Using Ambidexterity to Achieve Service Excellence

A Practical Example of Vodafone in the German Telecommunication Market

Bachelor Thesis 2011 49 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media


Table of Contents

List of Abbreviations

List of Figures and Tables

1 Introduction
1.1 Problem Definition and Objectives
1.2 Course of the Investigation

2 Terms and Definitions
2.1 Organizational Ambidexterity
2.1.1 General Definition of Ambidexterity, Exploitation, and Exploration
2.1.2 Classification of Ambidexterity
2.2 Measuring Services
2.2.1 Foundations of Measuring the Quality and Satisfaction of Services
2.2.2 The Gap Model
2.2.3 The SERVQUAL Model
2.3 Customer Delight
2.4 Service Excellence
2.5 Service Efficiency and Service Effectiveness
2.6 Ambidextrous Characteristics in Service Excellence

3 Methodology
3.1 Introduction of the German Telecommunication Market
3.2 Introduction of Vodafone Germany
3.3 Research Approach

4 Outcomes
4.1 Service Excellence at V odafone
4.2 Measuring Satisfied Customers at Vodafone - The Net Promoter Score
4.3 Service Efficiency and Effectiveness at Vodafone

5 Evaluation and Conclusion

Reference List


List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures and Tables

Figure 1 : Determinants of Perceived Service Quality

Figure 2: The Gap Model

Figure 3: Exemplary Depiction of Items and Dimensions for Service Quality

Figure 4: Summary of Steps Employed in Developing the Service-Quality Scale

Figure 5: SERVQUAL's Five Dimensions

Figure 6: Levels of Customer Relations

Figure 7: Zone of Tolerance

Figure 8: The Three Rings of Perceived Value

Figure 9: Proposed Model of Delight and Satisfaction

Figure 10: Characteristics of Excellent Service

Figure 11: The Main Internal Service Issues

Figure 12: EFQM Excellence Model

Figure 13: Kano Model of Customer Satisfaction

Figure 14: Market Share MNOs Third Quarter 2010 in Germany

Figure 15: Structure of the DIN SPEC 77224

1 Introduction

1.1 Problem Definition and Objectives

In conjunction with the advancing process of globalization the competitive environment continually intensifies (Meyer, 2002, p. 3). The possibilities to minimize costs and to increase return on sales are mostly exhausted or require a high amount of effort to be realized (Kuhn & Hellingrath, 2002, p. 1). Market saturation in industrial nations caused a swift from seller to buyer markets (Meyer, 2002, p. 4), where the major challenge for service companies is based in the flexible and adaptable fulfillment of ascending demands and expectations of its customers (Gouthier, 2006, p. 58; Grant, 1996, p. 375). Delivering an outstanding and positively surprising service to the customer can lead to competitive advantages, such as a higher willingness to pay as the study by Homburg, Koschate, and Hoyer (2005) indicates, a higher loyalty if customers are very satisfied as “the Satisfaction-Loyalty Link” by Jones and Sasser (1995, p. 95) depicts, or a increased intention to recommend the services or products of a several provider (Mittal & Kamakura, 2001).

Thus, topics, such as service excellence gain importance, where companies appeal to continually improve and even perfect their service offer in order to achieve customer delight (Jonston, 2004, p. 129). Famous examples of companies that continuously strive for service excellence are Singapore Airlines and the Ritz Carlton hotels (Johnston, 2007, p. 23; Heracleous & Wirtz, 2010).

By watching classical advertisement in television or radio, several companies claim to deliver excellent service to their clients although in practical business life they fail. In order to implement service excellence, managers’ major issue is the combination of the apparently opposing forces of effectiveness and efficiency of their service. The view to be able to combine these two contrary forces contradicts Porter’s claim for differentiation and cost leadership (Porter, 1997). Nevertheless, Heracleous, Wirtz, and Johnston (2004) emphasize the necessity to find a balance between service effectiveness and service efficiency, and Bartlett, Ghoshal, and Birkinshaw (2004, pp. 405-406) describe a symbiotic process of rationalization and revitalization as crucial to succeed in a highly competitive environment.

