2003),
exploitative and explorative learning (Kang and Snell, 2009), and explorative and exploitative
knowledge-sharing (Im and Rai, 2008). Empirical evidence shows that ambidexterity drives sales
growth (He and Wong, 2004), performance (Lubatkin et al., 2006), and survival (Hill and
Birkinshaw, 2014) in organizations and business units.
The ambidexterity literature highlights different perspectives on how ambidextrous innovation
can be achieved. Researchers have largely focused on the structural separation of exploitative
and explorative innovation tasks into different organizational units, i.e., structural ambidexterity
(Tushman and O’Reilly, 1996; Simsek et al., 2009). However, while structural ambidexterity is
achieved through a separate unit focused on exploration to shield it from the mainstream
business that remains focused on exploitation (Smith and Tushman, 2005), and by separating
radical and incremental innovation teams (Martini et al., 2015), effective coordination and
integration between the two remains a challenge (Zimmerman and Birkinshaw, 2016).
Another approach referred to as temporal ambidexterity suggests oscillating between the
conflicting activities of exploration and exploitation over time in response to environmental
needs (Siggelkow and Levinthal, 2003; Boumgarden et al., 2012). This allows individuals to
focus on one activity at a time, and yet, integrate knowledge and experience from explorative
and exploitative phases, thus overcoming a shortcoming of structural ambidexterity. However,

this temporal separation and vacillation also demand constant changes in systems and processes
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to organize activities in back-and-forth cycles between explorative and exploitative innovation.
To address these challenges, researchers have begun to focus on the notion of contextual
ambidexterity, arguing that exploration and exploitation should be integrated within and across
business units (BUs), and rely on supportive organizational context and processes that
“encourage individuals and teams to make their own judgments about how to divide their time
between conflicting demands for alignment and adaptability” (Gibson and Birkinshaw, 2004, p.
210). While this approach aids the development of the behavioral capacity to simultaneously
explore and exploit (He and Wong, 2004), it places great strain on employees who must cope
with conflicting tasks and tends to be more suited to exploitative innovation (Zimmerman and
Birkinshaw, 2016). More recently, researchers have also highlighted the importance of cognitive
ambidexterity; that is, contextual ambidexterity at the individual level (Good and Michel, 2013;
Karhu et al., 2016), acknowledging the role that individual cognitive capacities play in coping
with the conflicting tasks of exploration and exploitative innovation.
Research in strategy cognition also suggests that cognitive frames, defined as the shared
assumptions and understandings or collective mental models that organizations possess (Kaplan,
2011), play a crucial role in innovation processes and outcomes (Foss and Saebi, 2017;
Narayanan et al., 2011; Kaplan, 2011). Cognitive frames help manage the uncertainty,
ambiguity, and unpredictability that besets explorative innovation (Raisch et al., 2009; O’Connor
and Rice, 2013), and the innovation paradoxes associated with balancing exploration and
exploitation (Andriopoulos and Lewis, 2010; Smith and Tushman, 2005). Importantly, even
when a firm has appropriate project portfolio management capabilities, it may not be able to
deliver anticipated outcomes if cognitive frames are not aligned with innovation opportunities
(Kaplan, 2008; Randhawa et al., 2021a). Going further, Lin and McDonough (2014) have argued
that cognition is an antecedent to ambidextrous innovation: cognitive ambidexterity aids firms in
embracing tensions rather than denying them. Therefore, ambidextrous cognitive frames are
essential for generating ambidextrous innovation. Yet, while stable cognitive frames develop
common understandings and coordinated action at the organizational level, the very stability of
cognitive frames may also lead to inertia that hinders innovation (Danneels et al., 2018; Nagaraj
et al., 2020).
Prior research has shown that DT enables ambidextrous innovation by changing individual
thinking among managers (Zheng, 2018) and reducing team-level cognitive inertia (Nagaraj et
al., 2020). Yet, we know little about if and how managers can use DTI to shift the collective
cognitive frames of organizations to achieve an ambidextrous innovation portfolio. While some

researchers have highlighted the importance of cognition at the individual level (Carlgren, Rauth,
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and Elmquist, 2016; Schweitzer et al., 2016; Liedtka, 2015), we focus on how DT can help
overcome inertia and shift cognitive frames at an organizational level to ultimately enable an
ambidextrous innovation portfolio. We thus respond to Lin and McDonough’s (2014) call for
more empirical studies on the role of cognitive frames in fostering ambidexterity.
The role of middle managers in ambidextrous innovation
The literature on ambidexterity draws heavily on the assumption that the top management
team (TMT) are the key decision-makers who address the exploration-exploitation tensions
(Zimmermann, Raisch, and Birkinshaw, 2015), and are hence pivotal in “the processing of
disparate demands essential to attaining ambidexterity” (Lubatkin et al., 2006, p. 646). This line
of thinking stems from a traditional view that the senior managers’ role is to define (innovation)
strategy, while MMs focus on strategy implementation and, only occasionally, get involved with
strategy formulation (Floyd and Wooldridge 1992, Raes et al. 2011). The structural
ambidexterity perspective (Tushman and O’Reilly, 1996), for instance, suggests that creating the
conditions to engage in both exploitative and explorative activities and behaviors is a senior
management task, whereas BU managers should focus on executing either exploration or
exploitation. Yet, strategy and innovation research has highlighted that MMs’ decision-making
helps shape innovation strategies (Fulop 1991, Burgelman 1994, Reitzig and Sorenson 2013,
Heyden, Sidhu and Volberda, 2018) and, consequently, whether and how firms explore and
exploit innovation opportunities (Randhawa, Wilden and Gudergan, 2018). More recently, the
top-down view of innovation has been challenged, highlighting the importance of MMs for
selecting and implementing entrepreneurial opportunities (Ren and Guo, 2011; Schubert and
Tavassoli, 2020) and initiating and implementing strategic change (Tarakci et al. 2018).
MMs, as the first instance of organizational decision-making, are well placed to initiate and
create a strategic innovation portfolio (Roth, Spieth and Lange, 2019; Radaelli et al., 2017).
MMs play a crucial role in innovation portfolio management, defined as the decision-making
process to evaluate, select and prioritize innovation projects in line with the firm’s long-term
strategic objectives (Kester et al., 2011; Spieth and Lerch, 2014). MMs who manage innovation
portfolios are responsible for not only efficiently and effectively allocating scarce resources but
also for establishing cross-functional collaboration across different managerial levels and
adapting the innovation portfolio to emergent changes (Kester et al., 2011; Roth, Spieth and
Lange, 2019). More generally, MMs act as “interpreters and sellers of strategic change at the
micro-level” (Rouleau, 2005, p. 1413). From an ambidexterity perspective, Mom, van den
Bosch, and Volberda (2007) showed that a combination of top-down, bottom-up, and horizontal

knowledge flows could help synthesize explorative and exploitative innovation. More recent
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studies suggest that MMs play a vital role in bridging between front line employees and the TMT
to develop innovations (Heyden, Sidhu and Volberda, 2018), leading to calls for more in-depth
analyses of how MMs contribute to innovation (Radaelli et al., 2017) and shape an ambidextrous
innovation portfolio in organizations (Mom, Fourné, and Jansen, 2015). In this article, we
address how MMs leverage DT to serve this end.
RESEARCH DESIGN AND METHODOLOGY

We adopt an in-depth longitudinal case study approach to investigate the process of
implementing DT for ambidextrous innovation. This approach is well-suited where the
boundaries between the phenomenon and its context are blurred (Hartley, 2004; Yin, 2003) and
to analyze “a number of interdependent variables in complex structures” (Dubois and Gadde
2002, p. 558). Our case features the execution of DTI by the innovation unit, Nest, set up to
pursue an ambidextrous innovation portfolio at Urban (pseudonyms), a leading Australian
property development company. The case covers four years (2016–2019) and is complemented
by an analysis of the firm’s recent history (2008–2019) to understand the context and events
leading up to the DT implementation process. We follow the journey of the organization from a
current to a future state in line with the targeted strategic ideal (Hoyte and Greenwood, 2007),
taking account time and the nature of the process(es) of change, to derive theoretical insights
(Langley et al., 2013). Specifically, we focus on the dynamics by which ambidextrous innovation
was pursued through DTI implementation and how the organization responded to inertia in the
process.
Research setting
Urban is a leading, publicly listed Australian property group that owns and manages
commercial offices, retail centers, and residential and industrial properties both in Australia and
internationally. The group has a strong property development capability and one of the largest
property portfolios in the country.
The group is led by a CEO, Chief Financial Officer (CFO), Head of Strategy, Chief
Information Officer (CIO), and Head of Culture. Each of its three BUs – office and industrial,
retail, and residential – has its own Head. Together, these form the TMT of Urban. Reporting to
the BU Heads are the BU general managers who form Urban’s middle management.
During the 2008 global financial crisis, Urban’s diversified property portfolio, funded mostly
via bank loans, created significant issues. It represented a volatile time for Urban’s TMT, MMs,
employees, and shareholders alike. Indeed, at one point, the company’s share price dropped 80%

in only six months. Slowly recovering, the firm found itself in a more stable position by 2012,
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which also marked the change in Urban’s leadership and strategic direction, culminating in the
appointment of a new chief executive officer (CEO) in 2012.
This study covers a period commencing when Urban began to make deliberate changes to
improve its strategic innovation portfolio through a time in which the construction industry
experienced growth but also competitive struggles and culminates when Urban began reaping
benefits as a result of its growing ambidextrous innovation portfolio.
Urban was identified as an exemplary case for the investigation of the development of an
ambidextrous innovation portfolio by two of the authors when they conducted a preliminary
qualitative study with 21 CEOs and chairs of Boards of leading Australian companies (Leung et
al., 2016), which included Urban. The study’s aim was to investigate the strategies and practices
of Boards and executive teams that fostered and hindered innovation. It became clear during
these preliminary interviews that it was Urban’s ambition to develop an ambidextrous innovation
portfolio. At the time, Urban had just launched their innovation unit, Nest. In 2017, the CEO
introduced the researchers to the director of Nest (a MM), who then provided access to other
members of the organization and a range of secondary data sources.
Data collection
The interviews with the CEO and the Board chair as part of the earlier study were the first
phase of our data gathering. We then developed a collection of publicly accessible information
on Urban, such as company reports and the property development industry. Other archival data
included documents not publicly available—for example, internal reports; company documents
such as memos, meeting minutes, presentations, and emails; project proposals; training and
workshop materials—which were made available to us by the Nest director. These documents
outlined critical steps in the setup and development of Nest and its practices.
Subsequently, two of the authors conducted 31 interviews with key decision-makers at all
levels, including the TMT (e.g., CEO, CFO, Head of Strategy, Head of Culture), MMs (e.g., the
director of Nest, BU managers), and frontline employees taking a lead role in the innovation unit
(called “innovation leads” and “innovation champions” respectively) over a period from 2016
until early 2020 (see Table 1). We identified these interviewees in collaboration with executives,
the Nest team and by asking interviewees to introduce us to other relevant members.
Pseudonyms are assigned to key informants. Interviews were conducted face-to-face, lasted
between 45 minutes and 2 hours, and were recorded and transcribed.
After the first three interviews with the Nest director and other members of the team, it
became clear that DT was to be used as a framework for the setup of Urban’s ambidextrous

