NAVIGATING PARADOX AS A MECHANISM OF CHANGE AND INNOVATION IN HYBRID

ORGANIZATIONS
Author(s): JASON JAY
Source: The Academy of Management Journal , February 2013, Vol. 56, No. 1 (February
2013), pp. 137-159
Published by: Academy of Management

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c Academy of Management Journal
2013, Vol. 56, No. 1, 137-159.
http://dx.doi.org/10.5465/amj.2010.0772

NAVIGATING PARADOX AS A MECHANISM OF CHANGE

AND INNOVATION IN HYBRID ORGANIZATIONS

JASON JAY
Massachusetts Institute of Technology

Hybrid organizations combine institutional logics in their efforts to generate innova

tive solutions to complex problems. They face unintended consequences of that insti
tutional complexity, however, which may impede their efforts. Past scholars have
emphasized conflicting external demands, and competing internal claims on organi
zational identity. Data from an in-depth field study of the public-private Cambridge
Energy Alliance suggest another consequence: paradoxes of performing (Smith &
Lewis, 2011) that generate ambiguity about whether certain organizational outcomes
represent success or failure. This article develops a process model of navigating such
paradoxes: in sensemaking about paradoxical outcomes, actors grapple with definition
of success and can transform the organizational logic. The result can be oscillation
among logics, or novel synthesis between them when outside perspectives enable a
clearer view of the paradox. Hybrid organizations' capacity for innovation depends in
part on the results of this change process.

For several decades, scholars and practitioners lana & Dorado, 2010; Canales, 2008). I focus here on
have sought novel organizational models and strat a public-private hybrid organization1 that com
egies for addressing big, complex problems: scien bines logics of government bureaucracies, business
tific and technological innovation, poverty allevia firms, and nonprofit associations to tackle the com
tion, public health, education, and environmental plex challenge of climate change.
sustainability, among others. One result of this Although some scholars have emphasized the
search has been the formation of organizations that "sense of dissonance" (Stark, 2009) and innovative
draw from multiple institutional logics, particu potential of synthesizing logics and practices (Chen
larly when problems seem to dwarf the ability of & O'Mahony, 2006; Murray, 2010; O'Mahony &
organizations that hew narrowly to one logic. Log Bechky, 2008; Reay & Hinings, 2009), institutional
ics of the market and academic science come to complexity also has challenging unintended conse
gether in efforts to accelerate medical discovery inquences (Greenwood, Raynard, Kodeih, Micelotta,
biotechnology firms (Murray, 2010). Logics of mar & Lounsbury, 2011). Hybrid organizations must
ket and charity combine to approach poverty alle contend with competing external demands (Pache
viation through microfinance organizations (Batti & Santos, 2010) and internal identities (Kraatz &
Block, 2008). As a result (and in contrast to the
inertia and stasis endemic to organizations con
My sincere thanks to Ann Langley and the anonymous forming to homogeneous institutional fields
reviewers of the AMJ Special Research Forum on Process
[DiMaggio & Powell, 1983; Hannan & Freeman,
Studies of Change in Organization and Management for
1984]), excessive change may characterize the life
their clear insight throughout the review process. Wanda
Orlikowski, Susan Silbey, and Rick Locke contributed to
of organizations that grapple with these multiple
influences. Such instability and flux could deplete
the development of the research as my extraordinary
dissertation committee. I drew insight, support, and in organizations' capability to solve complex prob
put on early drafts from Rebecca Henderson, Lotte Bai lems, particularly if change leads to the collapse of
lyn, Melissa Paschall, Joelle Evans, Kate Parrot, Ryan
Hammond, Steve Morgan, the MIT-Harvard Economic
Sociology Working Group, the MIT Sloan Sustainability1 The term "hybrid organization" has two prominent
Research Group, the Strategy group at the Boston Univer
uses in scholarly and practitioner literature. One, part of
sity School of Management, attendees of the 2009 Ivey
Powell's (1990) "neither market nor hierarchy" idea, de
PhD Sustainability Academy, and anonymous reviewers scribes a hybrid, networked organizational form. The
of the 2010 Academy of Management conference. This other describes organizations in which there is a combi
research has been generously funded by the Robert nation of public and private organizing logics, through
and Patricia Switzer Foundation, the Martin Family Fel
mission-driven businesses, social enterprises, cross-sec
lows for Sustainability, and the MIT Sloan School oftoral collaboration, and public-private partnerships of
Management. various kinds. I use the term in this latter sense.

