The dialectics of serendipity

European Management Journal 33 (2015) 9–18

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European Management Journal j o u r n a l h o m e p a g e : w w w. e l s e v i e r. c o m / l o c a t e / e m j

The dialectics of serendipity 1 Miguel Pina e Cunha a,*, Arménio Rego b,c, Stewart Clegg d,e,f, Greg Lindsay g a

Nova School of Business and Economics, Universidade Nova de Lisboa, Lisboa, Portugal Universidade de Aveiro, Aveiro, Portugal c Business Research Unit (UNIDE), Instituto Universitário de Lisboa (ISCTE-IUL), Lisboa, Portugal d University of Technology Business School, Sydney, Australia e Nova School of Business and Economics, Lisboa, Portugal f Newcastle University Business School, Newcastle, United Kingdom g Robert F. Wagner Graduate School of Public Service, New York University, New York, NY, United States b

A R T I C L E

I N F O

Article history: Received 18 July 2014 Accepted 12 November 2014 Available online 4 December 2014 Associate editor: Sabina Siebert Keywords: Serendipity Honda effect Doubt Alternate templates Dialectics

A B S T R A C T

Serendipity in organizations has often been perceived as a mysterious occurrence. We approach the process of serendipity via reconsideration of Honda’s entry into the US market using an alternate templates analysis, showing that serendipity can be conceptually interpreted as the synthesis of preparation and openness to novelty, articulated through generative doubt. In this sense, it can be thought of as a dialectical process that thrives through the creative synthesis of the existing and the new. It is a practical accomplishment rather than an organizational form of mystery. © 2014 Elsevier Ltd. All rights reserved.

Introduction “(. . .) [L]uck often plays a role in company success. Successful companies aren’t ‘just lucky’ – high performance is not purely random – but good fortune does play a role, and sometimes a pivotal one. If all this seems discouraging, it need not. The fact that business performance depends on so many things outside our control is no cause for despair. And fortunately, there are several good examples of managers who see the world clearly, accurately, without delusions”. Rosenzweig (2007, 158–159) Louis Pasteur once defended that chance favors only the prepared mind. Organizational researchers have paid little attention to this observation, ignoring processes such as luck, “happy accidents” (Lindsay, 2013), chance, and serendipity as elements in organizing. The concept of serendipity, which constitutes the conceptual object of this article, has been mostly absent from the organizational literature but has been the object of attention in multiple domains, as discussed by Merton and Barber (2004). Its presence

1 We are grateful to the special issue Editors and to our reviewers for their excellent comments and suggestions. Miguel Pina e Cunha acknowledges support from Nova Forum. This paper is part of project SMU-PT/OUT/0014/2009. * Corresponding author. Nova School of Business and Economics, Universidade Nova de Lisboa, Lisboa, Portugal. Tel.: +351 967745759; fax: + 351 21 387 11 05. E-mail address: [email protected] (M.P.e. Cunha).

http://dx.doi.org/10.1016/j.emj.2014.11.001 0263-2373/© 2014 Elsevier Ltd. All rights reserved.

features significantly in some important sectors of activity (pharmaceuticals, medicine; e.g., Meyers, 2011) but this fact has been insufficient to spawn more research on the topic from an organizational perspective. One possible explanation for this neglect results from the fact that in the predictability-oriented world of modern organization theory, serendipity is an alien force, an intruder from the realm of luck and randomness. The idea that chance events outside the organization’s control and scope of action can have significant consequences is a threat to the certainty-oriented vision of the world espoused by dominant organizational theory (for a critique see Tsoukas, 2005; see also Rosenzweig, 2007 about how chance matters for organizational and leader success). A minority group of unorthodox authors, however, claim that organizations can try to use luck to their advantage by understanding the phenomenon of serendipity, which will be discussed below. In this article we study the process of serendipity from an organizational perspective, in order to contribute to answering one question: how do organizations manage to transform luck into serendipity? Considering the high visibility of a handful of instances of serendipity, including 3M’s Post It notes, Velcro, penicillin, the X-ray, the microwave or Viagra (see Fry, 1987; Roberts, 1989), the lack of attention that the topic received thus far is surprising. We seek to contribute to fill the gap represented by the absence of serendipity in the organizational literature by looking at one concrete case that has been approached from diverse theoretical angles (strategy and learning, mostly) but not from a serendipity angle: the now classical case of Honda’s entry in the US market.

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M.P. Cunha et al./European Management Journal 33 (2015) 9–18