The concept of organizational ambidexterity borrowed from organizational theory offers a response how to combine these two characteristics without neglecting one of them, thus, solving the perpetual conflict and paving the way to achieve service excellence. Empirical evidence for the linkage of ambidexterity and performance measurement in firms was scarcely provided in the scientific literature (Raisch & Birkinshaw, 2008, p. 394), such that this thesis has the objective to provide a further component into this area of empirical research.

The paper presents theoretical foundations of organizational ambidexterity and service excellence and compares the theory to the application in the real business world with insights from Vodafone in Germany. Communities and differences between the scientific theory and the practical application should be depicted. The findings should serve as a stimulus for companies to cross-check and eventually re-organize their approach towards the achievement of service excellence. Due to the fact, that the literature and comprehensions on organizational ambidexterity and service excellence vary widely, the common ground and basic understanding should be provided. As a consequence, the paper does not claim to present the whole range of theoretical concepts available.

1.2 Course of the Investigation

After the introduction, the theoretical framework of this thesis is constructed with the presentation of terms and definitions from the literature on organizational ambidexterity, service quality and service excellence. In the next step, the contrary forces of service efficiency and service effectiveness are depicted that impedes the implementation of the service excellence frame-work in the real business life. The duality of efficiency and effectiveness is further described and then, these two forces will be abstracted and similarities to the concept of organizational ambidexterity and its two opposing forces of exploitation and exploration are introduced. Furthermore, the distinction between customer satisfaction and customer delight, and between service quality and service excellence is explained.

The next chapter comprises a depiction of the methodology applied whereas an overview of the German telecommunication market and in detail Vodafone’s (VF) company profile is provided for a basic characterization of who VF is, which role it plays in the German telecommunication market, and why especially VF was chosen for a practical application in this thesis. Based on this information, the approach is presented that an empirical analysis was conducted by interviewing key VF employees on the effects of ambidexterity for the achievement of service excellence.

Then, the outcomes of the qualitative surveys are reflected objectively in the subsequent chapter. The last part offers a personal evaluation and conclusion based on a literature review to support or disprove the effect of ambidexterity on achieving service excellence.

2 Terms and Definitions

In order to discuss the effects of ambidexterity on the achievement of service excellence, several terms and theoretical foundations have to be defined beforehand. The term organizational ambidexterity and further, the terms customer satisfaction in comparison to customer delight and service quality compared to service excellence will be defined, as they are essential to the understanding of this paper.

2.1 Organizational Ambidexterity

The term ambidexterity is derived from the two Latin words ambo [both] and dextra [right hand] and transfers the metaphor of the rare human ability to use both hands similarly well to organizations. Duncan (1976) was the first who introduced the term of ambidexterity and the ambidextrous organization in the field of organization science as an efficient and at the same time adaptive company that generates and implements new ideas continually.

2.1.1 General Definition of Ambidexterity, Exploitation, and Exploration

The concept of organizational ambidexterity although firstly introduced by Duncan (1976) gained researcher’s interest due to the frequently cited work by March (1991) who identified the duality of the opposing forces of exploitation and exploration as two strictly separate learning processes in companies. Exploitation is described with company activities, such as “refinement, efficiency, selection, and implementation” (March, 1991, p. 102). Exploration represents actions, such as “search, variation, experimentation, and discovery” (March, 1991, p. 102). Thus, these two opposing forces request various contexts, organizational structures and strategic background (Raisch & Birkinshaw, 2008, p. 376). With reference to the before mentioned metaphor, both forces embody the two hands, whereas ambidexterity is responsible to establish an equilibrium between these opposing processes. Besides, Raisch and Birkinshaw (2008, p. 375) define ambidexterity as “an organization’s ability to be aligned and efficient in its management of today’s business demands while simultaneously being adaptive to changes in the environment”, while Tushman and Smith (2002) interpret exploitation and exploration as the capability to process incremental and discontinuous innovations continuously, Grant (1996) as the ability to create and sustain advantages, and Volberda (1996) as change and preservation.