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138 Academy of Management Journal February

hybridity and the dominance of one logic

Block, 2008). doxes such as the one I describe. I argue that active
How do change processes unfold in hybrid or- reflection on organization
ganizations? What bearing do they have on the ars and practitioners, wil
innovative potential of combining logics? The près- derstanding processes of
ent study makes two key contributions in exploring zations and in prese
these questions. First, it develops a process model capacity for innovation
of iterative, continuous organizational change (Or
likowski, 1996; Tsoukas* Chia, 2002) that could ba INSTITUTIONAL
generalise to a vanety of hybnd orgamzaUons. ORGANIZATIONS
Prior studies have emphasized more episodic re
sponses to institutional complexity (Greenwood et It is axiomatic that i
al., 2011; Pache & Santos, 2010), or followed hybrid evolved through two
organizations over time without developing this theorists saw organizatio
kind of process model (Battilana & Dorado, 2010; with meaning, value, and
Reay & Hinings, 2009). Second, this model illus- bers and leaders (Selznick, 1957). Later there
trates how "sensemaking" amid organizational par- emerged a "neoinstitutionalism" (DiMaggio & Pow
adoxes (Quinn & Cameron, 1988; Smith & Berg, ell, 1983; Meyer & Rowan, 1977; Powell & DiMag
1987; Smith & Lewis, 2011) can be an important gio, 1991) focused on external actors that impose
mechanism of change in hybrid organizations, one values and expectations on organizations. In this
that affects their capacity to innovate. This new shift, the primary level of analysis moved from an
mechanism complements prior mechanisms put organization (and what goes on inside) to a field
forth in empirical work, such as power struggle and and network, with emphasis on diffusion of norms
negotiation among competing internal and external and practices across organizations. One result of
factions who represent disparate logics (Ashforth, such diffusion is the emergence of institutional log
Reingen, & Ward, 2009; Fligstein, 1987; Layzer, ics (Lounsbury, 2007; Thornton & Ocasio, 1999,
2008; Thornton & Ocasio, 1999). 2008) that define comprehensive "rules of the
My central finding is that as members of a hybrid game" within different spheres of soci
organization take actions to achieve their mission nomic life.
and then interpret the outcomes of those actions, This recent emphasis on institutional
they discover that some outcomes are ambiguous however, sparked a new line of inquiry tha
and paradoxical: they are successes when viewed some concerns of the old institutionalism
through the lens of a public service logic but fail- the organizational consequences of particip
ures seen through the lens of a client service busi- multiple fields, or of combining multiple
ness logic. Efforts of members to make sense of under one organizational roof? Doing so
these outcomes, and therefore of organizational important sites of innovation (Reay &
strategy and identity, result in their transforming 2009; Stark, 2009) and the emergence of
their organization from a business logic to a non- tices and institutions (Chen & O'Mahon
profit logic and finally to a synthesis of the two. It Murray, 2010; O'Mahony & Bechky, 2008
is in this synthesis—partly enabled by bringing ex- Hinings, 2009). This is because combi
ternal perspectives into the sensemaking conversa- means bringing together novel comb
tion—that innovative practices emerge through capital, tacit knowledge, and regimes of
combining organizational means and ends in tion—means and ends—resulting in what Stark
new ways. (2009) called the "sense of dissonance." At the
I start by reviewing the literature on change in same time, or
hybrid organizations and on the more general role ing demands
of sensemaking and paradox in organizational norms and expe
change. I then describe my theory-building ethno- 1991; Glynn,
graphic study of the Cambridge Energy Alliance Santos, 2010). I
(CEA), a public-private partnership to promote en- these compet
ergy efficiency as a solution to climate change. may fall prey
Building on my data about CEA's transformation, I (Ashforth e
develop a process model of navigating paradox in toward the s
hybrid organizations and identify a specific service Powell, 198
paradox arising in organizations with dual logics of One importa
public service and client service. I conclude by is organizatio