Serendipity reveals valuable resources and opportunities where none apparently existed (Baker & Nelson, 2005; Cunha, Clegg, & Mendonça, 2010; Day & Schoemaker, 2008), exposes pending threats incubating in the peripheries of organizational attention (Day & Schoemaker, 2004), revealing opportunities far from the beaten path (Fleming, 2002; Popescu & Faussone-Pellegrini, 2010; Roberts, 1989). As summarized by Brown (2005, p. 1230), “chance encounters, accidental occurrences and sheer good fortune loom large in business life. Everyone is familiar with the fortuitous stories mentioned above as well as with others such as those of the Velcro, Corn Flakes, Band Aids, Post-it Notes and Nike’s waffle sole, to say nothing of Teflon, Kevlar, dynamite, artificial dyes, polyurethane and penicillin.” A phenomenon may be perceived as serendipitous when luck is framed as opportunity and transformed into practical action in response. For the observer unable to transform luck into serendipitous discovery, luck itself amounts to nothing useful. It is therefore the way an event is framed that transforms it into serendipity. Luck, in this sense, may not be a casual event – a fortunate episode – so much so as a complex process embracing both individual and collective preparation. To address our research question (“how do organizations manage to transform luck into serendipity?”), we have organized the article in the following way. We start by contextualizing the theme theoretically. The theoretical background contains three subsections: we start by defining the concept and then present the two major perspectives on serendipity (serendipity as a matter of preparation, and serendipity as openness to novelty). Discussion precedes the analysis of a classical case, the object of multiple and disparate investigations that have sometimes but interestingly, not always, featured the role of serendipity, a case in which focus meets openness, that of Honda’s entry in the US market. In line with other authors in organization and management theory, we use case re-interpretation to develop theory. We approach the case methodologically through template analysis. We next present the conclusions, in which we show that serendipity can be considered as an exercise in dialectics. We view these dialectics as a process based on mutually sustaining dynamics of preparation and openness, articulated by the cultivation of ‘generative doubt’. We define generative doubt as purposeful search for understanding stimulated by the recognition of the limitations of existing understanding (Locke, Golden-Biddle, & Feldman, 2008), seeing such doubt as actionable and thus supportive of further learning. In doing so we extend knowledge of luck and organizations by exploring ways in which organization members can try to become lucky. Theoretical background Work on serendipity in the context of organizations has offered contradictory accounts of its role and relevance. Serendipity has been presented by some authors as a process that can be facilitated in and by organizations, whereas others see it as inherently emergent and un-manageable. To situate the limited literature on the topic, this theoretical section is organized around three parts: we start by defining serendipity and then present the two major perspectives on the topic (serendipity as a matter of preparation and serendipity as a product of openness). Organizations are systems constituted by both order and chaos (e.g., Brown & Eisenhardt, 1997). As such, they need to address a dual challenge: they have to seek for control while mired in interdependence and complexity and therefore be open to novel possibilities yet to be envisioned. To do so, they must develop the kind of awareness enabling these events to be grasped as unexpected opportunities – retrospectively, organizations will inevitably discover “lucky” events when they have self-aware members. Managers may thus decide to design their organizations in ways that may be open and responsive to “unanticipated breakdowns and contingencies, initiated opportunistic shifts in structure and coordination mechanisms, and improvised various procedural, cognitive, and normative variations” (Orlikowski, 1996, p. 63).

Appreciation of the unanticipated can result in the ability “to turn the unexpected into the profitable” (Sarasvathy, 2001, 6; see also Cunha, Neves, Clegg & Rego, 2014). After defining serendipity we will debate these different theoretical perspectives. Definition Serendipity refers to the accidental discovery of something that, post hoc, turns out to be valuable, i.e., it refers to luck transformed into discovery. Denrell, Fang, and Winter (2003, p. 978) define it as “effort and luck joined by alertness and flexibility”, whereas Merton and Barber (2004, p. 293) see it as unfolding when one stumbles on an “unanticipated, anomalous and strategic datum that becomes an occasion for developing a new theory or for extending an existing theory.” If organizations seek to create contexts supportive of innovation and able to depart from expectation, the ability to appreciate and embrace serendipity is a necessity. As Sarasvathy (2001, p. 3) put it, “seasoned entrepreneurs (. . .) know that surprises are not deviations from the path. Instead they are the norm, the flora and fauna of the landscape, from which one learns to forge a path through the jungle” (Italics in the original). Different streams of research present different ways of dealing with surprise: (1) approaching surprise via preparation, i.e. cultivating the competences that will give the organization the ability to face the unexpected, or (2) deliberately exposing the organization to novelty, i.e., making it open to the unexpected. These views are elaborated next. Serendipity as preparation One theoretical perspective establishes that serendipity is essentially un-manageable and thus cannot be “corralled”. It assumes that the best way to prepare for the unexpected consists in improving the organization’s competences. The management literature contributing to this perspective establishes that chance is fundamentally emergent, necessarily delivering unpredictable results (e.g., MacKay & Chia, 2013). To reap the benefits of serendipity, organizations can thus reinforce their nuclear competences. Strategically, a focus on core competences will increase the depth of both exploratory and exploitative processes (Markides & Williamson, 1994; Prahalad & Hamel, 1990). Instead of investing in diversified areas, a focus on areas of competence may lead to a progressively deeper knowledge base that can reveal unexpected opportunities. Thus, good preparation can be a requirement for exploring serendipitous opportunities as sophistication in a given area may extend existing technologies into new territories, exposing new possibilities (e.g. Brown & Eisenhardt, 1997) in a given domain. In other words, great expertise may be the best source of new possibilities, as progressive familiarity with a market or a technology may naturally evolve into new applications, including some resulting from a Pasteurian sort of mental preparation. From this perspective, serendipity results not from a deliberate attempt to facilitate unexpected discoveries but from the fact that the organization was able to perceive and to assimilate the unexpected when it emerges. Serendipity is not a product of facilitation but an emergent phenomenon: prepared organizations will grab their opportunities not because they stimulated them but because they were ready to notice them; in other words, because they were prepared. It is known, however, that such an approach as that outlined in the previous paragraph contains a risk: core competencies may progressively turn into core rigidities (Leonard-Barton, 1992). The organization becomes so focused on its current technologies that the innovations it spawns progressively become more convergent. An organization can thus become a victim of its own success, developing an architecture of simplicity that is inherently dangerous (Miller, 1993): the accumulation of innovations closes the organization upon itself, with each new innovation replicating previous solutions and reinforcing simplicity in a vicious circle of innovation that eventually locks-in the organization around narrowly established possibilities.