During a certain period several researchers held the view that an incoherency of these two opposing forces exist (e.g. Hannan & Freeman, 1977; Miller & Friesen, 1986; Porter, 1997), thus, allowing either a focus on “efficient exploitation” or “effective exploration” (Raisch & Birkinshaw, 2008, p. 377). A stake of researchers holds the view that there exists a trade-off between these two forces (e.g. Ancona, Goodman, Lawrence, & Tushman, 2001; Levinthal & March, 1993).

March’s (1991) statement successful companies were able to balance exploitation and exploration appropriately was followed by substantial research and led to a move from thinking of ambidexterity as a trade-off thinking towards the trend of understanding it as a paradox where the two opposing forces are balanced (Adler, Goldoftas, and Levine, 1999, p. 47; Jansen, Tempelaar, van den Bosch, & Volberda, 2009; O'Reilly III & Tushman, 2007; Raisch & Birkinshaw, 2008, p. 377).

March (1991, p. 71) and similarly Ahuja and Lampert (2001) argue that a one-sided focus on tasks belonging to exploitation may increase the short-run performance, while an organization’s performance in the long-run is neglected.

On the one hand, a strong emphasis rather on exploitation than on exploration may be explained by its apparently more secure returns (Levinthal & March, 1993, p. 106). In addition to this argument, Lant and Mezias (1992) claim that past efforts in exploitation make future efficiency gains in this field even more attractive, thus, shifting core competencies into core rigidities due to a high specialization (Leonard-Barton, 1992) which may yield to a competence trap in the long-term (Ahuja & Lampert, 2001) because the environmental circumstances changed significantly over time, such that the organization is not capable anymore to adept to these changes (Jansen, van den Bosch, & Volberda, 2005).

On the other hand, an over-emphasis on the exploration force may lead to a competence trap where a company struggles in an infinite circle of search, discovery and failure without any rewards, although it continuously enhanced its knowledge base (Levinthal & March, 1993, p. 106). Volberda and Lewin (2003) mention an over-sensitiveness to current changes that is not rewarded with any gains.

Levinthal and March (1993, p. 105) frame organizations’ success as their ability to avoid competence traps as well as failure traps by stating “engage in enough exploitation to ensure the organization’s current viability and engage in enough exploration to ensure future viability.”

In terms of human beings as reference point, ambidexterity may face limits due to individuals’ cognitive limitations to pursue both, the activities of exploring and exploiting (March, 1991, p. 397).

2.1.2 Classification of Ambidexterity

Since the interest in organizational ambidexterity arose, scholars developed various concepts of application in business and social sciences for the theory coming from organizational science.

The major research streams for the utilization of exploitation and exploration are clustered by Raisch and Birkinshaw (2008, pp. 377-380) into five areas: organizational learning, technological innovation, organizational adaption, strategic management, and organizational design.

Firstly, the perspective of organizational learning applied the terms exploitation and exploration in various learning contexts. A group of scholars defined exploration as all instances associated with learning, whereas the reprocessing of existing knowledge is linked to the ability of exploitation (e.g. Rosenkopf & Nerkar, 2001, p. 288). In accordance with March’s (1991) idea of balancing the duality of forces, another research stream differentiated among exploitation and exploration as varying degrees of learning (e.g. He & Wong, 2004, p. 481), such that “exploitation refers to learning gained via local search, experiential refinement, and selection and reuse of existing routines. Exploration refers to learning gained through processes of concerted variation, planned experimentation, and play.” (Baum, Li, & Usher, 2000, p. 768) Nevertheless, there as well exists dissension whether the two forces are incompatible or whether a balance between those two should be established (Levinthal & March, 1993; March, 1991). Empirically, Mom, van den Bosch, and Volberda (2007, p. 910) found that managers that are part of top-down knowledge inflows as well as bottom-up knowledge inflows in the organization obtain higher activities in exploitation and exploration respectively.