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 2013 Jay 139

scholars ha
struggles an
ternal cons
tional logic
does the or
Ocasio, 199
pate the cap
one logic comes to dominate. explain antecedents and consequences of these re
Several empirical studies have documented how sponses, at organizational and field levels. A
business actors, and financial actors in their busi- other domains of organizational research,
ness field, can control the outcomes of such change cess-based approach can complement this type
processes, imposing market logic over alternative work. First, it can be useful in uncovering
or competing institutional logics of professions, causal relationships and interactions to be exp
civil society, and state. In collaborative, public- through more comparative and cross-sectiona
private environmental governance initiatives, real search (Langley, 1999; Möhr, 1982). It migh
estate developers can use their willing participa- earth new conditions under which responses
tion as a bargaining chip and thus steer decision likely to occur, as well as the intended and u
making to suit their private interests (Layzer, 2008). tended consequences of those responses. Furt
In the publishing industry (Thornton & Ocasio, process perspective can foreground the conti
1999) and in multidivisional corporations (Flig- nature of change without assuming or privile
stein, 1987), financial logics have supplanted pro- stability or equilibrium (Tsoukas & Chia, 200
fessional logics through shifts in the balance of Pache and Santos themselves suggested a pa
power among senior managers, combined with nor- way for such work: "Understanding the dynam
mative conformity and imitation at the institutional process through which organizational respon
level. These studies help explain "who wins" shape organizational structure, which in turn i
among competing constituencies hewing to spe- ences subsequent responses, is an important
cific logics. step in uncovering the complexity of institutional
Some research, however, suggests that managers processes" (2010: 473). Followin
may be able to moderate conflict and domination of depict two examples in Figu
particular factions and logics. For example, in mi- identified in prior work migh
crofinance organizations that provide loans to low- tions. This depiction is a star
income clients in the developing world, hiring peo- process-based understanding
pie whose career backgrounds link them firmly to organizations.
either the finance field or the development field In the present study, I dev
can lead to factional conflict and organizational with similar feedback of act
drift toward these individual logics. Hiring (usually conditions for action. The ne
younger) employees without these biases and so- based on a previously unid
cializing them into the hybrid culture may enable a navigating paradoxes that ar
more dynamic and innovative balance between log- tutional logics. This me
ics (Battilana & Dorado, 2010). those depicted in Figure 1, and in the Discussion I
Such managerial actions may occur in the early address how they might be integrated in fa
stages of an organization, as Battilana and Dorado ture work.
(2010) describe, or as a response to competing de
mands ..and identity claims at other moments in e™ci'»u^nir D.DAnnv .Krri
, ,.r rr., ■ 4. n j rr . . SENSEMAKING, PARADOX, AND
organizational
? , j . ORGANIZATIONAL life. Theorists have made CHANGEefforts to oof* * *
categorize such deliberate responses to i
tional complexity (Greenwood et al., 20
facing competing external demands, org
can engage in compromise, avoidance, d
manipulation (Oliver, 1991; Pache & Santos
When facing competing internal identitie
tions adhering to those identities, man
attempt deletion, compartmentalization
tion, and synthesis (Kraatz & Block, 200
Foreman, 2000). Through doing so, orga
may achieve (at least temporary) stabili

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140 Academy of Management Journal February

FIGURE 1
Two Mechanisms of Change in Hybrid Organizations from Prior Literature"

CONFLICTING INSTITUTIONAL DEMANDS: Strategic responses:

Change m Compromise
Combining ^ Conflicting external ^ Strategic ^ organizational Avoidance (decoupling)
logics demands _ response practice and Defiance
identity Manipulation
(Oliver, 1991; Pache & Santos, 2010)

Managerial responses:
PLURALISM OF LOGICS AND IDENTITIES: Deletion
Compartmentalization
... Conflicting internal , Change in Aggregation
Combining ^ demands and identity ► ™*allaSena' fc. organizational
logics , . ' * response practice and Synthesis
° claims r r,
f,
identity Hiring and socialization into new logic
(Battilana & Dorado, 2010; Kraatz
Kraatz&&
Block, 2010; Pratt & Foreman, 2000)

a The two mechanisms are depicted as potentially iterative processes when outcomes feed back to conditions.