innovation portfolio. We then consulted the DT literature to generate additional questions that
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focused on the circumstances, strategies, and activities, as well as reasons for events, as they
related to the implementation of DTI by Nest to attain ambidextrous innovation. These questions
revealed each interviewee’s role and contribution to DTI implementation, examples of
innovation projects they worked on, how the DT methodology and toolset were applied,
reflections on key success factors and challenges, and how they responded to the challenges.
Table 1 shows the primary and secondary data that we collected as part of the study.
INSERT TABLE 1 HERE
As interviews were retrospective by no more than four years, we did not assume extensive
retrospective rationalization, misinterpretation, or idealization. However, in this relatively short
time, respondents may have developed less openness, as their statements could have affected
their career or ongoing project work. Insights from interviews were hence triangulated with
information from other meetings as well as concurrent secondary data. Several informants were
interviewed repeatedly over the course of 4 years to trace how managerial decisions were made
and how they impacted the DTI implementation activities and outcomes. Interviewing
informants from different levels and who were involved in different ways and at different times
with the innovation unit, along with the use of secondary and archival data, helped include
diverse perspectives and complementary information on the same events (Glaser and Strauss,
1967), thereby increasing the validity of our findings (Yin, 2003).
Data analysis
We adopted an abductive approach to analyze the longitudinal data. The iterative cycles of
confronting data and theory allowed us to “expand [our] understanding of both theory and
empirical phenomena” (Dubois and Gadde, 2002, p. 555). The goal was to allow new theoretical
insights to emerge from data collected from multiple sources, analyzed through constant
comparison, and validated by both extant theories and ongoing data analysis.
We started with a focus on the ambidexterity literature as our data indicated that Urban saw
an ambidextrous innovation portfolio as a key goal. We engaged concepts such as structural
ambidexterity in the data analysis. For example, we coded statements about “separation from
hierarchy”, “autonomy”, “core team” and divided focus between exploration and exploitation as
examples of structural separation. As we progressed data collection, we were led to the DT
literature, especially the three different interpretations of DT practices as identified by Dell’Era
et al (2020): creative problem-solving, sprint execution, and creative confidence, which helped
explain our data on how DT was adopted. For example, originally the Nest team focused on

using DT tools to understand the needs of the customer and to develop ideas for potential new
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products/services. We coded statements referring to the importance of “customer scan stage” and
“ideation stage” as creative problem-solving practice, as there is a strong focus on understanding
the customer needs and ideation in this DT practice (Dell’Era et al 2020). See Figure 1 for a
detailed coding structure.
INSERT FIGURE 1 HERE
As we continued our analysis, we noted that interviewees reflected upon the cognitive shifts
they felt and/or observed as a result of engagement with the DT practices, revealing the
important role of cognitive reframing underpinning the firm’s journey toward ambidextrous
innovation. We then expanded our conceptual framework by drawing on strategy cognition and
innovation management research, which has noted the centrality of collective cognitive frames in
driving innovation portfolios. While this served as a theoretical reference, it allowed us to code
the data and abstract themes such as frame flexibility, co-optation, and collective sensemaking.
For example, we coded references such as “thinking outside the box”, “something no-one has
done before” to the theme of frame flexibility as they demonstrate a cognitive frame that
accommodated explorative innovations (Raffaelli, Glynn, and Tushman, 2019) (see Figure 1).
This literature also helped us make sense of the difficulty to shift towards explorative innovation,
which the data also revealed, by sensitizing us to the concept of inertia (Danneels et al, 2018).
Based on our abductive analysis and our efforts to match theory and reality (Dubois and Gadde,
2002), we organized first-level themes into theoretical constructs which we further abstracted
into aggregate dimensions (see Figure 1).
Next, in alignment with other process studies (e.g., Langley, 1999), we consolidated the
narrative history of Urban and Nest. We used key transition periods, when the Nest team
changed elements of their practice, to delineate three phases of DTI, the drivers and outcomes of
these transitions, how the phases related to a progressive shift in cognitive frames, and how
these, in turn, led to ambidextrous innovation. The phases included feedback loops between old
and new practices, yet, for analytical reasons, we present the phases in a more linear fashion.
Finally, we conducted an in-depth analysis of the process and outcomes and looked for
relationships between key constructs across phases. For each phase, we asked the following
questions: (1) How did Nest evolve their DT practice during this phase? (2) What triggered the
transition to the next phase? (3) How did the Nest director, team and other organizational
members respond during this phase? (4) What were the outcomes and impact of these responses
on the innovation portfolio? (5) What mechanisms could explain these actions and outcomes?

We generated memos when analyzing the data and literature in terms of the above questions, and
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continuously matched and contrasted memos to refine our theoretical understanding.
We validated our interpretations throughout the analysis: on several occasions, we shared
insights with the Nest team. Progress reports were shared in late-2017 and mid-2018, and two
informal progress presentations took place in November 2019 and January 2020. These feedback
sessions allowed us to check our understanding of the key issues and provided additional insights
that were incorporated into the ongoing rounds of data analysis. The member checks served to
revise and clarify the findings discussed below (Hirschman, 1986; Lincoln and Guba, 1985).
By iteratively enfolding our findings with constructs in existing research to inform the
ongoing data collection, analysis, and interpretation and validating recurrent patterns in the data,
we developed our final process framework of how DT enabled ambidextrous innovation (Figure
2). Tables 2, 3, and 4 outline the core theoretical concepts and how they were empirically
manifested for each phase of DTI implementation.
RESULTS
We theorize how Urban’s innovation director (a MM) used DT practices to support the
organization toward ambidexterity across three phases (Dell’Era et al., 2020). Importantly, this
process triggered a progressive shift in the organization’s cognitive frame toward one that
embraced ambidextrous innovation. Figure 2 presents our process framework to using DT as a
strategic lever for attaining an ambidextrous innovation portfolio and the way this was enabled
by the innovation director. Tables 2, 3, and 4 provide illustrative evidence for each phase.
INSERT FIGURE 2 HERE
INSERT TABLES 2, 3, AND 4 HERE
Developing Urban’s innovation strategy: Incorporating design thinking

Embedding and formalizing innovation as a core capability in Urban was a key strategy
launched by Karen when she was appointed as CEO in 2012. This was because “[innovation]
was sporadic and patchy, and there was no holistic thought to why are we doing this, how are we
doing it” (CEO, 2017). Karen defined innovation as “change that adds value,” keeping the
definition broad intentionally “so, that [innovation] can be as far-reaching as process innovation,
a product innovation, a service innovation. It can be disruptive; it can be incremental” (CEO,
2016). Accordingly, the focus was on improving existing offerings and also developing radically
new offerings such as using drone technologies to improve health and safety construction
practices; using prefabricated construction methods, and developing new business models for

residential building (build-to-rent) or new services in retail (artificial intelligence-enabled
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customization of products and services). The goal was an ambidextrous innovation portfolio, as
Karen explained, acknowledging the cognitive shift that this would entail:
We need to squeeze that [existing] business as hard as we can … and then do

something completely different … so we’re trying to do two things at once …
owning the now and owning the future at the same time. They’re quite different
ways of thinking. So, as an organization, we have to be somewhat ambidextrous
… in ‘squeeze the lemon mode’ [and] ‘think of the future mode (emphasis added,
CEO, 2017).
In 2013, Rachel was appointed to lead the development of Urban’s innovation portfolio,
becoming Urban’s first General Manager, Innovation. Rachel was a well-regarded and
experienced MM in the strategy department, who had worked at Urban for several years. She had
identified innovation as a critical capability gap across the organization and had raised the need
to address this gap in conversations with Karen and other senior executives. Rachel also knew
that the lack of strategic direction was a key barrier to innovation at Urban:
People knew that we needed to be more innovative; we’d had internal studies that
said we weren’t doing [innovation] well…. So, everyone was very well-
intentioned but was quite directionless.
Rachel led the setup of Nest and was appointed its director. She chose DT as the key
methodology to underpin Nest’s innovation initiatives because she saw “the rigor, the structure,
the thinking around customer problems” that DT offered as important to formalizing an
ambidextrous innovation portfolio. Her goal was to balance Urban’s current portfolio of
exploitative innovation projects, which incrementally extended existing offerings to meet
existing customer needs to achieve better product-market efficiency, with explorative innovation
projects to develop new offerings designed for new product-market domains and emerging
customer needs (Jansen et al., 2006; O’Reilly and Tushman, 2013; He and Wong, 2004).
We found that the innovation director used three different DT practices in phases to respond
generatively to inertia towards explorative innovation and shift the cognitive frame of the
organization toward ambidexterity. We present our findings according to our three-phase
periodization: (1) creative problem-solving, (2) sprint execution and, (3) creative confidence. For
each phase, we show the firms’ organizational context and the structural separation that marked
the beginning of each phase, enabling the organization to progressively build resources and

legitimacy for DTI. We then demonstrate how the implementation of a specific DT practice,
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from creative problem-solving to design sprint execution to creative confidence, triggered a
generative response to inertia in each phase through the mechanisms of frame flexibility, co-
optation, and collective sensemaking. We argue that these mechanisms enabled a shift in
collective cognitive frame towards an ambidextrous frame. Finally, we summarize our findings
by taking stock of Urbans' ambidextrous innovation portfolio.
Phase 1: 2015–2017—Creative problem-solving
The context: Prior to 2015, Urban had no formal structuring for innovation portfolio
management. Rachel addressed this issue by setting up systems, processes, funding and
governance to support innovation, and developing specific innovation roles (Faems et al., 2008),
to help build resources for DTI.
Structural separation: Nest became the unit dedicated to driving DTI implementation and
building an explorative and exploitative innovation portfolio. We see this as an important step
towards structural separation - a proven approach to achieving ambidextrous innovation
(O’Reilly and Tushman, 2013; Tushman et al., 2010) as it signaled the firm’s commitment to
innovation, while “protecting” innovation from the pressures of business operations.
Rachel facilitated a series of workshops with the TMT, including BU Heads, to develop and
agree on some “broad areas of focus” that set priorities for the company’s innovation efforts. A
decision was made to define eight missions with a balance between explorative and exploitative
innovation. Four exploitative missions focused on Urban’s existing customers and product-
market efficiency and four explorative missions were defined around the potential needs of
future customers and new product-market domains (He and Wong, 2004). This was a deliberate
strategy to attain ambidexterity by creating a portfolio of projects with different risk profiles and
time frames and was seen as a way of balancing the long- and short-term (Baghai, Coley, and
White, 1999). It is well known that such a portfolio management strategy is recommended for its
aggregate-level focus—bringing focus on the performance of the overall portfolio rather than the
success or failure of individual high-risk projects (Sykes and Block, 1989). It was Rachel’s role
as the MM to implement this strategy (Floyd and Wooldridge, 1992).
Rachel recruited 22 volunteers called innovation champions (frontline employees) from
across the firm, who were trained in DT by a team of external consultants, building resources for
DT. The champions’ brief was to spend about 2–3 days per month working exclusively on either
an exploitative or explorative innovation mission and come up with creative ideas to support the
idea generation phase of the innovation value chain (Hansen and Birkenshaw, 2007). Promising

ideas were passed onto the respective BUs to be further tested, implemented and
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commercialized.
We refer to this as the start of structural separation as innovation champions were removed
from their operational activities and put into dedicated teams working on either an explorative or
exploitative mission (Martini et al., 2015; Simsek et al., 2009). The teams were organizationally
interdependent with respect to pursuing ambidexterity and their activities were coordinated
through a shared vision and the leadership of the Nest director and the senior management team
(O’ Reilly and Tushman, 2007). Kelley (2009, p. 497) argues that structural options that
“preserve organizational connectedness [] will more likely be associated with sustainable radical
innovation activity in an established organization”. Although Nest was as a separate unit, the
innovation champions provided an ongoing connection to the BUs.
Creative problem solving: To translate the missions into innovation ideas, Rachel and the
innovation champions used a creative problem-solving approach (Dell’Era et al., 2020) to “go
and talk to customers around these [missions] to actually identify specific challenges that [they]
want to solve…in line with our strategy” Here, DT tools were deployed intensively to seek
creative solutions to meet both current and emerging user needs: that is, pursue exploitative and
explorative innovation as part of the innovation portfolio management. An Innovation Council,
consisting of the TMT, was responsible for overseeing progress and approving a small yet
dedicated budget for customer scans, ideation, and experimentation sessions.
DT’s focus on the holistic needs of customers (current customers for exploit-type projects and
future customers for explore-type projects) through need-finding (Seidel and Fixson, 2013) was
seen as the critical starting point:
Importantly, we’re looking to uncover the gaps in the customer experiences when
trying to get these jobs done— … if we find the gap between what the customer
wants and the available solutions—that is where the opportunity is. These are the
innovations that are highly successful … the gap when someone comes up with
something new!!! (Nest training materials)
Frame flexibility: Through intense DTI tool deployment, Rachel emphasized “quality and
rigor over speed,” which gradually led to a change in cognitive frame towards exploration:
It took almost a year for us to get out of our own assumption and headspace
around what we currently do. It’s so hard when you’re in a business to have the
freedom to do that next thinking, and [the innovation champions] did; they did a