Secondly, the research stream on technological innovation mainly discusses the differentiation between incremental and radical technical innovations, whereas incremental innovations are understood as minor technical changes, while radical changes mean a move to completely new products (e.g. Dewar & Dutton, 1986; Tushman & Anderson, 1986). Tushman and Smith (2002) refer these incremental innovations as activities to meet existing customer needs, whereas the radical innovations represent the activity to meet wishes of new, emerging customer groups.

In the context of technological innovation Leonard-Barton (1992, p. 111) mentions a dissent of so called core rigidities, that “managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side.” In addition to this argument, researchers mainly emphasize the need to participate in and balance both forces, such as Tushman and O’Reilly (1996, p.24) point at the “ability to simultaneously pursue both incremental and discontinuous innovation.”

Thirdly, research on organizational adaption stresses the organizational balance between continuity and change to establish long-term success (e.g. Brown & Eisenhardt, 1997; Volberda, 1996). Meyer and Stensaker (2006) frame organizational ambidexterity in terms of organizational adaption as the balance to operate daily business and simultaneously, recognize the need to adapt to changes.

In this context, organizational chaos may occur caused by an overload of changing activities while neglecting the continuity perspective, whereas a negligence of change actions may lead to inertia (Huy, 2002; Levinthal & March, 1993). The role of managers is perceived as center stage intermediaries by some scholars, for instance Tushman and Romanelli (1985) state, “mediating between forces for convergence and forces for change.”

Fourthly, organizational ambidexterity found its application also in strategic management. Burgelman (1991, 2002) developed the intra-organizational ecology model of strategy making by differentiating between exploitation as activities inside the current strategy that are variation reducing and exploration as activities outside the current strategy that foster increases in variation. Furthermore, he concludes a mixture of exploitation and exploration offers most advantages: “organizations may have to keep both processes in play at all times, even though this means that the organization never completely maximizes its efforts in the current domain” (Burgelman, 1991, p. 256).

Moreover, Bartlett et al. (2004) focus on the requirement to rationalize existing processes and to revitalize by developing new competencies. Additionally, Hamel and Prahalad (1993) emphasize that this suspense is the major strategic challenge in order to develop competitive advantages.

Finally, the dimension of organizational design addresses the applicability efficiency and flexibility in organizations at the same time, whereas the demand for organic structures is explained by the ability to invent new ideas, while mechanistic structures are required to realize them (Duncan, 1976). Some scholars claim that both structures are unmanageable to combine (e.g. Lewis, 2000), while Gibson and Birkinshaw (2004) suggest establishing a greater context to be able to solve this dilemma. Thus, the definition of ambidexterity in terms of organizational design represents its capability to manage complex operations guaranteeing long-term innovations as well as efficiency gains in the short-run (Tushman & O’Reilly, 1996).

2.2 Measuring Services

The following section will focus on the fulfillment and exceeding of service demands. The term service will be understood in a broader view as “deeds, processes and performances” (Zeithaml, Bitner, & Gremler, 2006) enacting the generic characteristics intangibility, heterogeneity, inseparability, and perishability that differentiate services from goods (Parasurman, Zeithaml, & Berry, 1985, p. 42; Edvardsson, Gustafsson, & Roos, 2005).

2.2.1 Foundations of Measuring the Quality and Satisfaction of Services

Due to an increasing competitive environment companies cannot deny the relevance of customer orientation, thus, customer satisfaction has evolved as a central goal of organizations resulting in that almost every company measures customer satisfaction (Parasurman, Zeithaml, & Berry, 1988, p. 12).