search process, the authors helped these managers zational change that is continuous, situated, and
view their dilemmas through the lens of paradox. A emergent (Tsoukas & Chia, 2002; Weick & Quinn,
paradox involves contradictory yet interrelated el- 1999). Slippage in organizational routines and ac
ements that exist simultaneously and persist over tion can occur, and unintended consequences of
time (Smith & Lewis, 2011). As such, paradoxes at action are common. Retrospective sensemaking can
Lego could not be solved but could be navigated reframe such actions and consequences as in
through "both-and" thinking toward "workable cer- tended, thereby changing organizational identity,
tainty" and actions that broke through paralysis. strategy, and practice (Plowman, Baker, Beck,
Smith and Lewis (2011) build on this piece and Kulkarni, Solansky, & Travis, 2007; Weick, 2001).
other studies of paradox to suggest that paradoxes Whereas the exogenous change literature tends to
can be latent in organizations, but be made salient focus on middle managers who are engaging in
through processes of change such as that at Lego. sensemaking amid executive-led change programs,
They surface in the form of ambiguity that demands thig strategic Naming process can more directly
sensemaking (Weick, 1995): an iterative cycle of involve management teams. In this article, I
action and retrospective interpretation to generate show how adox can drive strat ic sensemaking
stable meaning and organized action. Such pro- j , ., . ,
° ° ~ . . . and now this process results m organizational
cesses can occur naturally but may tall into vicious rhRTiPP
,
cycles of "stuckness," confusion, and conflict. r xl , .
r . , j i , j . .... The root cause ot the paradox in the present
Moving toward workability and creative action m , . . f
.1 g r j . ... Iii study is a hybrid organization s combining mstitu
the tace ot paradox requires cognitive and behav- . tip , . , »
ioral complexity (Denison, Hooijberg, & Quinn, tional logics
1995), sometimes enabled by outside assistance, an|J imaki
such as that provided by Lüscher and Lewis as Scholars ha
action researchers. strain sensemaking by providing scripts for action
These scholars'" work contributes to a view of and schemata through which organiza
episodic organizational change as an exogenous nomena get interpreted (Weber & Gl
trigger for sensemaking. Organization members Weick, Sutcliffe, & Obstfeld, 2005). Wh
must make sense amid change efforts that are un- when those schemata generate contradicto
folding and disrupting everyday routines (Balogun pretations for example, defining the s
& Johnson, 2004; Gioia & Chittipeddi, 1991); in the zational outcome as both success an
process, they shape the implementation and out- Weber and Glynn (2006) suggested that
comes of change. In this view, change gives rise to tutional contradictions might be triggers
ambiguity and paradox (Cameron & Quinn, 1988), making, but they do not posit the outcomes
which in turn give rise to sensemaking enabling sensemaking. Smith and Lewis (2011)
action rather than paralysis. that "paradoxes of performing" may occur in organ
It is also possible, however, to see a different izations with a plurality of stakeholders and
causal pathway. Sensemaking can generate organi- and they used corporate social initiatives

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 2013 Jay 141

tential cont
no empirical illustration of the idea. as a gateway for this group of private and govern
My empirical study of the Cambridge Energy Al- ment organizations. In 2006, it set community-level
liance brings to light a specific paradox of perform- goals of achieving "unprecedented levels of energy
ing that I call the "service paradox." The study savings and clean energy" in Cambridge (indicated
develops a process model of how navigating that by 50 percent penetration in both commercial and
paradox leads to iterative organizational change residential sectors, and 50 MW of peak energy use
that at first undermines, then enables, innovative reduction). Yet it was also designed to sustain itself
action. By mapping this process and some condi- like a business with revenue from two sources:
tions under which it occurs, this article contributes mark-ups on energy efficiency projects, and re
to understanding of the organizational conse- wards for greenhouse gas and energy use reduction
quences of combining institutional logics and has created by voluntary and regulatory markets. To its
important implications for managerial practice and individual clients, CE A promised a financial pay
public policy. back and reduction in ecological footprint from
their investments in energy efficiency. Thus, CEA's
RESEARCH CONTEXT AND METHODS tag line was "Save Money. Save the Planet."
Figure 2 depicts CE A in the value chain for en
The Cambridge Energy Alliance ergy-efficient building retrofits, as an alliance a
The Cambridge Energy Alliance (CEA) was ere- rayed in concentric circles,
ated through a partnership among diverse actors: CEA is part of a family of similar initiatives in the
the municipal government of Cambridge, Massa- United States that include the Greater Cincinnat
chusetts; several Boston-area foundations; the local Energy Alliance, the Southeast Energy Efficienc
electric and gas utilities; and a range of energy Alliance, and the Energy Efficiency Partnership o
service companies (ESCos) and financial institu- Greater Washington. I conducted preliminary inte
tions that provide technical and financial assis- views with key personnel of each of these initia
tance for energy-efficient improvements in build- tives but went into ethnographic depth with CEA.
ings. From its inception, CEA combined a logic of CEA involved partners from the government, busi
public service with a logic of client service. It was ness, and nonprofit sectors and therefore served as
intended to be a mission-driven nonprofit organi- a vivid site for the study of hybrid organizations.