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Serendipity as openness to novelty Another perspective assumes that organizations can prepare themselves to be able to reap the fruits of serendipity by searching for novel and unidentified opportunities. Organizations can deliberately expose themselves to serendipitous discoveries, an approach epitomized by Rovira and Trias de Bes (2004), who claimed that luck can be created and enacted as a factor deserving systematic management. Brown (2005, p. 1231) pointed in the same direction: “Far from being uncontrollable, luck can be caught, corralled, coached, created.” To do so, organizations can mold the factors necessary to get lucky (Fry, 1987). They may thus deliberately engage in exploratory efforts, challenging their own assumptions and entering new territories in a somewhat anarchic approach (Quinn, 1985) that contains risk as well as promise. It can impede achieving superior levels of efficiency but will actively counter ossification around established solutions. Extant organizational literature discusses several possibilities for nurturing serendipity. We discuss three, from strategic, structural, and cultural perspectives. First, some strategies increase the alertness to the power of serendipity more than others. For example, prospective strategies are potentially friendlier to unexpectedness than defensive strategies (Miles & Snow, 1978), in the sense that a focus on innovation creates more awareness of the fact that innovation is not linear or predictable. Second, from a structural perspective, serendipity is facilitated by organic designs. These designs (e.g. adhocracies; see Mintzberg, 1979) offer abundant space for organizational members in terms of initiative and proactivity, creating conditions for the emergent solutions which open windows of attention to novelty (Colbert, 2004). Third, organizations nurture cultures supportive of serendipity when employees are allowed to represent themselves as change agents. Research shows that people at the frontline are often able to identify opportunities that may go unnoticed in the rest of the organization (Day & Schoemaker, 2008; Hassan, 2011). Familiarity with work processes increases the possibility of identifying unsolved problems, intriguing deviations and unusual patterns, which can subsequently lead to unexpected discoveries (Day & Schoemaker, 2008; Hassan, 2011; Mirvis, 1994). Organizations can thus prepare for serendipitous possibilities by embracing novelty in order to avoid too much consistency. Consistency is critical but an excess of it may confront organizations with difficulties in terms of adaptation (Turner & Rindova, 2012). Given pressures for predictability and consistency, organizations potentially “will drift toward less novel behavior” (Rosenkopf & McGrath, 2011, p. 1297). The embrace of novelty counters this possibility. But it does not neutralize a threat: the possibility of drifting (Ciborra, 2002) from opportunity to opportunity without a focus, potentially investing resources in options devoid of synergistic or cumulative potential. Summary Preparation to act in the face of the random and the surprising requires a capacity to work in and around the type of accidental discoveries that fall under the heading of serendipity (De Rond & Morley, 2009). Such an appreciation, however, has been absent from dominant organizational theorizing, devised to craft organizations as if the unexpected could be contained. It can be argued, however, that serendipity is integral to organizing. Complex systems such as organizations cannot avoid unexpectedness, because they are constantly trying to catch competitors unaware via surprising moves (Cunha, Clegg, & Rego, 2012; Rosenzweig, 2007), by launching new products (Brown & Eisenhardt, 1995), reinventing market spaces (Kim & Mauborgne, 2005), or applying new learning, resulting from interactions with the environment. These interactions end up changing the environment itself (Nonaka, Mitsuro, Hirose, & Kohlbacher, 2014). In this section, two approaches to serendipity were contrasted. One framed it as a process that can be created or facilitated through an active, deliberate openness to novelty. When seen as a matter of

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preparation, serendipity is opportunity because organizations were ready to process it as such. The two processes are not incompatible but represent two views of the serendipity, echoing the leveraging vs. learning debate (Tidd & Taurins, 1999): firms might try to progress by exploiting existing competencies or via the discovery of new ones. The literature leaves an important pair of open questions: should organizations assume that serendipity depends upon preparation and that therefore they should invest in being prepared or should they create mechanisms to expose themselves to novelty and, in this sense, stimulate serendipity? Or, alternatively, can they explore both ways simultaneously? In order to explore interrogations, we study the well-documented case of Honda’s entry in the US market, in order to investigate the tension between investing in preparation vs. investing in openness. Method We apply an alternate templates analysis to the Honda case. There are well-known exemplars of case studies that were used cumulatively, including the disasters with the Challenger and Columbia space shuttles (Beck & Plowman, 2014; Starbuck & Farjoun, 2005; Starbuck & Milliken, 1988; Vaughan, 1996) and the Mann Gulch forest fire (Maclean, 1992; Weick, 1993; Whiteman & Cooper, 2011). On this occasion we explore the process of serendipity by revisiting the case of Honda’s entry into the US market in the 1960s and 1970s, a central management and organizational topic subsequent to Richard Pascale’s (1996) article in the California Management Review, which popularized the so-called “Honda Effect.” Pascale offered a contrasting explanation to a 1975 Boston Consulting Group report on the strategic alternatives then facing the British motorcycle industry. Situating the case After becoming one of Japan’s leading motorcycle manufacturers, achieving outstanding success with the 50 cc model called the “Super Cub,” Honda entered the US in the mid-1960s, quickly conquering more than half of the motorcycle market. In this case (parts A and B; see Appendix, Harvard Business School cases 9-384-049 and 9-384-050), competing perspectives on the role of serendipity are depicted. For the reader unfamiliar with the case, the Appendix offers a brief overview of its two parts: (1) part A is a BCG-based account of the story that is analytical, systematic, and retrospective; (2) part B presents Pascale’s interpretation, based on the accounts of Japanese executives in the US at the time. The second version is rich in serendipitous discoveries; the first one is not. The Honda Effect “involves a conundrum that still preoccupies some of the best minds in business schools” (De Rond, 2012, p. 77). It is also one of the best illustrations of the type of cumulative case study to which one can apply alternate templates. Previous analyses of Honda included the original work by Boston Consulting Group (1975), and Pascale (1990), as well as further developments including those by Mintzberg (1991), Quinn (1991), Hamel and Prahalad (1994), and Mair (1999). Table 1 offers an overview of these methodological approaches. Several and sometimes contradictory accounts of Honda’s success have been advanced. Two explanations prevailed: (1) on the one hand, Honda’s success has been interpreted as the outcome of calculated and deliberate decisions to exploit economies of scale; (2) on the other, Honda seems not to have followed a premeditated strategy, with its success being “primarily the result of incremental learning and luck” (De Rond, 2012, p. 79). De Rond (2012, p. 79) pointed out that “while the two accounts do not contradict each other in every aspect, the discrepancies were significantly stark to crystallize differences between advocates of planning and learning that continue to be debated to this day in MBA classrooms.” The Honda case is a rich source of analysis of the process of serendipity, which was, according to Pascale, an ingredient in the company’s success. Interestingly, some analyses have deliberately

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Table 1 Rich, multi-authored cases in organizational research: Three classic works.