Quality with reference to Olshavsky (1985) and Parasuraman, Zeithaml, and Berry (1985) is defined as an overall evaluation, comparable to attitude. Oliver (1981, p. 27) relates satisfaction to a certain transaction and explains satisfaction as a “summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer’s prior feelings about the consumption experience.” Moreover, Oliver (1981, p. 42) makes a distinction from attitude as:

Attitude is the consumer’s relatively enduring affective orientation for a product, store or process (e.g., customer service) while satisfaction is the emotional reaction following a disconfirmation experience which acts on the base attitude level and is consumption specific. Attitude is therefore measured in terms more general to product or store and is less situationally oriented.

Although the difficulty may arise how to measure the quality of a service that is neither tangible nor non-perishable, the positive effects on a company’s financial performance are evident (Anderson & Zeithaml, 1984). Moreover, customers face problems evaluating the quality of a service in comparison to the quality of a good.

Thus, their perception of service quality is described as the result from their expectations prior to consumption subtracted by the observed process and outcome of the service performance (Parasuraman et al., 1985, p. 42). Furthermore, customer expectations are a combination out of past experience, word of mouth communications, and personal needs (Parasuraman et al., 1985, p. 44). Lewis and Booms (1983) define it similarly, “Service quality is a measure of how well the service level delivered matches customer expectations. Delivering quality service means conforming to customer expectations on a consistent basis.” Satisfaction judgments are based on the confirmation or disconfirmation of customer expectations (Smith & Houston, 1982) or as Parasuraman et al. (1988, p.17) state “the degree and direction of discrepancy between consumers’ perceptions and expectations.”

Concluding, satisfaction with a service leads to a positive disconfirmation if the service is better than expected, to a confirmation if it is as expected, and to a negative disconfirmation if it is worse than expected.

Parasuraman et al. (1985, p. 48) depict ten determinants of perceived service quality as influencing factors on expectations and perceptions by the customers (see Figure 2).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Determinants of Perceived Service Quality (adapted from Parasuraman et al., 1985, p. 48)

2.2.2 The Gap Model

Based on exploratory interviews with managers and customers, Parasuraman et al. (1985) built the foundation for the analysis of service quality and defined a model that analyzed hurdles in delivering high quality services (see Figure 1).

Gap 1 represents the knowledge gap between a company’s perception of consumer expectations and the real expected service. Possible measures in order to close this gap is to understand customer needs by firstly, improving information exchange between front-line service employees and their managers and secondly, transform the gained knowledge into actions (Parasuraman et al., 1985, p. 44).

Gap 2 is called the standards gap that may exist between a firm’s own perceptions of customer requirements and the translation of these perceptions into service standards. Hereby, details and specifications need to be communicated to implement a firm’s service standard vision successfully (Parasuraman et al., 1985, p. 45).

Gap 3 reflects a split in the actual service delivery claiming for controlling processes or authorities cross-checking whether the service delivery matches the set service standards (Parasuraman et al., 1985, p. 45).

Gap 4 is depicted as communications gap caused by unrealistic service depictions to the consumers. Thus, attainable goals should be set, appropriate resources should be provided, and a general understanding of the offerings by employees should be ensured (Parasuraman et al., 1985, pp. 45-46).

Finally, gap 5 mirrors the gaps 1 to 4 which can be closed by eliminating the four before mentioned discrepancies, in order to establish a good understanding of the actual customer needs (Parasuraman et al., 1985, p. 46).

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: The Gap Model (adapted from Parasuraman et al., 1985, p. 44)

2.2.3 The SERVQUAL Model

Three years after the publication of the gap model, the same scholars derived an extension of their previous research that identified the beforehand shown ten potentially overlapping dimensions of service quality (Parasurman, et al., 1988). The objective was to describe the development of SERVQUAL-model and to discuss scale properties and potential applications.



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using ambidexterity achieve service excellence practical example vodafone german telecommunication market




Title: Using Ambidexterity to Achieve Service Excellence