fantastic scan … came up with this really cool idea, running experiments …. So, it
Accepted Article was really the first disruptive idea. (Rachel, 2018)
Frontline project members felt increasingly comfortable deploying DT tools such as

ethnographic research, user interviews, and observations to explore unmet customer needs and
identify innovation opportunities. They felt that explorative thinking was encouraged, accepted,
and supported, and radical ideas were no longer perceived as risky: “Now you can have
conversations with people and explore things without people fearing that their idea is a bad one
or that they’re too junior and so it won’t be heard” (Innovation Champion 2, 2017). As
innovation champion 4 explained, “another reason I’m really passionate about innovation is I
find it transformed the way I think even in my day job.”
Phase 1 (see Figure 2) instilled confidence and commitment among frontline members in
applying DT for exploration in their daily pursuit of innovation (Elsbach and Stigliani, 2018;
Kelley and Kelley, 2013), which expanded their cognitive frame as evident from this quote:
“[The process] really got me thinking about a different way of thinking about my contribution
to the workplace, to the culture and certainly, there were some really significant … mind shifts,
paradigm shift thinking that was required which I embraced and I continue to use that, even
outside of [Nest]. (Innovation Champion 2, 2018)
As a result of such an explorative innovation frame, frontline employees had an outlook that
“if you understand the customer, the dollars come rather than just [thinking], I can’t see the
immediate dollar increase. That’s been a big change” (Rachel, 2018). We find that this was
enabled by frame flexibility (Raffaelli, Glynn, and Tushman, 2019), defined as the ability to shift
a contracted cognitive frame to accommodate explorative innovations.
A big part of Rachel’s role at the time was keeping the innovation champions “enthused and
supporting them in any way”. This is because, without these champions, Nest would not have
had the same impact and penetration into the business:
Now they talk about customer-centricity, and they know what a scan means …
you really see differences in the way people talk and the language, which has
happened from this champion model.…And we really needed that in the early
days, that influence. (Rachel, 2019)
This helped to build critical legitimacy for DTI as an enabler of explorative innovation at the
frontline level. There was also strong support from the TMT, who recognized how Nest’s
deployment of DT was fostering an explorative innovation frame among frontline members:

More people have been learning the process that we have adopted for innovation.
Accepted Article I think people are now seeing the value of creating an environment of ideas and
not trying to quickly dive into a solution. People are much more aware of that now
and far more appreciative. So, we have become far more sophisticated in terms of
our thinking around innovation. (CFO, 2017)
However, after two years of operation, the BUs remained skeptical about the focus on
explorative innovation and unconvinced that DTI was producing sufficiently quick and tangible
innovation outcomes. As this BU manager remarked:
You can deliver those great ideas, but then it’s the people that are operating the
assets [] so it’s got to flow through to all of those different roles and aspects of the
operational business. So, I’m not sure if that’s really happened yet. It’s still in the
sort glory and big ideas []. (BU MM 2)
Inertia: While the creative problem-solving approach helped legitimize DTI as a driver of
explorative innovation among frontline employees, skepticism remained at the BU level. BU
managers questioned why the Nest team was spending time and resources to pursue ideas that
were “very far out there” (BU MM 3, 2018) and did not add value or direct benefits to the BUs.
We see this as a kind of inertia to change (Danneels et al., 2018), in this case, toward explorative
innovation at the BU level. As missions were set by the TMT with the Nest team, who then
worked directly with customers, BU managers felt that the innovation portfolio was not well-
aligned with BUs’ needs. As such, BUs’ substantial investment in the Nest initiative, including
the time spent by innovation champions, were questioned:
We were actually funding [one innovation role 50/50]. And talking to some of the
innovation champions that are in [our BU], I just got this overwhelming sense we
weren’t actually achieving anything. We were going in circles [and] the business
was heading in one direction, and [Nest] seemed to be heading in a completely
different direction. This makes absolutely no sense to me. (BU MM 1, 2017)
Both the TMT and Nest reflected on the inertia towards explorative innovation at the BU
level. The Head of Culture noted in 2018: “because [Nest] is working on some of those big long-
term missions [and Urban has] a very transactional culture, so [for] things that are taking more
than a few months; [the BU managers ask] what’s happening—is there progress?”. Rachel

added: “They’re working every day in how to exploit their business, [so when] they’re presented
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with something [visionary], they’re just like, ‘Whoa, how does that fit?’”
The BUs hesitated to release their employees to work on innovation projects. Without their
cooperation, Nest lacked the workforce capacity to deploy the resource-intensive DT tools and to
simultaneously pursue explorative and exploitative innovation. Soon, most innovation
champions could only commit time in addition to their usual workloads. Rachel acknowledged:
So even though we had the innovation champions, and they were meant to work 2
to 3 days a month, they never actually did …. It’s just very hard when you have
your reporting manager and deadlines. [People are] always at capacity, and people
are working on [Nest] outside business hours.
By the end of 2017, five out of eight missions had stalled. Out of four explorative innovation
projects, only two progressed to a pilot stage, and both were eventually aborted. Only one
exploitative innovation project was successfully implemented (see Table 5). Yet, Rachel
remained confident that “swings and roundabouts” are part of the transition towards an
ambidextrous innovation portfolio and that experimenting with DT practices was necessary:
It’s not something you rush, and we’re fine with that because we’d rather spend a
lot of time and experiment and get it right than launch something that’s wrong
(Rachel, 2017).
Indeed, the inertia towards exploration triggered the next DTI phase. We see this as an
adjustment of DTI implementation.
INSERT TABLE 5 HERE
Phase 2: 2017–2019—Design sprint execution

The context: Rachel realized that it was crucial to demonstrate quick solutions to the BUs,
“[and] make what we offer the business better and add more and more value to the business”
(Rachel, 2018). Rachel thus shifted Nest’s portfolio management to pursue exploitative
innovation projects via design sprints (Dell’Era et al., 2020). The emphasis was on accelerating
the development process and reducing market uncertainty by quickly and effectively launching
new solutions to meet current customer needs (Knapp et al., 2016; Ries, 2011) and, importantly,
to demonstrate the value of DTI for exploitative innovation to the BUs. To do so, dedicated
resources were needed: “…we lacked the horsepower to get things going” (Head of Culture,

2018), as was a clearer structural separation between exploration and exploitation across
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different units (Martini et al., 2015).
Structural separation: The role of innovation lead was created and four innovation leads were
appointed full-time to Nest to enable the widespread implementation of design sprints. Structural
separation was thus strengthened by setting up a core Nest team to build resources for DTI. Each
innovation lead was allocated to one BU to support prototyping, reduce risk and deliver
innovative outcomes for the BUs: “running lots of experiments and having the business be as
comfortable around experiments” (Rachel, 2018). Innovation leads were paired with a sponsor
(BU manager) to focus on exploitative innovation. A delegation team comprising three members
of the TMT (the CEO, CFO, and chief strategy officer) and a rotating group of BU sponsors was
created whose role was to support innovation project portfolio management. The aim of the
redesign of the portfolio management model was to involve BU managers in making decisions
on Nest’s innovation project portfolio and to make them accountable for their progress.
Design Sprint execution: To execute the design sprints, a limited set of tools that focused on
brainstorming and prototyping solutions, rather than need-finding (Seidel and Fixson, 2013), was
deployed in accordance with project-specific requirements. The intent was to learn just enough
from users to test viable products and deliver improved solutions (Dell’Era et al., 2020). This
variation followed feedback from BU managers that using the full range of DT tools was overly
time-consuming and resource-intensive and not supportive of the quick execution they were
looking to achieve. As one explained, “I need a [Nest]-lite expedited version that picks up the
key steps, and then I need the full robust [process] completely …. There’s nothing where one
size fits all” (BU MM 3). In response, depending on the stage of the projects and the needs of the
BU team they were supporting, the innovation leads applied DT tools in a more selective way:
I guide [the BU team] by giving them the training they need for each part of the
project. They come to us with an idea, and we start the experiment phase, and we
use Lean Startup to go back to scan and uncover the jobs to be done. So, it’s much
more flexible. (Innovation Lead 1, 2019)
Using select DT tools reduced the burden on workforce resources. Crucially, the speedy
design sprint execution meant that implementing DT became more manageable, and outcomes
were achieved quicker. Consequently, there was a large increase in the number of exploitative
projects completed (see Table 5) in comparison to the previous phase.
Co-optation: From a cognitive perspective, the visible success of design sprints both fed and
reinforced the previously established exploitative innovation frame among BU managers,

enhancing their confidence and buy-in to use DT as a legitimate approach for innovation
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(Wrigley, Nusem, and Straker, 2020). Some of those most skeptical at the start began to embrace
DTI:
[DTI] is starting to permeate into middle management as well. So that [middle

management] level, which we’ve always struggled with. We’ve got some really
great supporters within that group now that we have worked really hard to build
up. (Innovation Lead 1, 2019)
Based on strategy cognition literature, we refer to this mechanism of putting the new DTI
approach at the service of the already legitimized cognitive frame as co-optation (e.g., Danneels
et al., 2018; Starr and MacMillan, 1990). Indeed, co-optation helped in building legitimacy for
DTI at the MM level. Importantly, with DTI being applied increasingly at the BU level, Rachel
was able to leverage the legitimacy of the exploitative frame to obtain the required buy-in to
continue DT deployment to pursue an ambidextrous innovation portfolio:
The thing about [Nest] is, you’re always learning, I’ve done lots of [training]
sessions …and I still go into a workshop, and they come up with some new
technique that I’ve never seen before…the techniques they teach you and how to
think about things and not to close your eyes to certain ideas and biases and
unconscious bias and all that stuff, it’s just good business to know it. (BU MM 1,
2018)
Inertia: With flexible DT tool deployment and speedy execution, as the demand for the
innovation leads to support BU exploitation projects continued to increase, questions were raised
as to Nest’s own focus on longer-term initiatives and the value these were adding to the BUs. BU
managers wanted Nest to focus on their immediate, incremental needs:
The [BU] knows the business better than anyone, so why are we not going in the
same direction? Because there’s plenty to be done in the right direction [] This
just is not working – [] because we’re heading in a new direction [] you are kind
of over here going, no, you need to be doing this. (BU MM4, 2018)
This feedback indicated that inertia towards exploration was still an issue at the BU level.
This posed a risk “because [BUs] are the ones that control where the dollars are spent […]” (BU
MM 4, 2018). BUs preferred to absorb the Nest team and draw on these resources to drive BU-
specific, exploitative innovations. However, this further jeopardized Nest’s workforce capacity

to pursue explorative innovation, and developing a balanced ambidextrous innovation portfolio
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remained a challenge. As Rachel explained, “we’re turning business projects around so quickly
now, but the [explorative] missions have kind of this slow trajectory, and it’s almost become the
group norm to have it at that slower pace” (Rachel, 2018). Consequently, no new explorative
innovations were pursued during this phase (see Table 5). The residual inertia towards
explorative innovation at the BU level and the continued focus on exploitative innovation
triggered another shift, leading to the third phase of DTI implementation. An emergent portfolio
strategy evolved as more experience was gained with the flexible deployment of DTI.
Phase 3: 2019—Creative confidence
The context: In response to the inertia that was slowing down explorative projects, DT was
deployed differently to make the organization more confident with the creative processes
underpinning both explorative and exploitative innovation (Kelley and Kelley, 2013). However,
it became clear that the two needed to be separated even more to achieve this (Martini et al.,
2015). For Rachel, this created an opportunity for further structural separation. DT
implementation for exploitative innovation became “business-led and very aligned” with the
BUs: “So, we’re working, in a very tailored manner with the heads of each of the businesses”
(Rachel, 2019). The DT for exploration continued to be championed by Nest.
Structural separation: In this phase, structural separation became more pronounced than in
the previous two phases through distinct task and role divisions across units; with the BUs
owning and implementing exploitative innovation, while Nest would spearhead explorative
innovation, building further resources for DTI. Exploitative innovation was implemented through
incremental design sprints by “the businesses [that] set the mission, the challenges, [and]
resource … and [the Nest team are] the facilitators … what we do is provide the training and
guidance [on] the [Nest DT] process” (Innovation Lead 2, 2019). For explorative innovation, a
radical design sprint approach that brought the entire Nest team together for intensive periods to
work on new (or revisited) explorative missions was introduced.
Creative confidence: A creative confidence approach was adopted (Dell’Era et al., 2020) with
DTI tools deployed flexibly—that is, DT tools for need-finding, brainstorming, and prototyping
were used entirely for explorative projects and selectively for exploitative projects. With
increased confidence among all levels in using the DT tools, and by using radical and
incremental design sprints, the time needed to make progress was reduced: “the sprints were just
revolutionary in terms of our ability to just make stuff happen …. where we are now is just a
different level” (Rachel, 2019).