Representative works

Event Core question

Answers (a partial list)

Possibilities for alternate template analysis Alternate templates

Honda

Challenger

Mann Gulch

BCG report (1975) Pascale (1996) Mintzberg (1991) Mair (1999) Honda’s entry in the US market in the late 1960’s, early 1970’s Why did Honda succeed in its endeavor to win a position in the competitive US motorbike market? Because of its economic advantages and the exploitation of economies of scale. Because of the extraordinary adaption skills of its managers in the US. Incremental learning and luck. Contrasting views on the sources of organizational success: planning vs. learning.

Vaughan (1996) Starbuck and Milliken (1988)

Maclean (1992) Weick (1993) Whiteman and Cooper (2011)

Challenger launch disaster, by NASA, 1986

Tragic forest fire in Montana, with 12 deaths, August 1959 Why did 12 firefighters die while other three managed to survive?

Why did teams of highly trained experts make such a catastrophic decision? Because of group-thinking processes. Because of superstitious learning. Because of systemic complexity.

Because of cognitive traps and failures of teamwork. Because of difficulties imposed on human interactions in a hostile ecological context.

Distinct individual, team and organizational explanations of decision-making processes.

Human explanations vs. human in ecological context explanations.

Multi-authored, multi-perspectival case analysis offers opportunities to explore a given case from diverse points of observation. It offers an interesting complement to a strategy of multiple case research. Whereas multiple case research typically consists in using several cases to study one single phenomenon, in this case the same case is adopted to explore different intervening processes in one single process or episode. This illustrates the incompleteness of simple explanations for complex processes.

ignored the relevance of serendipity, which means that Honda’s entry into the United States offers two contrasting explanations: (1) an analytical approach (Mair, 1999), discounting the role of serendipity; and (2) Pascale’s learning, which expresses an appreciation of serendipity’s part in the process. When told from the Honda team’s perspective, the process “highlights miscalculation, serendipity, and organizational learning” (Mair, 1999, p. 84). These ingredients, Pascale comments, are “counterpoints to the streamlined ‘strategy’ version related earlier” (Mair, 1999, p. 84), i.e. the version offering a retrospective analytical explanation. As previously discussed, “how an organization deals with miscalculation, mistakes, and serendipitous events outside its field of vision is often crucial to success over time” (Pascale, 1996, p. 89, italics in the original). The case therefore offers an opportunity to use the very same data to appreciate or to discount the role of luck and serendipity in one concrete organizational case; hence, we use an alternate templates strategy (Langley, 1999) to explore the process. Applying an alternate templates strategy to the case Methodologically, in an alternate templates strategy, several alternative interpretations (templates) of the same event are proposed, based on different theoretical premises. Following this strategy “provides a powerful means of deriving insight from a single rich case because the different theoretical interpretations provide the base for comparison” (Langley, 1999, p. 699). Alternate templates, via case reanalysis, present advantages as well as disadvantages. Among the advantages, one may consider the cumulative knowledge and the progressive enrichment of the case, which, via iterative work, juxtapose layers of texture and a multiplicity of perspectives. As Poggi (1965, p. 284) put it, “a way of seeing is also a way of not seeing” such that case re-analyses may be “thoroughly one-sided” (see also Mair, 1999, p. 37). The present discussion is naturally vulnerable to these limitations. Alternate templates strategy based upon existing cases has disadvantages. These include possible distortion of the original data as successive interpretive layers are introduced, and with it, a progressive focus on the most salient dimensions of the case (e.g., planning versus learning, in the case of the “Honda effect”), while marginalizing important facets of the process under consideration. When “competing versions of the truth” emerge, “what matters” may become more important than “what [really] happened” (De Rond, 2012, p. 77). In any case, despite these shortcomings, the role of serendipity featured prominently in

the explanation of Honda’s success. Sometimes it featured as a determinate presence while in other cases it was absent; hence, the interplay of luck and deliberation makes this a suitable case for treatment.

Analyzing the data The richness of a case can be a source of theory development (Lee, Mitchell, & Sablynski, 1999) – in this instance about the role of serendipity in organizing. To explore this role, we returned to the original debate and proceeded in three steps informed by the logic of grounded theory. First, we carefully collected and analyzed the literature in order to build theoretical sensitivity. This resulted in a broad literature review effort. We started with the case, because of familiarity reasons and then enlarged the bibliography circles progressively, via the Ansoff and Mintzberg debate and finally included other relevant sources identified in the literature, some belonging to the planning vs. emergence debate (Ansoff, 1991; Mintzberg, 1991), others focusing on Honda itself (Pascale, 1990; Rothfeder, 2014). This process of induction started well before we decided to prepare this paper and continued after the first submission, namely, via the inclusion of a recent book on Honda (Rothfeder, 2014). Second, cursory analysis was done in the form of basic open/ axial coding (Strauss & Corbin, 1990), generating specific questions to attend to in subsequent iterations, leading to a tentative interpretation to be considered in the next stage in a preparation for the core theory-building effort. We extracted the major conceptual themes. With regard to the process we proceeded according to the precepts of grounded theorizing, starting with open codes and then organizing them around conceptual axis according to the logic of grounded theorizing. This process involves successive iterative attempts at meaning making through comparing data and tentative theorizing. It is inherently messy in its initial stages (Gehman, Treviño, & Garud, 2013; Langley, 1999). Third, the analysis aimed at producing the actual grounded theory. The result of such a process is a synthesis that organizes a composite theoretical framework able to capture the case at a conceptual higher order level of analysis. This synthesis situates the themes theoretically in order to explain their role in serendipity. In this case we organized the discussion around two major frames of analysis that seem to provide an adequate explanation of the case and that are consistent with previous theorizing, which indicates that theoretical grounding is firm.