FIGURE 2
CEA and Its Exchange Partners®

Value
Value chain
chain for energy
for energy efficiencyefficiency building
building retrofits via CEA retraits
\ via CEA \
*\

vice Providers Energy Users

Small
residential
Direct outreach
Small
Public events
I Public events commercial/
institutional
Peregrine
Membership Large
organizations residential

Large
commercial/
institutional
■v ■■ -

Funders Government Foundations [Private capital 1 1

[ Other
Other municipalities
municipalities and
and observers
observers J Gove1rnment - ] Government

I Nonprofit
sssa J Nonprofit

1 1] Hybrid
Hybrid

a Actors within the solid line represented themselves as part of CEA when interacting with people outside. Fill patterns identify the
primary institutional logic of each actor (see the legend).

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 142 Academy of Management Journal February

TABLE 1
Furthermore, as a context, Cambridge is suppor
Data
of ongoing involvement by all three Sources between July 2008 and May
types of 2010
act
so CEA's hybridity was Source
most likely Number® to be sustain
over the period of observation. Cambridge is pa
the Boston metro area, Interviewees
where there are several
CEA executives and staff 2
anthropic foundations at least partially focuse
Consultants to CEA 6
environmental causes, and a burgeoning clea
City officials 3
ergy industry (Pernick, Wilder,
Potential and actual C&I& clients
Winnie, 11 20
Cambridge is a wealthy, highly educated,
Energy service company partners 8 an
litically liberal community
Utility (BACVR,representative 2005;
1 US
sus Bureau, 2008), withRelated
two organizations
major and initiatives
research in 7 un
Massachusetts
sities providing a strong base of highly trai
volunteers and advisors. In this context, the Cam Related initiatives outside MA, talking about CEA 2
Archival records
bridge city government had made political commit
ments and built a solid administrative infrastruc
Strategy presentations and white papers 6
Grant applications and financing solicitations 5
ture to back environmental initiatives, such as Financial reports 9
biohazard monitoring and single-stream recycling, Tracking spreadsheets/databases for client 3
in addition to greenhouse gas reduction. In this engagements
Client energy audit reports 5
supportive environment, any challenges for CEA
would more likely be attributable to its hybridity.
Meeting minutes 30
Observations
CEA therefore provides a strategic research site
Strategy meetings Sporadic 9
(Merton, 1987) for addressing the questions Board of directors meetings Every 6-8 weeks 9
posed above. Core group meetings Every 2 weeks 27
Observation in office Sporadic 80 (days)
(2-5 hours/day)
Data Gathering
a The total number of interviewees was 40. Archival records
To study how CEA changed over time, I con totaled 58, and observations, 125.
ducted a two-year ethnographic field study. The
theoretical territory of hybrid organizations is still
in its early stages, and the questions I pose are generated useful data about sensemaking processes
inductive, aiming to describe processes of sense as people responded to my interpretations with
making and organizational change. Thus, an induc their own. At the same time, this research ap
tive, theory-building strategy from qualitative data proach—combining elements of ethnography and
is appropriate (Edmondson & McManus, 2007). action research—necessarily introduces biases in
Data gathering included participant observation, the research process. My interpretations of CEA's
semistructured interviews, and archival data anal context, actions, and outcomes clearly affected my
ysis, as summarized in Table 1. informants' interpretations. The key to rigor with
Participant observation. Following some pre this interactive methodology is to be reflexive and
liminary interviews in July-August, 2008, I con transparent about one's own impact, to "triangu
ducted participant observation within the Cam late" insights with multiple data sources, and to
bridge Energy Alliance organization, from consider one's own role when theorizing about or
September 2008 through May 2010. ganizational processes observed (Argyris & Schön,
My participant role was as an engaged organiza 1978; Latour, 2005; Lüscher & Lewis, 2008). I en
tional historian. This meant participating in meet deavored to follow these prescriptions throughout
ings as a note taker and carrying out dozens of this work and particularly in crafting the pro
informal conversations that served as unstructured cess model.
interviews. As I gathered these data about the un Observed meetings took a variety of forms—any
folding organizational history, the "engaged" as time more than two people were having a conver
pect of the role meant periodically sharing my find sation around the CEA headquarters office, they
ings through conversations and written documents. would move to the conference room, and would
Doing so ensured deep and sustained access to either invite me to join or accept my request to join.
people and documents because organization mem The 80 days of in-office observation included many
bers saw my presence as potentially contributing to such opportunities for spontaneous participant ob
organizational learning and effectiveness (Balogun, servation, in contexts where I could observe and
Huff, & Johnson, 2003; Schein, 2007). The interac record people's active sensemaking. With time, I
tive process of sharing findings and reflections also noticed a great deal of repetition in the themes of