The way explorative projects were defined and executed was changed with Nest engaging all
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key stakeholders—from the TMT to a larger group of BU managers. During April–May 2019,
the innovation leads worked every day on “bulldozing” explorative innovation:
It was progression at any cost because … people in the business were saying,
“you’ve got great value here, and great culture here, but, what have you delivered,
what ideas have come out?” … it’s all about delivery. So, it was head down and
get stuff done. (Rachel, 2019)
Importantly, critical synergy required for ambidexterity was achieved by having innovation
leads coordinate activities across the separate exploitative and explorative project teams, and
through the shared vision and leadership of the Nest director and the senior management team
(O’ Reilly and Tushman, 2007). Eventually, two significant explorative innovations were
realized (see Table 5), leading to Urban-backed spin-offs, including a venture that developed an
artificial intelligence-based system for monitoring progress on construction sites, improving
safety and reducing time and cost for Urban and others in the industry.
Collective sensemaking: Throughout the sprints, the Nest team engaged with over 50
managers and employees across Urban, which was in “contrast … to the early days where we
would … only occasionally give the business an update” (Rachel, 2019). They also invited all
BU managers responsible for Nest innovation champions to present the current and planned
innovation portfolio: “we went through everything, I went through the strategy and the sprints”
(Rachel, 2019). This ensured that “[the BU managers and TMT] have visibility; they [would]
have the right to decide which thing we are going to focus on” (Innovation Lead 1, 2019).
Notably, having innovation leads coordinate across both exploitative and explorative project
teams led to a synergistic effect between the two. This hybrid model ensured that insights and
ideas generated during explorative projects were shared with the BUs and helped inform
exploitative projects. On the other hand, building relationships in the BUs during exploitative
projects helped the team secure buy-in and support from the BU managers when they were
working on explorative projects.
These helped further establish “organizational connectedness” (Kelley, 2009) between the
innovation unit and the BUs. From a cognitive perspective, it enabled collective sensemaking of
DTI. Collective sensemaking is seen to occur as “individuals exchange provisional
understandings and try to agree on consensual interpretations and a course of action” and is
underpinned by the understanding that “individual interpretive actions feed collective ones”
(Stigliani and Ravasi, 2012, p. 1232). In our case, the Nest team worked with the BU managers

(and the TMT) for collective sensemaking of exploitative and explorative innovation (Beverland
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et al., 2015; Stigliani and Ravasi, 2012; Weick, 1995). This led to joint interpretations of the
innovation portfolio (Dougherty, 1992) and the development of a shared cognitive schema
(Moussavi and Evans, 1993; Narayanan et al., 2011) around ambidexterity, underpinning the
cognitive integration required to shift to an ambidextrous innovation frame. This proved critical
to attain synergy between exploration and exploitation. The resulting ambidextrous innovation
frame also helped build further legitimacy for DTI at the BU level with one putting “half a
million dollars aside to fund innovation projects” (Innovation Lead 1, 2019). The CEO added:
[It was] a five-year transformation program []. It was a series of decisions along
the way to get from where we were then to where we are now. And I would say
that [Nest] …has been a key driver of cultural change in the organization (CEO,
2018)
Overcoming inertia: Progressively, as people from across the organization were exposed to
and recognized the value of DTI, they started applying it in their day-to-day practice: “I’ve found
the DT training to be an amazing tool not just for the missions, but for everything I do. I look at
things from a totally different perspective” (BU MM 5, 2018). We argue that the creative
confidence approach (Dell’Era et al., 2020) ensured support and ways to gain organizational
connectedness and collective buy-in for DTI across the TMT, MM, and frontline employee
levels for both explorative and exploitative innovation. Importantly, this approach inspired
collective sensemaking across the organization (Buehring and Liedtka, 2018; Narayanan et al.,
2011) through the development of a shared ambidextrous innovation frame:
I think that [Nest] has had very positive cultural impacts within our broader
business on a number of different fronts but certainly [Urban] as a business is
looking to be industry leaders, and I think [Nest] has really provided that mindset
within the business. (BU MM 4, 2018)
Subsequently, Urban was recognized as one of the most innovative companies nationally and
had established a portfolio of both explorative and exploitative innovation, as we describe below
(see also Table 5). The CEO acknowledged that Nest had embedded ambidextrous innovation
mindset into the organizational culture (company press release 2019, paraphrased), indicating a
shift in the company’s cognitive frame. Importantly, deploying DT practices flexibly and
responding generatively to inertia was the key to an evolutionary approach to managing the

tension between explorative and exploitative innovation (He and Wong, 2004). This was critical
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in achieving synergy between the two to build an ambidextrous innovation portfolio:
As we mature, we look at how to pivot the program. I think that’s one of the best
things about what we do, is that we actually apply our own methodology … And
we’ve done that throughout the five years; [Nest] has changed a lot. It changes all
the time. (Rachel, 2019)
Taking stock of Urban’s ambidextrous innovation portfolio

By the end of 2019, Nest had built an ambidextrous innovation portfolio: completed over
sixty business projects (exploitative innovation) and proposed six explorative innovations, two of
which led to the creation of radical, innovative spin-offs. Importantly, through the flexible and
continuous use of DT practices, the company attained synergistic effects between explorative
and exploitative innovation. Additionally, Nest had engaged in over 2500 direct customer
interactions and raised AU$7.9 million to seed fund Nest projects. The team had trained close to
25% of Urban’s workforce, including 165 now skilled and experienced innovation champions.
In 2020, Urban received global recognition for its innovation achievements, ranking in the top
10 of the world’s most innovative companies in its category. This ranking was based on three
explorative innovation projects that delivered innovative solutions for commercial, residential,
and retail customers. Urban’s CEO summarized the emergent, adaptive implementation of DTI
driven by a generative response when faced with inertia that shifted the cognitive frame across
the organization:
Over the last few years, we have been working towards a culture of innovation
where everybody believes it is part of their job to challenge the status quo and
reimagine what we do. This transition has been championed by our innovation
team [Nest] [] We are changing the way we problem solve as a business (CEO,
2020, company website).
DISCUSSION
DT practices for ambidextrous innovation: a framework
We have presented findings of a longitudinal case study showing how the innovation director
(MM) of a large organization used DT practices flexibly over three phases and how this process
helped shift the cognitive frame of the organization toward ambidexterity. This led us to develop
a process framework (Figure 2). While the deliberate strategy from the outset was to achieve an

ambidextrous innovation portfolio, getting there only emerged as a result of a phased and
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adaptive process, ranging from creative problem-solving to design sprints and finally to creative
confidence. When faced with inertia to explorative innovation, the innovation director (MM)
responded with strategic flexibility: she adapted the DT approach and structures along the way,
allowing an emergent portfolio strategy to be shaped over time (Burgelman, 1983; Mintzberg,
1978). The MM’s generative response to inertia in each phase guided the choice of the type of
DT that was adopted. The mechanisms of this emergent process were similar across all phases,
and eventually overcame the inertia and achieved an ambidextrous cognitive frame.
Each phase began with structural separation (Faems et al., 2008; O’Reilly and Tushman,
2013; Tushman et al., 2010), that increased progressively in terms of formal structuring of a
separate organizational unit, team recruitment and training, and role distinction for exploration
and exploitation. The structural separation helped in building resources for DTI—in turn
enabling the implementation of a specific DT practice in phases, starting from creative problem-
solving to design sprint execution, and finally creative confidence (Dell’Era et al., 2020). The
decision to adopt these practices in each phase was triggered by what we term “generative
inertia”. We argue that the MMs generative response to inertia in each phase triggered the
cognitive mechanisms—frame flexibility, co-optation, and collective sensemaking—that
underpinned the transition from an explorative to exploitative to ambidextrous frame. Such a
continuous and evolutionary development of a shared ambidextrous innovation frame across
diverse units and organizational levels (Narayanan et al., 2011; Kaplan, 2011) drove the
cognitive integration necessary to achieve an ambidextrous innovation portfolio.
During the creative problem-solving phase, need-finding (Seidel and Fixson, 2013) with a
focus on user-centeredness (Brown, 2008) enabled frame flexibility (Raffaelli et al., 2019), which
in turn, expanded the exploitative frame to accommodate an explorative innovation frame among
frontline employees. This created legitimacy for DTI as a driver of explorative innovation at the
frontline level. However, inertia at the BU level in relation to explorative innovation generated a
pivot to design sprint execution in Phase 2. Here, the focus shifted back to exploitative
innovation via the flexible deployment of brainstorming and prototyping (Seidel and Fixson,
2013) to accelerate the innovation development process (Knapp et al., 2016; Ries, 2011), which
enabled co-optation (Starr and MacMillan, 1990; Danneels, Verona and Provera, 2018),
enhancing legitimacy for DTI as an enabler of exploitative innovation at the BU level. However,
the residual inertia in relation to exploration triggered a generative response that led the change
to a creative confidence approach in Phase 3. All DT tools (need-finding, brainstorming, and
prototyping) were leveraged flexibly for both explorative and exploitative innovation. Critically,

collective sensemaking (Stigliani and Ravasi, 2012; Beverland et al., 2015) was instrumental in
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cognitive integration across the top, middle, and frontline levels to foster an ambidextrous
innovation frame (Buehring and Liedtka, 2018), and create synergies between explorative and
exploitative innovation (He and Wong, 2004).
This process was shaped as the innovation director (MM) and her team pivoted along the way,
adjusting responsibilities for exploitation and exploration and how DTI is deployed based on
feedback. Importantly, while Nest started with a deliberate innovation portfolio strategy, they
changed it along the way as needed. Moreover, rather than attempting to follow a single best DTI
approach, they adapted their DT practice and related structure as interim objectives evolved,
highlighting the significance of strategic flexibility (Burgelman, 1983; Mintzberg, 1978). In light
of these findings, we suggest that the flexible and phased implementation of DTI ultimately
promoted a way to achieve the cognitive (re)framing necessary for attaining an ambidextrous
innovation portfolio. Despite starting with an overly optimistic deliberate strategy and having
setbacks to DTI adoption along the way, freezing of the cognitive frame in each phase triggered
a generative response to inertia, enabling the organization to progressively build the resources
and legitimacy for DTI. Ultimately, this allowed them to go beyond a local maximum and
implement the higher-potential cognitive shift to ambidextrous innovation.
Theoretical implications
This study makes four key contributions. First, we contribute to the DT literature by
developing a process model of how MMs can respond to inertia towards exploration and, in
doing so, shift the organization’s cognitive frame to an ambidextrous innovation orientation. We
demonstrate how DT can be used flexibly and iteratively, thus enabling a transition to an
ambidextrous innovation frame. We conceptualize generative inertia as a transition mechanism
and as a way of coping with the ambiguities and uncertainty of explorative innovation
(O’Connor and Rice, 2013) and competing innovation priorities (e.g., He and Wong, 2004), that
ultimately enables the cognitive integration required to achieve synergistic effects between
explorative and exploitative innovation.
In contrast to Liedtka (2015), our focus is not on how DT enables individual cognitive bias
reduction but on how a phased DTI implementation can expand the collective cognitive frames
from explorative to exploitative to ambidextrous innovation at the organizational level. In doing
so, we respond to Micheli et al.’s (2019) call to examine how new cognitive frames can be
introduced in contexts where previously established logics or “cognition-based inertia” may
stifle innovation (Nagaraj et al., 2020). We also address the need to link DT with innovation
from a cognitive process perspective (e.g., Beverland et al., 2015; Dong et al., 2016).