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Template 3 Template 1

Template 2

Preparation

Generative doubt

Openness to novelty

Fig. 1. The dialectics of serendipity.

The first frame situates the case interpretation along the analytical vs. behavioral approach, as traditionally espoused in discussions of the Honda effect. This framework grounds the discussion around three main concepts: preparation, openness, and doubt. The second frame refers to the connection between frameworks, distinguishing dichotomy (preparation vs. openness) and dialectics (preparation and openness). Our literature review confirmed the plausibility of dialectical explanations of the “Honda effect” (Mair, 1999). The previous analysis resulted in three conceptual alternate templates. For dualistic approaches, behavioral and analytical explanations are opposite and attention to one overrides the other. This results in templates 1 and 2 of Fig. 1. Differing from dichotomous explanations, Honda’s success can be perceived as a result of the organization’s capacity to derive a positive, generative tension from opposites, which leads to template 3. We resume the work with the conceptual representation of Fig. 1, which graphically depicts the three main templates. The process thus infuses the interpretation with the theoretical sensitivity (O’Reilly, Paper, & Marx, 2012) from the case-derived conceptual model. What intrigued us was how the case offered two competing yet complementary perspectives on the entry of Honda into the U.S. motorcycle market. An alternate templates analysis of serendipity therefore articulates the different angles/templates in a consistent fashion, exploring linkages and continuities that are lost when these templates are not articulated. In this case, assuming the templates as complementary rather than contradictory facilitates the capture of theoretical perspectives that are missed when these processes are viewed as distinct poles of a dichotomy rather than as the interrelated poles of a dialectic. Constructing the interpretation To explore the process of serendipity, the case was analyzed along two dimensions grounded in the relevant literature. The first dimension organizes the explanation along the preparation/openness continuum that emphasizes explanations related to the adoption of views privileging forethought or action. We sought to understand whether thinking preceded action or whether action was used to facilitate thinking by considering existing narratives concerning the case. We therefore considered the argumentation used in both explanatory modes to make sense of the case. The forethought perspective is represented in Ansoff’s (1991) planning argument, stating that Honda was successful because of the

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fine-grained competitive advantages relentlessly built over time. The openness perspective is present in Mintzberg (1991) and Pascale’s (1996) defense of action and openness to discovery as sources of learning, arguing that local adaption skills were crucial in transforming a losing strategy into a winning opportunity. Both perspectives are sufficiently well known to not require reiteration. The second axis refers to the epistemology of the explanation, as dichotomy- or dialectics-based. Dichotomous thinking refers to considering the opposition between the constitutive elements of a social process. In this perspective, organizations are confronted with trade-offs. Dialectics refers to the consideration of opposites as parts of a synthesis (Harvey, 2014). Under a dialectical lens, processes thrive because of the presence of opposites, not in spite of them (Clegg, Cunha, & Cunha, 2002). Dialectical views may reveal untapped possibilities of action. It has been used to explain the success of Honda: “Honda possesses a strategic capability which allows it to innovatively transcend many of the dichotomies of management thinking and practice: a dichotomy-reconciling strategic capability” (Mair, 1999, p. 26). The synthesis of data and theory extends research on serendipity by articulating how serendipity results from a dynamic interplay of preparation and openness, mediated by generative doubt. In the next section we elaborate these templates. Discussion The previous analysis suggests that serendipity can be defined in terms of generative doubt, i.e. the motivated search for understanding stimulated by the experience of not knowing (Locke et al., 2008). Doubt articulates a prepared focus to search for how to organize when facing unexpected and unknown events. This perspective opens several possibilities of action in the three domains of serendipity: preparation, openness, and generative doubt itself (Table 2). These perspectives offer a diversity of interpretive frames permitting the exploration of serendipity as involving the interplay between preparation and openness articulated by generative doubt. First, it requires preparation, built over plans and routines approached mindfully. Second, it demands openness, i.e. the effort to recognize and accept unexpected observations as organizational opportunities. When organizations legitimate doubt they facilitate a double process: doubt is important because (1) it allows organizational members to question and interrogate the existing assumptions and routines, as well as (2) to consider that not every opportunity is a relevant opportunity, i.e. that focus on an organization’s area of competence is a source of focus and an antidote to drifting. From the perspective sketched above, serendipity can be seen as a complex process rather than as a mysterious discovery of an opportunity without preparation, a result of luck, pure and simple. The tension between preparation and openness is maintained productive via a form of doubt that is generative: it not only prevents progressive levels of architectural simplicity (Miller, 1993) but it also counters the erratic pursuit of opportunities (Ciborra, 2002). Next, we detail the three conceptual templates on serendipity. Template 1: Serendipity as result of preparation According to the preparation approach, the success of Honda in the U.S. resulted from a number of competitive advantages that were carefully cultivated and deployed over time, in a top-down manner, i.e., with managerial intentionality. Analytical explanations focus on plans and preparation and emphasize the relentless pursuit of competitive advantages by Honda in the domains of technology, innovation capabilities, and flexible manufacturing. Mair (1999, p. 29) captures the essence of this perspective in the following depiction:

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Table 2 Preparation, doubt and openness in serendipity. How preparation frames serendipity

How doubt frames serendipity

How openness frames serendipity

Direction

Plans provide directional clarity, indicating strategic intentionality and accumulate organizational memories.

It offers possibilities for making sense of possible re-directions.

Contribution

Focus

“efforts to affect the recognition and acceptance of sets of routines, rather than (. . .) simply engaging in those routines” (Zietsma & Lawrence, 2010, p. 190) Consistency resulting from planning builds organizational memories and routines. Plans delimit opportunity boundaries.

Doubt challenges previous direction, countering directional crystallization. The willingness to revise existing schemas

Chance events

Distractions from organizational direction

Overall contribution to serendipity work

Facilitates filtering: plans help to situate chance events inside or outside the organization’s scope of opportunity. It establishes the places to look for luck.

Memory

“Abbeglen and Stalk explained Honda’s success in terms of a ‘counterstrategy that was both simple and innovative’ (1985, p. 49). The simple parts included massive price cuts, promotions, and larger inventories maintained at dealers. The innovative part was ‘the use of product variety as a competitive weapon’ (1985, p. 49). Honda rapidly expanded its model range and renewed many older models, at a rate that Yamaha, which had not yet attained market leadership, could not match and therefore rapidly fell behind. Despite the heavy spending on price cutting and new models in the domestic motorcycle market, Honda now highly successful in the automobile sector, improved its overall financial position between 1981 and 1983. Honda continued the pressure of relentless new model introductions in 1983 and 1984, to the point that Yamaha publicly admitted failure.” In a preparation mode, the company’s success can be explained through its capacity to accumulate competitive advantages perfected over time. In this approach, the organization’s dominant logic (Prahalad & Bettis, 1986) reduced space for serendipitous deviations and enforced strategic focus (Lado, Boyd, & Wright, 1992). In this template lucky discovery is constrained by design and opportunities for serendipitous discoveries are seen to be identified on the basis of existing strengths and competences. In addition, the fact that an organization has clear rules for exploration helps it to delimit opportunities that deserve to be considered, distinguishing them from those that should rather be dismissed (Bingham, Eisenhardt, & Furr, 2007). Template 2: Serendipity as openness Serendipity in Honda’s action can be explained from an alternate template informed by an organic, bottom-up component, which offers space for organizational members to make do as they go along. Such a perspective based on openness to novel possibilities is expressed in terms of Pascale (1996, p. 90) “think[ing] more in terms of ‘strategic accommodation’, or ‘adaptive persistence’, underscoring their belief that corporate direction evolves from an incremental adjustment to unfolding events.” This continuous adjustment to unfolding events implies that the organization succeeded because it was open to novelty. The capacity to accommodate and adjust is associated with an organization’s ability to move information and ideas from bottom to top and back again (Weick, 2004), and to develop a sophisticated understanding of the skill labeled by Pascale (1996, p. 80) as “peripheral vision”, i.e. the capacity to discern unfolding changes

Doubt refreshes organizational memories and routines. Doubt refreshes the meaning of “boundaries” balancing past and future. Opportunities to revisit the organization’s dominant logics Facilitates dialogue between plan and possibility

The effort to recognize and accept an unexpected observation as an organizational opportunity Updates memories with new information Challenge opportunity boundaries

Opportunities for innovation Facilitates expansion: stimulates organizational members to play with unplanned opportunities without initial refusal of their potential just because they were not planned.

and to tackle them locally rather than via central strategic planning. It is in this mode that “strategy had to be conceived informally before it could be programmed formally” (Mintzberg, 1991, p. 465). People make their strategy in order to understand what their strategy is, a process in which serendipity plays an important role, stretching strategy and renewing it. Serendipitous encounters are not minor anomalies in this template, but potential juncture points – strategic bifurcations that may push strategizing processes in unexpected directions. In this regard, serendipitous discoveries may have strategic relevance because they potentially inform an organization’s strategic course of action (Day & Schoemaker, 2008). Reducing these bifurcations to mere curiosities is inadequate, in the sense that small events have the potential to trigger large changes (Weick, 2004). Template 3: Serendipity as the synthesis of preparation and openness via legitimate doubt A third template articulates the two previous conceptions via generative doubt (Weick, 2001), i.e., as the voluntary “‘privation’ of habits” (Locke et al., 2008, p. 908). The two templates (preparation and openness) make the organization permeable to the influence of convergence without divergence, and divergence without convergence. The positive tension between these forces has been theorized by Klag and Langley (2013) as a generative space where knowing meets notknowing. It is generative because it synthesizes a dialectic articulating the powers of preparation with those of openness. While what an organization knows is taken to be a secure base for action it is also accepted that there must be space for the unknown, accepting doubt as legitimate (Weick, 2001) and using it to make sense of a complex, evolving world. Knowing and not-knowing are potentially generative tensions but they need to be integrated. Focus pulls the organization toward exploitation, assuring that it stays close to its fundamental competencies (Hamel & Prahalad, 1994); openness pushes the organization toward exploration (March, 1991), stimulating the actualization of competencies and helping it to avoid the rigidity of existing competencies (Leonard-Barton, 1992). In other words, the combination of preparation and openness helps to update dynamic competencies, impeding them from becoming rigid and increasingly static (Leonard-Barton, 1992; Miller, 1990). The cultivation of doubt as a legitimate organizational state plays a critical role in the process of making serendipitous work acceptable (Vogus, Rothman, Sutcliffe, & Weick, 2014; Weick, 2001). Legitimate doubt provides the bridges between consistency and novelty, such as when Honda executives oscillated between the strategy dictated from Japan and their responses to local observations in California.