We argue that for organizations to attain an ambidextrous innovation portfolio, it is important
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to have a stepwise approach to DT implementation that can adapt to the interim (explorative and
exploitative) innovation objectives over time. Notably, in our case, shifting from creative
problem-solving to design sprint execution, and ultimately to creative confidence, enabled the
cognitive integration required to achieve an ambidextrous frame. This demonstrates how
different DT practices can be deployed flexibly and sequentially within the same organization,
thus extending the work of Dell’Era et al. (2020). At the same time, our analysis also implies that
all four DT practices identified by Dell’Era et al. (2020) do not necessarily have to be present for
successful DTI implementation. Indeed, we did not find evidence for the adoption of the fourth
DT practice – “innovation of meaning” that enables the identification of “a novel purpose that
redefines the problems worth addressing” (Dell’Era et al., 2020, p. 10). Instead, we suggest that
different combinations of practices might work in different contexts and that there is no one best
DTI implementation approach. Notably, leveraging DTI to achieve an ambidextrous innovation
portfolio requires a robust feedback mechanism to maintain strategic flexibility rather than
attempting to get it right at the outset (Burgelman, 1983; Mintzberg, 1978). This is because
emergent portfolio strategy evolves as more experience is gained along the way, and DT
implementation needs adjusting as organizational conditions change.
Furthermore, we suggest the type of DT used in each phase depends on the exploration-
exploitation maturity level of the organization, and an intentional choice to adopt different DT
practices is required to achieve an ambidextrous innovation frame. Similar to prior research on
strategy cognition (e.g., Kaplan, 2011) and ambidexterity (e.g., Zimmermann et al., 2015), our
insights highlight that implementing DTI to develop an ambidextrous innovation portfolio is an
emergent, adaptive process. Notably, we show how this process can be managed flexibly to
respond to inertia in a generative way across different organizational levels and BUs (e.g., Ben
Mahmoud-Jouini et al., 2019). Our findings lend support to the notion that DT is not a linear
process that can be deployed “through a series of structured steps” (Butler and Roberto, 2018, p.
49). We demonstrate how DTI is “actually used in multidisciplinary teams that newly adopt a
design thinking approach” (Seidel and Fixson, 2013, p. 19).
Our second contribution to the DT literature is to show how DT links to broader
organizational outcomes. In our case, the phased implementation of DTI helped shift
organization-wide cognitive frames toward ambidexterity. The majority of the DT literature has
focused on specific DT tools and methods to solve problems at the project level (e.g., Ben
Mahmoud-Jouini et al., 2016; Seidel and Fixson, 2013). Only recent studies have started to
address how DT implementation relates to organization-level constructs such as organizational

culture (e.g., Elsbach and Stigliani, 2018), organizational design (Csaszar, 2013), organizational
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strategy (e.g., Knight et al., 2020; Liedtka and Kaplan, 2019), innovation (Verganti, 2006),
product development (Meinel et al., 2020), and brand ambidexterity (Beverland, Wilner, and
Micheli, 2015). In line with Beverland et al. (2015), we focus on the generative mechanisms
through which DT can enable cognitive integration at the organizational level. We show how
such a process enabled the organization to manage its explorative side and discover a more
radical transition to ambidexterity (O’Connor and Rice, 2013). More broadly, we argue that a
firm’s innovation frame can be created and changed through DT if the organization is flexible
about how it uses DT practices and generative in how it responds to inertia.
Specifically, we demonstrate how DT can be used to change mindsets in favor of producing
behaviors that lead to ambidextrous innovation (Lin and McDonough, 2014) by enabling
managers and employees to feel confident in facing innovation challenges and organizational
change (Dell’Era et al., 2020). This highlights the relevance of DT for changing organizational
culture (Elsbach and Stigliani, 2018; Kolko, 2015). More generally, we add to the limited
research on the process of DTI implementation (e.g., Chang et al., 2013; Carlgren, Elmquist, and
Rauth, 2016) showing how developing legitimacy is critical (Micheli et al., 2018; Rauth et al.,
2014) to overcome barriers to innovation (Hölzle and Rhinow, 2019; Ben Mahmoud-Jouini et al.,
2019).
Third, research focusing on the role of MMs in leveraging DT for strategic innovation
portfolio management is still in its infancy (Knight et al., 2020; Radaelli et al., 2017). Despite the
strategic importance of MMs in the innovation process (Floyd and Wooldridge 1994, Currie and
Procter 2005, Heyden et al. 2018), we know little about how a manager’s position within the
organization shapes the way DT is used for innovation portfolio management (Taracki et al.,
2018; Behrens, Ernst, and Shepherd, 2014). In this study, we do not focus on senior managers
(Micheli et al., 2018; Rauth et al., 2014) or frontline project teams (e.g., Hölzle and Rhinow,
2019). Rather, we studied the role of MMs: that is, managers who do not simply carry out top-
level orders but also have the freedom to make decisions on DTI portfolio management
(Behrens, Ernst, and Shepherd, 2014). While organizations start with a deliberate innovation
portfolio strategy, this must be adjusted when faced with inertia (Randhawa et al., 2021a). Here,
our findings highlight that MMs can respond to inertia with strategic flexibility – adapting the
DT approach and structures and by allowing strategy to emerge over time (Burgelman, 1983;
Mintzberg, 1978). This highlights the strategic role and agency of MM in leveraging DT for
innovation portfolio management.

In particular, we investigated MMs’ bottom-up engagement with senior executives, their top-
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down engagement with frontline employees, and their horizontal engagement with peers in
leveraging DTI to facilitate innovation portfolio management (Roth, Spieth, and Lange, 2019;
Kester et al., 2011). In this context, our study demonstrates that MMs act as a conduit between
TMT, frontline employees, and peers, reconciling their varied interests, increasing legitimacy for
DT, to ultimately shape the organization’s collective cognitive frames over time, underpinning
its shift towards ambidextrous innovation. This finding accords with prior management research
on how MMs contribute to strategy and innovation by championing initiatives such as DTI
(Glaser, Stam, and Takeuchi, 2016; Heyden, Sidhu, and Volberda, 2018; Huy, 2002). The
implications of our findings are that focusing only on the upper echelons creates the risk of
misattributing the consequences of innovation processes, some of which are at least partly
attributable to MMs (Schubert and Tavassoli 2020).
Prior research has suggested that MMs manage innovation portfolios by applying formalized
innovation portfolio management systems, seeking to align their employees’ different abilities,
actions, and outcomes with firm goals and strategy (Kester et al., 2011; Spieth and Lerch, 2014;
Randhawa, Wilden and West, 2019). By contrast, we contribute to the limited research taking a
behavioral perspective to innovation portfolio management (Radaelli et al., 2017; Roth, Spieth
and Lange, 2019), showing how MMs can use DTI to respond generatively to inertia and
facilitate collective sensemaking among various organizational members to align their decisions
and actions with firm strategies (Randhawa et al, 2021a). We thus complement Roth et al.’s
(2019) work on the role of sensegiving and sensebreaking in innovation portfolio management.
We show how using DTI flexibly can help MMs adapt innovation portfolios to changes and
opportunities, reconcile conflicting interests and understandings among groups (Andriopoulos
and Lewis, 2010; Smith and Tushman, 2005), and account for the complexity and uncertainty in
exploratory innovation (Vedel and Kokshagina, 2020; O’Connor and Rice, 2013). In so doing,
our study challenges the effectiveness of formal and rational but potentially inflexible innovation
portfolio management processes.
Our final contribution is to ambidextrous innovation research. By showing how DT practices
can be deployed in a phased manner to attain an ambidextrous innovation portfolio, we add to
the limited research that clarifies the relationship between DT implementation and ambidexterity.
Previous conceptual work has suggested that DT can enable ambidextrous innovation through
the mediating effect of ambidextrous learning at the project level (Zheng, 2018). We extend this
work showing how DT can enable ambidextrous innovation through a suite of generative
mechanisms deployed at the organizational level. We identify how these mechanisms allow for a

generative response to inertia towards exploration, leading to an ambidextrous innovation frame.
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We highlight the need for starting with the near-term exploitative innovation and build resources
and legitimacy progressively before attempting to pursue explorative innovation. In doing so, we
address the more general question of how managers can use DT in a stepwise manner when
transitioning to ambidextrous innovation. We contend that DT can provide a new organizational
design principle to manage the tension between explorative and exploitative innovation
simultaneously (He and Wong, 2004).
Research on ambidexterity has stressed the differentiation between structural, temporal and
contextual ambidexterity (Zimmerman and Birkinshaw, 2016) – and more recently cognitive
ambidexterity, which refers to contextual ambidexterity at the individual level (e.g., Good and
Michel, 2013; Karhu et al., 2016). In our study, DT provided a set of practices that enabled
individuals to address different dualities—exploitation and exploration (Raisch and Birkinshaw,
2008; see also “harmonic ambidexterity”, Simsek et al., 2009). We suggest that flexible use of
DT practices can serve as a basis for cooperative exchange to help attain “organizational
connectedness” (Kelley, 2009), that is critical for the cognitive integration underpinning
ambidextrous innovation (Simsek et al., 2009; Zimmerman and Birkinshaw, 2016). This is in
line with He and Wong (2004), who find that ambidexterity can be achieved if the dualities
between exploration and exploitation can be reconciled by managers at the group level.
Furthermore, while structural and contextual ambidexterity has often been considered as
being mutually exclusive, we found that DT can enable a dual approach to ambidexterity
(Randhawa, Wilden and Gudergan, 2021b). This is because DT tools can be adapted to the needs
and objectives of the evolving innovation project portfolio and help attain greater connections
between the innovation unit and the broader organization on which it depends. These ultimately
develop collective cognitive frames that provide synergistic effects between explorative and
exploitative innovation, thus supporting the shift to ambidextrous innovation (He and Wong,
2004).
In so doing, we also add to the sparse literature on cognitive ambidexterity by showing how
DT can be used as a lever to help teams develop the cognitive capacity to accommodate the
contradictions between explorative and exploitative innovation (Good and Michel, 2013) and
expand their cognitive agenda to recognize a broader range of innovation opportunities (Smith
and Tushman, 2005). Eventually, these lead to a collective cognitive reframing toward
ambidexterity at the organizational level (Birkinshaw and Gupta, 2013).

Managerial implications
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Our findings are relevant for executives and managers who leverage DT as a strategic
approach to innovation. Too often the focus of implementing DT is merely on training people in
new tools and methods leading to naive expectations of achieving outcomes quickly. Our
findings suggest that executives must tap into the potential of DT to achieve strategic outcomes
such as ambidextrous innovation. At the same time, we show that implementing DT in
transitioning to long-term explorative innovation outcomes and pursuing ambidextrous
innovation is not straightforward – it is an emergent and adaptive process. We highlight the
significant role that MMs can play in the flexible implementation of DTI and proactively
addressing inertia.
Indeed, our case highlights that for an organization with a high-velocity, operational culture,
to attempt to secure support for high-risk, long-term explorative innovation, there needs to be a
step-wise approach. We suggest that organizations will benefit most from DTI when managers
deploy DTI in a phased manner rather than striving for ambidextrous innovation outcomes from
the outset. It is best to start with the near-term exploitative innovation and build resources and
legitimacy progressively before attempting to pursue explorative innovation. In navigating the
shift to ambidexterity, managers can use our framework to choose DT practices that can be used
flexibly based on the exploration-exploitation maturity and objectives of their organizations.
Rather than follow a single best approach, it is best to be pragmatic, and test, adapt and pivot to
different DT practices as interim objectives evolve. We suggest that such an iterative approach,
that lies at the heart of DT, applies to the very implementation of DT too.
Because managers charged with the responsibility to implement innovation, often MMs, are
often directly exposed to the pressures of delivering on short-term business objectives and long-
term innovation strategies, they have a challenging but crucial role in achieving ambidextrous
innovation outcomes. In other words, if organizations want to develop an ambidextrous
innovation portfolio, they need to appreciate the strategic role and agency of MMs in this
process. It is hence important to train and coach MMs to use DT practices flexibly to this end.
MMs responsible for DTI implementation also require autonomy and resources to adjust the DTI
approach —for example, shifting between the practices of creative problem-solving, sprint
execution, and creative confidence—to meet changing demands. Giving MMs autonomy means
giving them the freedom to experiment (and possibly fail) and pivot as they discover new ways
of working with new approaches in the prevailing work culture.
Our findings suggest that MMs can leverage DTI practices to trigger generative
mechanisms—frame flexibility, co-optation, and collective sensemaking – to adapt to the interim

(explorative and exploitative) innovation objectives over time. First, we find that implementing
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creative problem-solving triggers frame flexibility by expanding cognitive frames to
accommodate explorative innovation. Here, dedicated training of managers and employees in
creative problem-solving techniques could also play a crucial role. Second, sprint execution can
be used to achieve cognitive cooptation as it can draw on the already legitimized exploitative
frame to produce quick wins and obtain further buy-in for the change effort. By work
collaboratively with peers and demonstrating early achievements, MMs can gain their support.
Finally, the creative confidence approach cultivates collective sense-making by involving
multiple stakeholders, seeking their feedback and input, and getting their commitment early in
the process. Overall, this helps MMs drive the higher-potential cognitive shift to ambidextrous
innovation.
To this end, firms should put in place systems and practices that encourage MMs to use DTI
flexibly to work toward greater connections between the innovation unit and the broader
organization on which it depends, and changing the cognitive frames or outlooks of BU
managers and frontline employees across units. This is necessary to create synergies between
explorative and exploitative innovation across units and levels, and to produce behaviors that
lead to ambidextrous innovation. Employees and managers need support to augment such
cognitive abilities involved with DTI, which may also involve developing a mentorship and
coaching framework.
FUTURE RESEARCH
Inevitably, our study has limitations, which also provide avenues for future research. First, we
have focused on a single organization in the property development sector that has a volatile
history of entrepreneurial activity (Bailey, 2020). While recognizing the limitations of a single
case study for statistical generalizability (Yin, 2003), we suggest that our findings may be
transferable across organizations facing challenges in transitioning to ambidexterity and/or DTI
implementation. Researchers can explore how the DTI implementation process varies across
organizations in different industries (e.g., manufacturing, services) and sectors (including public
and non-profit contexts) that are known to face innovation barriers in pursuing different
organizational outcomes (e.g., open innovation, digital transformation) (e.g., Randhawa, Wilden
and Gudergan, 2018; Randhawa, Wilden and West, 2019).
Additionally, our research draws from a larger corporate organization. Consequently, DTI
implementation in different-sized organizations (e.g., small and medium-sized enterprises or
start-ups) warrants further attention. Future research may also fruitfully explore the conditions

under which organizations use the DT practice that Dell’Era et al. (2020) term, “innovation of
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meaning,” and see if perhaps firms need to be more mature in their ambidexterity journey to use
this type of DT. While our focus has been on the role of cognition in DTI implementation, future
research can explore the impact of organizational culture (and other environmental factors) on
how DTI is implemented. Finally, future studies can explore a multilevel conceptualization to
enable a deeper understanding of the link between cognitive frames and DTI implementation and
outcomes at different levels (e.g., Lin and McDonough, 2014). Despite these limitations, our
study provides valuable insights for both scholars and practitioners on how DT can be used as an
enabler of ambidextrous innovation.
Acknowledgements
We are grateful to Editors Roberto Verganti, Claudio Dell ‘Era and Scott Swan and anonymous
reviewers for their helpful comments. We are indebted to Jelena Spanjol, as well as participants
at the 2020 JPIM Special Issue digital workshop, for feedback that led to significant
improvements to this article. We thank all study participants for their generosity in sharing
insights and experiences with us. We are particularly thankful to the company CEO and
Innovation Director for their ongoing support of our research project.

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Table 1: Data inventory table (interviews and secondary data)
# of # of # of interviews Interview # of pages per
Secondary data source Primary data source (Interviewees)
Type items pages / interviewee period transcript
Company Annual Reports 2009 to 2019 Report 10 ~772 Top Management Team (TMT)
Press releases, media coverage, blog posts Text 5 18 CEO 2 2017, 2018 20, 13
and media mentions (Pseudonym: Karen)
Client/partner briefing and industry Presentation 29* 266 Chair of Board 1 2017 21
conference presentations
Strategy documents (acceleration, Presentation 5 199 CFO 1 2017 12
partnerships, spin off, governance review)
Consulting firm reports and strategic Report 2 207 Head of Strategy 2 2017, 2018 19, 22
recommendations
Board papers and presentations Presentation 2 10 Head of Culture 1 2018 23
Leadership status updates Presentation 8 185 Middle Managers (MM)
Innovation Council status updates Presentation 15 294 Innovation Director 8 3/2017, 6/2017, 5/2018, 7/2018, 34, 18, 25, 42,
(Pseudonym: Rachel) 4/2019, 11/2019, 12/2019; 2/2021 27, 16, 38, 17
BU briefing, HR dept, Tax dept and other Presentation 17* 299 Company secretary/Head of Urban 1 2018 15
functional areas or locations internal investment fund
Mission overview documents for Innovation Report 8 8 Business Unit manager 1 1 2017 16
champions
Electronic pasteboards, posters, digital Text 37* 84 Business Unit manager 2 1 2018 23
screens, intranet posts
Innovation champion recruitment, role Text 12 15 Business Unit manager 3 1 2018 11
descriptions and briefing documents
Nest training materials Presentation 10 377 Business Unit manager 4 1 2018 30
Nest process guide and toolkit Report 2 305 Business Unit manager 5 1 2018 19
Personal email exchanges with researchers Text 22 29 Frontline employees
Photographs of events, workshops, trainings Images 12 57 Innovation lead 1 2 2017, 2019 20, 18

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Innovation lead 2 1 2017 20
Innovation lead 3 2 2017, 2019 13, 27
Innovation lead 4 1 2017 20
Innovation champion 2 1 2017 9
Total # pages 3133 31 640
* These documents contain information that was used for multiple purposes and is at times repetitive and/or an amended copy of an earlier version.
Table 2: Evidence for key constructs Phase 1

Key constructs Example quotes
Structural separation “[Nest] deliberately sits outside the normal hierarchy of management. Because innovative ideas are all well and good but when a project gets under
(Formal DTI pressure, the [BU] manager is going to stop it [] and the idea [] won't get any airtime because it costs. So, we set up a budget and a very small team.”
structuring) (CEO, 2016)
“And one of the key tenants of [Nest] is that it’s separate to the hierarchy; its governance is set up entirely separately because we learnt that that was
best practice, that the hierarchy can block innovation.” (Nest director, 2017)
“[Need to] [m]aintain a separation between the [Nest] innovation program and the conventional business hierarchy, ensuring autonomy and
independence” (Nest TMT presentation, 2017)
“we give [innovation champions] space and training and time to go ahead and think of innovative ideas around these very specific missions” (CEO,
2016)
“When we were champions [] we could put our preferences, which one [mission] we wanted to go on” (Nest director, 2017)
Building resources “Then we trained what we call [Nest] champions; so I actually think of them as little revolutionaries in the business in how to think about this
for DTI methodology” (CEO, 2016)
“[Nest team has] been training people and spreading the story and allowing people to be involved [] freeing up their time” (CFO 2017)

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“Innovation champions: Building capability in our business; []: Working 2-3 days a month on innovation; In a space that was completely different to
the normal business environment” (Nest presentation to TMT, 2017)
“We have ‘innovation champions’ because we really want to embed change at the front line. There’s no innovation team sitting off to the side, it’s
something that’s very, very embedded.” (Nest director interview for a magazine, 2017)
Creative problem “There is so much value in just stepping back and listening to what your customers want and observing how they actually use our physical spaces [];
solving (Focus on there are so many challenges in terms of how technology has changed the way consumers operate.” (BU manager 1, 2017)
need finding) “We've also learned that actually going out and talking to people is absolutely essential. You can't sit in a room and you can't ask people what they
would do. You have to go and ask people what they do do.” (CEO, 2016)
“[Nest] was [b]ased on leading Design thinking methodologies; [and] a customer-centric approach.” (Nest progress presentation to TMT, 2017)
“The customer is everything – customers are at the heart of innovation and our innovation process. Our innovation champion training is called
‘customer-centric innovation’. We’re building the capability in-house so we can be out there, on the front line: interacting, observing, talking to our
customers, understanding what it is they’re trying to get done, and understanding their frustrations, their workarounds, their experiences. So it all
begins and ends with the customer and customer experience” (Nest director interview for a magazine, 2017).
Creative problem “[In] a lot of [innovation] programs, people go from ideation to implementation but there are a lot more stages that you need to go through in that.
solving (Intense DTI So, we've got this quite rigorous process.” (CEO, 2017)
tool deployment) “We proposed that [rigorous DT] approach. So, by comparison, other innovation managers that I used to work with, communicate with, [] they
would skip the entire design thinking process and quickly get something out []; and so because the leadership let us do what was being proposed
without standing in the way, that’s kind of what set us apart” (Nest director, 2017)
“What I really appreciate about working through the [Nest] program is no one’s making knee jerk reactions at anything, it’s all very methodical and
very thought through. [] So, the one thing I can say about the [Nest] methodology is it’s incredibly robust” (Innovation champion 1, 2017)
“A process that can be applied to any problem; A process that we are slightly obsessed with; [] it changes the way you look at things; and ensure you
don’t skip steps.” (Nest training notes, 2017)

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Cognitive frame “We had never been customer centric in our innovation before, we’d always been tech lead or saw someone else doing something cool.” (Nest
flexibility director, 2017)
“I refer to it as a way of thinking and I think it’s an innovative way of thinking [] I see something there and think, ‘I’m going to ask the question’.
Sometimes you can change it, sometimes you can’t, that’s fine, but let’s at least explore that” (Innovation champion 2, 2017).
“[DT] really gets you to reach for the stars and think outside the box and reimagine, and for me has been a key driver for how I think and the
decisions I make on our projects. So [] it gives you a really broad scope – something that’s a first – something no-one has done before and I see that
as part of innovation [] that’s been the biggest game changer for me in how we think about it.” (BU manager 1, 2017).
“[DT is] so relevant for [Urban], the methodology is so robust [] just this whole process of starting to question assumptions and to test assumptions
and not just be led blindly by assumptions that we all make [] is so powerful” (Innovation champion 1, 2017).
Explorative “We really love the quote of, ‘if you're not changing at the same pace as the world outside you, the question is not if you will die, but when’. \ then
innovation frame how are we doing something completely different out here?” (CEO, 2016)
“We’re not looking to just tinker around the edges. That’s not what we’re here to do. The business does that. We’re here to radically revolutionize
[][the mission] is absolutely meant to be disruptive so it’s an exploratory focused mission [] A big emotive language about creating a new offering,
focused, fairly and squarely on our future customer in this space.” (Nest director, 2017)
“My understanding of Urban’s Innovation Strategy is to [pursue] those sorts of bigger blue-sky innovations as well, which might provide some value
whether commercially or making our jobs more efficient in other areas of the business.” (Innovation champion 2, 2017)
“We’re not focusing on just what’s in front of us here. We’ve obviously got to do that as part of our day to day, but we’ve got to be thinking about
what’s beyond that and I think our innovation program helps us do that.” (Head of Strategy, 2017)
“We need to be EXPLORING the future, at the same time that we EXPLOIT what we do now” (Nest presentation to innovation champions, 2016)
Building legitimacy “I think people are now seeing the value of creating an environment of ideas and not trying to quickly dive to a solution. People are much more
for DTI at frontline aware of that now and far more appreciative [] we have become far more sophisticated in terms of our thinking around innovation.” (CFO, 2017)
level “[Nest has] given people on the ground some ownership over the process and you see them applying it, you hear people talking about innovation not

Accepted Article
just as a buzz word but as a practice and as a way of thinking and the cultural impact of being in a [Nest] program is starting to spread its way
through. So [] when I hear people saying, “what do my customers say about this product and service” rather than, “I think this”, that’s when I know
that the ethos of the program has leaked it's way in.” (Innovation lead 1, 2017).
“[The DT language] started to be added to the lexicon, like you’d hear jobs being done, and that’s not just from [innovation] champions, but it’s also
people that have gone out and had some training on interviews and had gone out to do that” (Innovation lead 3, 2017).