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Table 3 Preparation, doubt and openness in the Honda case. Type

Explanation

A sample of evidence from the Honda effect literature

Sources on Honda and general theoretical affinities

Preparation

Honda’s success resulted from a finely honed capacity to develop competitive economic advantages over time.

Sources on Honda: • Ansoff (1991) General theoretical affinities: • Strategic focus Resource-based view

Openness

Honda’s success resulted from its capacity to express a bias for action and to move fast to grab opportunities even in face of ignorance, planning and designing simultaneously.

“On the side of production, scale, costs, and technology were said to be interlinked. Large volumes permitted lower costs, both through the use of specialized production technology, and though the imputed operation of the ‘experience curve’ an analytical tool which proposed that costs declined with accumulated volumes” (Mair, 1999, p. 2). Honda “reacted rapidly and well” (Mair, 1999, p. 30).

Generative doubt

Honda’s success resulted from its capacity to know what it knew and what it didn’t know. This prevented reification of established mindsets and allowed the construction of unplanned competences on top of existing competences.

“We were entirely in the dark in the first year” (Pascale, 1996, p. 87).

The application of an alternate templates strategy to the case thus suggests that what is distinctive about Honda’s entry into the U.S. was: (a) its ability to articulate the known and the unknown, in such a way that executives allowed the strategy to be refreshed but not ignored; (b) the capacity to synthesize ways of knowing and notknowing that could have been represented and approached as incommensurate. The case demonstrates (as summarized in Table 3) the presence of the three frames in Honda’s action. As a consequence, serendipity is the transformation of unexpected findings into actionable opportunities through the articulation of preparation and openness. Implications for theory and practice From the previous discussion, a number of implications can be drawn. We start with those that are practical. First, serendipity should be viewed as an effortful process of possibility expansion by reference to a filtering process that is sustained by existing plans and strategic intentions. Voluntary “exposure to novelty” (Rosenkopf & McGrath, 2011) is supported by the empowerment implicit in there being space for novel orientations in response to unplanned opportunities. Organizations can invite their employees to engage in exploratory activities (March, 1991) rather than simply to obey or to execute (Jacques, 1996). With this perspective there is a promising and paradoxical synthesis of exploitative exploration through engaging in exploratory activities without losing touch with existing plans. Second, because it involves an element of exploration as well as the boundaries of the existing plans, serendipity based on the cultivation of generative doubt may be a creative form of designing work that is both rich in clarity and challenge. Third, given the above serendipity can be perceived as a dialectical process. Creating comfort with dialectical views can thus be considered as a valid management option and a focus on serendipity can offer opportunities for cultivating comfort with paradox, a possibility that might be crucial for contemporary managers, inevitably confronted with contradictory demands (Eisenhardt, 2000). As Lewis and Dehler (2000) observed, comfort with processes that involve tensions between opposites can be nurtured and developed. Fourth, serendipity as the ability to cultivate preparation relentlessly, while maintaining openness to novel possibilities, as suggested by previous research (e.g., Brown & Eisenhardt, 1997; Lewis & Dehler, 2000; Patriotta, 2003), is something to be cultivated by organizations interested in facilitating serendipity and learning to work in dialectical regimes.

Sources on Honda: • Pascale (1996) • Mair (1999) General theoretical affinities: • Exploration • Emergence-based theories of strategy Sources on Honda: • Pascale (1996) General theoretical affinities: • Doubt as generative state • Duality views on organizations

In terms of research, our analysis indicates several possible avenues. Thus far, serendipity has been mostly approached anecdotally via some cases such as those mentioned in the introduction or as a conceptual problem (Cunha et al., 2010). However it seems that it is at least as important to study empirically the unfolding of serendipity as its outcomes (ideas, products, discoveries). In other words, understanding how serendipity occurs is critical to explain its final products. Future research may thus consider questions such as the following. First, what are the organizational antecedents of serendipity? When and how is preparedness a facilitator or an obstacle to serendipity? Are there any individual factors that indicate a propensity for serendipity? And how do organizations mold openness to serendipity? For example, some companies (such as Zappos; see Wei, 2010) prefer to hire people who consider themselves lucky. Does doing so have any impact in terms of the occurrence of serendipity? Second, when is openness to novelty positive or instead a source of perturbation and inefficiency? How do organizational members filter serendipitously relevant and irrelevant possibilities? In other words, how do people make sense of serendipity? Third, how can leaders at various organizational levels create cultures favorable to serendipity? Organization theory would suggest that traditional bureaucratic designs are hostile to serendipity but the fact is that the topic, in general, has been under-researched, with some work indicating that bureaucracies can actually spawn important innovations by handling tensions such as those involved in serendipity (Takeuchi, Osono, & Shimizu, 2008). The possible presence of serendipity in these cases should not be discounted. In summary, the phenomenon has been under-theorized and under-researched empirically. Limitations This work has several limitations, some of which were indicated in the methods section but there are also others noted here. First, serendipity may be inherently unpredictable, which means that lessons from one case may be irrelevant to another case. While this does not invalidate the study as a descriptive analysis, its normative limitations may nonetheless be circumscribed. Second, while the study assumed serendipity as potentially positive, cases that reveal negative possibilities may also be illuminating. Third, some organizational idiosyncrasies of Honda (a company very open to innovation; see Rothfeder, 2014) may have obscured important elements of the process. More research will be needed in different contexts. Nonetheless, the study aims for theoretical, not