Structural separation “There started to be a bit of tension between the [Nest] champion role and the business as usual activities [] So [the Nest director] restructured [Nest]
(DTI role to include a core team of people 100% dedicated to doing innovation whatever that may be []. Our role is to do the two things: [] run the missions
development, and guide the champions []. But also to give the business units ownership; [] a lead innovator is different to a champion because it’s a full time role,
recruitment and focussed 100% on delivering disruptive ends and incremental innovation” (Innovation lead 1, 2018)
training) “We have done a pivot with setting up a [Nest] core team [] because we lacked horse power to get things going []. The [Nest] team is on a journey
around how they play the role of what I call incredible activists – they have credibility in the system – they know the system but they have a point of
view and [] drive the innovation agenda.” (Head of Culture, 2017)
“I [] see benefit in having a fulltime team of people who can start to build-up that [DT] experience and that knowledge and share those learnings. It
was [] hard for the champions to switch from their day-to-day [work] back into [Nest] and back out again” (Nest director, 2017)
“The success of the [Nest] program, has resulted in a dedicated full-time innovation team to support progress on [explorative projects], and help the
business apply the [Nest] process to various business projects. [] The team has expert knowledge in best-practice innovation and works closely with
the entire [Urban] business.” (Urban website)
Building resources “Since the core team has been formed, we’ve made leaps and bounds. [] I think it remains to be seen, on that front, whether or not [Nest] is a success.
for DTI But certainly, in terms of shaping culture and changing the conversation and the tone, definitely.” (Nest director, 2018)
“[The innovation] lead role has [] in a very short space of time [] increased the internal capability when it comes to innovation.” (Innovation lead 1,
2017)

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“[The innovation lead role] allows the progression; So, what this [role] has done now has enabled me to just get things progressing.” (Innovation lead
2, 2017)
“[Nest] CORE TEAM: 4 Lead Innovators; ‘A dedicated innovation resource for Mirvac’. [They bring]: Innovation Training, Team Coaching,
Diversity of thought.” (Nest presentation to TMT, 2017)
Sprint execution “Before we invest the money into developing that [idea], let’s do the scans, let’s do some experiments, let’s just [] use that methodology, that
(Focus on innovation, real innovation [DT] theory. [] that’s where we might save thousands and thousands of dollars [].” (BU manager 5, 2018)
prototyping and “The centre manager [] developed a little co-working space on a casual leasing site in the shopping centre. [] ... that was just having a go, just trying
brainstorming) something. [] It was pretty raw in its development, but that was encouraged. Why not? To see what we can learn from it.” (BU manager 4, 2018)
“We learnt so much getting to that point in how to do innovation properly – how to ask those questions and experiment and rapid prototyping and all
those things that we theorised about the team was live doing it [].” (Head of Culture, 2017)
“What happens in lean start up? Traditional approach thrown out window; Customer research informs a problem; Ideas are suggested to solve
problem; If assumption is validated another experiment is run.” (Nest presentation to TMT, 2017)
Sprint execution “When we experiment, [] we think about how we can do [DT] differently – does it need to be all encompassing? Are there quicker ways to test? []
(Flexible DTI tool and there’s – almost subservience to the model – like it was some kind of religious experience. Now [] we will borrow from different approaches and
deployment and [Nest] are building their own approach.” (Head of Culture, 2017)
Speedy DTI “[The DT] process is great, [but] it does not apply to everything; there was a period [when] everything we wanted to do [was] to go through this
execution) process. And I was like, ‘you guys, this applies in certain cases, it can’t apply [to] everything’.[] ‘You’ve got to come up [with] a [Nest] lite version
[] to achieve outcomes faster.” (BU manager 4, 2018)
“[W]ith a business project, we might be like, okay, we’ll just do an ideation for you or we’ll just run an experiment for you. [] we pick parts of the
process that are suitable to that business project.” (Nest director, 2018)
“We are changing the game. Setting a new pace for Mission progress. We will drive speed and cycle through the learning loop. Rapid learning.
Imagine we are a start up! Time is of the essence. ‘Whatever it takes!’” (Nest presentation, 2018)

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Cognitive co-optation “But now we want to add value in more ad hoc way, someone can come to us with a problem here and maybe we can help a little bit there or, have
you done customer scan here, have you done this? So, it’s trying to find that balance between not completely compromising what you do and your
process and the rigour but also adding value to that business in a way that, they see as adding value as well.” (Nest director, 2017)
“[Nest] is good to have as a consulting role; so say we had a proposal on a project to implement something new that would be an industry first, it
would be good to be able to go to [Nest] and consult them on that idea and see what their thoughts were [] because it does add cost and often these
projects – they are done on a very lean basis.” (Innovation lead 3, 2018)
“The sprints were designed to get that outcome for the business, which they did and so we had at least one idea from every mission that entered the
market or was delivered to the business. [] we have got [four successful projects] out.” (Innovation lead 1, 2019)
Exploitative “[BU managers] don’t necessarily want to come to [Nest] and give [us] something because [they] won’t get anything out of it for two years []; [they
innovation frame were] feeling like the innovation process was too intense or too long.” (Innovation lead 2, 2017).
“I was having monthly catch-ups with whoever the innovation lead was, and making sure that we were progressing things, that I was asking
questions. What are we putting in front of people? What are we focusing on? Just putting that business lens over it. So, I think, you need to have the
innovation mindset and the thinking and pushing that, but it’s got to be connected to the business.” (BU manager 4, 2018)
“It might not be things that develop into the next amazing thing that changes the world, but if it’s that incremental change at project level and if you
have lots and lots of people across the business doing that, then that in aggregate creates a lot of value.” (Head of Strategy, 2017)
Building legitimacy “[We have] really spent those nine months focused on the ripple effect, as in, business projects – deliver value to the business, show how design
for DTI at MM level thinking can be rolled out and help with someone in any way, shape, or form [] – and I think we’ve built a lot of political capital back with the
businesses and demonstrated [the] value [of DT] and so we’re in a much better place now than we were [before].” (Nest director, 2019)
“The ability to articulate the alignment of how [Nest projects] were actually tied to the strategy [] started to happen.” (BU manager 4, 2018)
“Some of the senior people from the [BU] were also training in [DT] research, and my [] manager was at that training, and she was quite excited
about the opportunity to [] bring some of that into projects.” (Innovation champion 1, 2017)
“Sprints [] delivered things that we could put in the market as tangible outcomes for the business. They were hugely valuable to the business in terms
of the PR and the brand recognition they were getting.” (Innovation lead 1, 2019)

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“[Nest projects are] focused on extending the reach of the [Nest] ideology from [Nest] Missions to BAU [business as usual]; Become more
embedded []; move from compartmentalised program to a group wide customer-centric ideology; 1. Where [Nest] ideology applied to BAU by both
champions and non-champions; 2. Commercialisation and implementation of ideas” (Nest progress presentation to TMT, 2017)

Structural separation “The businesses tend to focus on incremental [innovation]. At [Nest] we are very conscious of [pursuing explore ideas].” (Innovation lead 3, 2019)
(DTI task division “So, we’ve got the [Nest] mission. And then there’s [the BUs projects] which we see as more incremental [] And we run [our mission] like a sprint, but
across units) we bring our fulltime team. [] The switch [between exploration and exploitation] comes from our role in the business []. So, when we’re helping with
the business projects, we approach it as a consultant would [].” (Nest director, 2019)
Building resources “We’ve still got the champions, but we’re bigger than that now. So, we just trained 65 champions again. [] But we don’t get just champions on
for DTI business projects. It’s anyone.” (Nest director, 2019)
“I train and I provide the skills to the people within the team, and then I mentor them through that process as well.” (Innovation lead 1, 2019).
“We’ll train them [people in the BUs who don’t know the DT methodology]. [] with business projects, [training] tends to be staged. They don’t
normally go straight from scan to experiment in six weeks like we might do on a mission; [] so you can train them on just scan or just lean experiment
so that you can chunk it up.” (Innovation lead 3, 2019)
“What is a Champion? Literally champion innovation in the organisation. Keep innovation top of mind. Share the methodology with your colleagues.
Agile champion model. Unlimited number of champions. [Nest] accredited.” (Nest innovation champion training notes, 2019)
Creative confidence “I worked on a project where they [the BU] already had an idea and in that particular instance, normally I would say, ‘look, why don’t we go and
(Shared focus on experiment with some of this’; but in that particular instance I said, ‘oh, look, we –it would be worthwhile to go back and do a bit of a scan’, because []
need-finding, having gone straight to solution probably wasn’t the best thing to do, and they recognised that themselves.” (Innovation lead 3, 2019)
prototyping and “Once we set the mission, we knew it was about [this customer group], we then went and completed a scan [] and out of that came a lot of themes, so
brainstorming) common themes and challenges []. So out of that research we then took challenges into [] an ideation. [] we had 200 people go through and we invited

Accepted Article
externals as well to go through and come up with ideas to solve the challenges, then we went through our decide phase []. [A]nd then we started to
experiment with that [].” (Innovation lead 3, 2019)
“The SHIFT to a [Nest] way of thinking is to change the way you think about your customer. [] When we understand the job the customer is trying to
get done – we understand the opportunity for innovation.” (Nest innovation champion training notes, 2019)
Creative confidence “[The sprints] sort of gave us a sandbox to play in. So, during the sprints we just forged ahead and we took the decision that whatever it took to get the
(Flexible DTI tool outcome is what we would do []; that would mean taking a lighter [DT] approach.” (Innovation lead 1, 2019)
deployment) “with the business projects, because you are working with business and you are delivering something for them and a lot of it is incremental, we are a
little bit more flexible around the process; [] when it’s our mission and it’s explore, we will follow the process from start to finish, but with the
business projects, [] what part of the process we start applying design thinking to is different.” (Innovation lead 3, 2019).
“You can also use [Nest] in your business roles at [Urban]: This type of thinking can be applied to lots of different customer problems where you need
a creative solution; And on business projects you can either use the entire [Nest] process or just use parts of it; So, be flexible and open to those
opportunities where you can add value to business projects.” (Nest innovation champion training notes, 2019)
Collective “[W]hat we totally changed in the last sprint – we spent so much time workshopping [] with every range of stakeholders – [TMT], board, everyone, we
sensemaking crossed off things, we added things on, we honed again, we honed again, none of that work was done with our prior ideas.” (Nest director, 2019)
“We are going to be more regularly touching base with the delegation [TMT representatives] in a much more ad hoc way and bringing them on our
journey of how we work []. So that the support is there right from the beginning and they come all the way through that process with us.” (Innovation
lead 1, 2019).
“So, we will set that mission, that explore mission with the entire executive leadership team, so the head of [all BUs] will all be involved. They will
know what the mission is. They will have view, visibility into that mission.” (Innovation lead 1, 2019).
“Key learning was in the past we hadn’t involved the senior people in [Urban] in helping make that decision [on innovations]; so we [] spent a solid
week every day, one person at a time or two people at a time [] – bringing everyone on this journey. [] The senior exec, we invited the Board and then
just other key people [], so a lot of that [middle management] level and then some of [them] brought some of their teams as well, so there was probably
a good 50 or 60 people that we kind of got through that information.” (Nest director, 2019)

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“We set up a room downstairs for ideation; opened it up to the [Bus] - sent out an email saying, ‘we’re doing ideation from this whole day, in this
room’. And we had so many people come and get involved. I think in total we had about 120 ideas that were developed.” (Nest director, 2019)
Ambidextrous “it’s hard [to work on explorative and exploitative projects at the same time]. [] we’ve got to balance the two; we have to do business projects, that’s
innovation frame how we build relationships, that’s how we learn about the business. [] the hardest thing to do is radical innovation.” (Innovation lead 3, 2019)
“the project I worked on just recently, there was a fairly radical idea that came [from a BU] and it’s on the radar but they want to focus on some of the
things that they can do within the next year, but they’re aware that they need to look at more radical things as well.” (Innovation lead 3, 2019)
“We are going to try to push them [the BUs] towards more radical [projects when working with Nest] because there are so many people trained on the
[Nest] process now that we are starting to feel like, ‘you could probably do incremental [projects] yourself, but if we’re going to devote resources to
this from our team and you’re going to put resources on it, pick something meaty.” (Innovation lead 1, 2019)
“[Nest] vision – To build ambidexterity, embed innovation capability and create value for [Urban].” (Nest innovation champion training notes, 2019)
Building legitimacy “So, [we are] talking to all of TMT and all of their direct reports, to understand, what success looks like? What are their biggest problems at the
for DTI at TMT and moment? [] what’s top of mind for them. How can [Nest] help. What do they need from us? [] where should innovation go next and to try to
MM levels understand their jobs to be done to formulate the strategy for next year.” (Nest director, 2019)
“[N]ow everyone uses the innovation techniques, terminology []. They know the process we go through; they know how important it is to go and do
the scans, to use the methodology.” (BU manager 2, 2018).
“It’s not unusual for me to go into a meeting and the people in there may not even know exactly what my function is, that I’m from [Nest] and they’ll
be talking about jobs to be done or customer pain points and that’s just become the norm.” (Innovation lead 3, 2019)
“the methodology part of the culture– [] I was in the leadership team meeting and they were talking about understanding our customers and this is
always how people now think; that you have to actually go out and do the research and scan [] everyone speaks a common language in relation to it.
And so, I think it’s changed how the business operates in terms of actually thinking about the customer first.” (Company secretary, 2018)

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Table 5: Innovation project examples and indicators in each phase
Innovation project type and Phase 1 Phase 2 Phase 3
indicators up until 2017 2017- 2019 2019-2020 (end of data collection)
Explorative innovation projects*  Creating a digital platform that  no new explore ideas were pursued during  Utilizing AI to innovate building
e.g., introducing new generation uses AI algorithms to match this phase construction methods and to increase
of products; enter new technology employees and employers based security on building sites; Urban
fields; developing innovative on skills, experience, behaviors launched a spin-off company (+)
building methods; focusing on the and ways of working. (-)  Developing more affordable and
needs of future  Converting under-utilized spaces flexible home products for younger
customers (car parks, basements and vacant first home buyers. Launched a spin-
retail or office spaces) into urban off company (+)
farms to address the potential
obsolescence of car parks due to
the rise of autonomous vehicles (-)
Exploitative innovation projects  Developing a service that adds  Developing prefabricated modules for  Creating an opt-in Smart Energy
e.g., reducing costs through value to families with children in housing construction (+) System for apartment buyers to access
process efficiency; improving shopping centers (+)  Creating a work model for co-locating solar energy (+)
existing products and services; employees from different units to work on  Developing new service features in
focusing on existing customers joint projects (+) office buildings to improve the tenant
 Developing a Click & Collect service for experience (+)
customers of shopping centers (+)  Improving spaces for collaboration,
 Developing a Care & Support service for wayfinding and traffic flow in office
pet owners who live in apartment blocks (-) buildings (+)
 Developing a transport service to attract
more visitors to retail centers (-)

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Number of explorative innovation
4 (initiated but aborted) 0 2 (completed)
projects
Number of exploitative
1 (completed) 44 (completed) 18 (completed)
innovation projects
Number of Innovation champions
22 60 83
trained
Number of full time Nest team
members (Director and 5 4 4
innovation leads)
* The example explore innovations were initiated in the stated phase but implemented during the following phase given their longer incubation times. (+) innovation
project was successfully completed/launch of spin-off or start-up; (-) innovation project was discontinued after pilot

Figure 1: Coding structure
Accepted Article First-order codes
Statements about Nest’s “separation from the hierarchy”,
Second-order codes
Structural separation (Phase 1)
Aggregate dimensions
“autonomy”, “independence”; about innovation champions Formal structuring of separate unit separating innovation from
working either on explorative or exploitative missions/ideas operational activities, and explorative and exploitative teams
Structural separation (Phase 2)

Statements about “core team of people”, “fulltime team of Formal structuring of core innovation team recruitment & training;
people”, “dedicated full-time innovation team” Structural separation
further separation of innovation & operations, exploration &
exploitation
Statements about Nest team “providing facilitation, guidance” Structural separation (Phase 3)
to BU teams, BU focus on “incremental”, Nest focus on Further distinction of task and role divisions across units; BUs focus
“explorative ideas” on exploitative versus Nest focus on explorative innovation
Statements about training a team of “innovation champions”, Building DT resources (Phase 1)

“embedded front-line”, “building capability” Building the team and capability for DT implementation
Statements about “increased the internal capability”, “enabled Building DT resources (Phase 2)
Building DT resources
progression”, “dedicated innovation resource” Strengthening the team and capability to progress DTI projects
Statements about “training anyone”, “share methodology with Building DT resources (Phase 3)
colleagues”, everyone is a “champion” Further expanding DTI capabilities across all levels
Statements about “listening to the customer”, being

“customer-led”, “customer scan”, “ideation” Creative problem solving (Phase 1)
Focus on ‘need-finding’: deploying the DT toolkit intensively to
Statements about “rigorous DT process”, following the full “DT develop exploitative and explorative innovation ideas
process”
Statements about running “experiments”, following a “lean

start-up” approach, “rapid prototyping”, “sprints”, “sandbox” Sprint execution (Phase 2)
Focus on ‘brainstorming’ and ‘prototyping’ solutions: deploying the DT practice deployed
Statements about “quicker ways to test”, a “lite DT version”, DT toolkit flexibly and selectively to speed up exploitative innovation
use “parts of the process”
Statements about BUs doing “scans, ideation, experimenting”,

a shared focus on “understanding the customer”, comfortable Creative confidence (Phase 3)
with DT, “recognizing” the DT tools/process Focus on ‘need-finding’, ‘brainstorming’, and ‘prototyping’ solutions:
DT used intensively on explorative projects and selectively on
Statements about being more “flexible” and “open” with the exploitative projects
DT process when working with BUs
Frame flexibility (Phase 1)

Statements about “innovative thinking”, “think outside the
Frontline project members’ expanding cognitive frames to
box”, “question assumptions”
accommodate explorative innovations
Statements about “adding value to the business”, “consult Co-optation (Phase 2)

Nest”, “get that outcome for the business” Leverage the already legitimized exploitative frame to obtain buy-in Generative mechanisms
by bringing visible success at the BU level
Statements about spending “so much time workshopping with Collective sense-making (Phase 3)
stakeholders”, bringing everyone “on a journey”, so many Intense involvement of multiple stakeholders in exploitative and
people “getting involved” explorative initiatives to develop joint interpretations of innovation
Statements about “not here to tinker on the edges”, “radically Explorative innovation frame (Phase 1)
revolutionize”, “thinking about what’s beyond” Focus on explorative innovation, not just exploitation
Statements about innovation needs to be “connected to the Exploitative innovation frame (Phase 2)
Cognitive integration of innovation
business”, “incremental change” Focus on BU-specific, exploitative innovation
frames
Ambidextrous innovation frame (Phase 3)
Statements about “balancing” exploration and exploitation, Shared commitment to ambidextrous innovation; synergy between
push more “radical innovation projects in the BUs” exploitative and explorative innovation
Statements about employees being “aware”, “applying Building DT legitimacy (Phase 1)

innovation as a practice”, DT “spread its way”, “added to the Frontline employees recognizing the value of DT for fostering
lexicon” innovation
Statements about building “a lot of political capital”, “articulate Building DT legitimacy (Phase 2)
alignment to strategy”, manager “training”, DT applied increasingly at BU level; BU managers recognizing the Building DT legitimacy
“recognition”, “become more embedded” value of DT tools
Statements about talking to all of “TMT and their direct Building DT legitimacy (Phase 3)
reports”, “everyone uses innovation methodology”, DT Collective buy-in for DTI across the TMT, MM, and frontline
becoming “the norm” employee levels

Inertia (Phase 1)
Statements about “we know our business better”, “not
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achieving anything”, “is there progress”
Statements about Nest “not going in the right direction”,

explorative innovation seen as “too slow”
BUs scepticism about the value of explorative innovation with no
immediate impact on the business
Inertia (Phase 2)
BUs scepticism about the value of pursuing non BU aligned Inertia/overcoming inertia
explorative innovation
Statements about DT being “an amazing tool for everything”, Overcoming inertia (Phase 3)
Nest driving a “different mindset in the organization” Collective buy-in for both exploitative and explorative innovation
across levels

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Figure 2: Framework: DT practices for ambidextrous innovation

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Accepted Article Design Thinking Implementation for Innovation:

An Organization's Journey to Ambidexterity

a krithika.randhawa@uts.edu.au (corresponding author), Tel. +61-410-911125, University of

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Dr Natalia Nikolova is Associate Professor in Organization Studies at the University of

Dr Sumati Ahuja is Senior Lecturer in Management at the Business School, University of

Dr Jochen Schweitzer is Associate Professor of Strategy and Innovation and Director of

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Article type : Original Article

Design Thinking Implementation for Innovation:

An Organization's Journey to Ambidexterity

Dr Krithika Randhawa is Senior Lecturer of Innovation, Strategy and Entrepreneurship at the

Dr Natalia Nikolova is Associate Professor in Organization Studies at the University of

Dr Sumati Ahuja is Senior Lecturer in Management at the Business School, University of

Dr Jochen Schweitzer is Associate Professor of Strategy and Innovation and Director of

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DESIGN THINKING IMPLEMENTATION FOR INNOVATION:

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RESEARCH DESIGN AND METHODOLOGY

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INSERT TABLE 1 HERE

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INSERT FIGURE 1 HERE

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INSERT FIGURE 2 HERE

INSERT TABLES 2, 3, AND 4 HERE

Developing Urban’s innovation strategy: Incorporating design thinking

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We need to squeeze that [existing] business as hard as we can … and then do

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Frontline project members felt increasingly comfortable deploying DT tools such as

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INSERT TABLE 5 HERE

Phase 2: 2017–2019—Design sprint execution

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[DTI] is starting to permeate into middle management as well. So that [middle

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Taking stock of Urban’s ambidextrous innovation portfolio

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