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statistical, generalization. The conceptualizations advanced here should be tested empirically in diverse contexts. With regard to theoretical validity, given the nature of the method and the data, the validity of our conclusions can be easily assessed by other researchers. The sources are public and easy to find, which means that validity issues can be tackled and disconfirmed. These limitations reveal avenues for future investigation, beyond those mentioned in the previous section. First, researchers may opt to study serendipity in contemporary work settings – in research labs or other contexts where the unexpected can actually be desired and even sought. Via ethnographic work they may follow the process of serendipity as it unfolds. This, in turn, may help to identify cases in which serendipity leads to positive and negative outcomes (socalled zemblanity, the opposite of serendipity; Boyd, 1998). Third, the recent idea that serendipity can be partly managed must be tested and refined in organizational settings. Deliberate provocation of serendipity may be possible in some contexts (e.g., creativity-oriented organizations) but unwelcome in others (e.g. efficiency-based companies). The boundaries of the analysis are established by the case itself: it refers to serendipity processes at the level of the organization, rather than at that of the individual or the team. As a result, we concluded that preparation offers tools to filter opportunities and to frame serendipity. In this sense, we implicitly assume that individuals and teams engaging in serendipity work are aligned with the organization’s intentions, which is not necessarily the case and leads to an anthropomorphized view of organizational serendipity. It is clear, however, that as one of our reviewers pointed out, “serendipity happens to people, not to organizations.” We need to know more about the micro–macro linkages involved in the serendipity process in order to know more about the transformation of serendipity as an individual experience into serendipity as an organizational process. The political components of serendipity should be assumed: those things not attended to because of dominant rationalities; those events that register as non-events due to dominant frames for sensemaking; and those non-decisions framing events that are and are not registered (Deroy & Clegg, 2011). The sociomaterial bases of serendipity can also be explored. Some companies (e.g. Google) design their buildings to try and encourage accidental cross-pollination. Ethnographic research shows some specific space layouts (namely privacy for meetings of dedicated change agents) facilitate some types of serendipitous encounters (Kellogg, 2009) while other spaces do not. Recent research by Danielsson et al. (2014) of nearly 2000 employees found that open plan offices created significantly more sick leave, through transmission of illness and creation of stress, thus making the likelihood of serendipitous encounters less likely. In other words, more needs to be known about when, how and why some serendipitous events gain strategic momentum whereas others evanesce or are countered rather than encouraged. Its limitations notwithstanding, the study responds to Rosenkopf and McGrath’s (2011, p. 1308) suggestion that researchers need to “undertake a richer treatment of the multiple contexts and mechanisms by which organizations simultaneously pursue (or avoid) novelty.” We analyzed one such mechanism: serendipity as the process combining the known and the unknown.

expand existing knowledge into new territories. In this sense, the implication is clear: managers can cultivate an appreciation for doubt by cherishing the unknown and the unexpected as sources of discovery and challenge, by stimulating people to allow themselves to fail and by having confidence in one’s competency as the safe base for exploration of the unknown. These processes were central to Honda Motor since its inception, as described by Rothfeder (2014). Serendipity is not something “out there” but the result of effort articulating existing interpretations as framed by plans and routines, with novel opportunities, as interpreted by reference to these plans. The analysis of the Honda case suggests the company’s success resulted from its capacity to rely on both deliberation and opportunity, making the two processes coincident in a generative synthesis that is continuous rather than episodic, a permanent dialectics, a tension that persists and that can be used creatively (Cunha, Clegg, & Cunha, 2002; Lewis & Smith, 2014). Deliberation confers strategic intentionality, which gives meaning to action and favors local interpretation within a broader and coherent organizational picture. Serendipity is possible because unexpected deviations can be made actionable via novel-oriented actions at the local level, converting unexpected deviations into part of the organization’s action repertoire. When employees are conscious of the “bigger organizational picture”, their local observations of unexpected events may be framed as serendipitous discoveries and thus acted upon. The productive tension between preparation and openness is maintained via generative doubt, a state where organization knowing offers a secure base for exploratory incursions in the realm of the unknown, that are, nonetheless, integrated in the organization’s action repertoire. Without one of the poles, the tension will lose generative power, probably unbalancing the organization in the direction of routine rather than novelty (Rosenkopf & McGrath, 2011), and potentially leading to ossification. Or, less likely, in the direction of novelty without systematization, exposing the organization to the risk of strategic drift (Ciborra, 2002). Too much preparation focuses the organization on its a priori predictions, impeding attention to fortuitous opportunities, whereas too much openness will cause drifting (Ciborra, 2002), making it difficult to discern happenstance from opportunity. Serendipity is a result of generative doubt when preparation and novelty coexist, in a complex synthesis. In this sense, it should be seen as an effort to be cultivated systematically rather than as a mystery to be marveled at. Appendix Honda’s entry in the US market: Two explanations. Preparation perspective Assumptions Focus in internal competences and efficiency Metaphor

Roots of success

Conclusion We asked “how do organizations turn luck into serendipity”, and responded that they do so via the dialectical interplay of preparation, openness, and doubt. Serendipity can thus be defined as unexpected observations framed as opportunities, made actionable by a frame of reference that is kept dynamic via the cultivation of doubt, i.e. using the sentiment of un-knowing as a stimulus to

Explaining success

Organization as machine

Openness perspective

Dual explanation

Organizations as organic systems, in permanently changing environments Organization as organism

A focus on efficiency did not impede organic adaptation via improvisation.

Plans and improvisations require organic and mechanistic elements. Technological Empowerment of Competence front line employees capabilities must be building combined with local Capacity of local (market share) adjustment. adjustment Superior Luck (in the case of technological the popularity of capacity Supercub model) Global plans must Bottom up: Top down: keep touch with the organization’s the local conditions. adjustment organization’s core capabilities capabilities

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