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 2013 fay 143

conversatio
were parti
consolidate
sations; th
and issues
These wer
the quarter
board of di
merate in T
field notes
ensure hig
In my info
formants f
me through
ing reflect
tionships,
access and
their genui
"lessons learned," since their mission included Semistructured interviews. For some categories
serving as a "national model"; a belief that I could of participants in the CEA network (particularly
offer value to the organization through my own clients of CEA), semistructured interviews were my
reflections and writing as described above; and a primary means of inquiry. I interviewed each per
nondisclosure agreement that I signed, giving CEA son in the CEA Core Group at least once. I endeav
the right to review my writing prior to publication ored to interview a representative from each niem
and redact any confidential information. My work ber of a category called the "large commercial and
was subject to three such confidentiality reviews at institutional" (C&I) clients. Any time I heard mem
various stages of writing, none of which required bers of CEA mention an important client, funder, or
any deletion or alteration of material. The only partner, I added the latter to my list of interviewees,
material I personally chose to omit concerned iden- Although I was not successful in gaining access to

TABLE 2
Institutional Logics in Cross-Sectoral Hybrid Organizations and Their Instantiation in the Cambridge Ener
Institutional Logic State Market Civil Society

Ideal type organization Municipal government bureaucracy Business firm Nonprofit organization
Normativity/strategicPublic
Normativity/strategic Publicservice.
service. Policy
Policy Client
Client service.
service. Revenue,
Revenue, profit,
profit, Public
Public service.
service. Mission,
Mission, public
public
imperatives implementation, serving value creation. service, solidarity, selflessness.
constituents, accountability. (CEA view of energy users: (CEA view of energy users:
(CEA view
(CEA view of
ofenergy
energyusers:
users: clients
clients whowho
needneed to served
to be be served activist
activist targets,
targets, campaign
campaign
political constituents with the and who should be given participants, partners, and/or
rights and responsibilities of choices) members)
citizenship)
Source of agency/ Coordination of public
public resources,
resources, Salesmanship,
Salesmanship, innovative
innovative service
service Convening,
Convening, collective
collective action
action
capacity to act rule making, enforcement power. delivery. framing, education.
(Primary actors in CEA: city (Primary actors in CEA: (Primary actors in CEA:
officials) consultants) community organizers)
Constraint/structure Law, procurement rules, Rules of the game, scar
transparency to public. attention and resources, stakeholders.
(CEA
(CEA stakeholders
stakeholdersembodying
embodyingbrokerage
brokerage position,
position,
fiduciary
fiduciary(CEA
(CEA
stakeholders:
stakeholders:
Foundati
Foun
constraint:
constraint: budgeting
budgetingbureaucrats
bureaucrats responsibility
responsibilityto to
financiers.
financiers.
donors,
donors,
members,
members,
board
board
of
and officials, city council, (CEA
(CEA stakeholders:
stakeholders: investors,
investors, directors,
directors, 1RS)
IRS)
elected officials, clients, subcontractors, board of
taxpayers/voters) directors)
Time Budget cycles, election cycles. Sales cycles, quarterly reporting. Campaign momentum, tipping
points, grant funding cycles.
Space Public meetings/hearings. Homes and businesses as clients. Neighborhoods, events, intimacy.
Artifacts (carriers) Climate action plan, budgets. Business plan, sales brochures. Grant proposals.

a Conceptual categories are based on Ewick and Silbey (2002) and Scott (2003). Accounts of instantiation in CEA are in italic.

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144 Academy of Management Journal February

all these potential informants, I used snowb

pling from those I did interview, to gain
view of CEA's context and relationships. I cu
ized interview protocol to informant and
sections on career background, experience w
ergy efficiency projects, experience with
bridge Energy Alliance, and reflections on
activities and outcomes. I audio-recorded eac
terview for transcription and qualitative
analysis. clear how effective CEA would be in accomplishing
Archival data. My role as historian gave me ac- its objectives. Whatever occ
cess to documents and archival data sources summa- wanted to be able to explain th
rized in Table 1.1 based sampling of documents on a tion Qf CEA's hybridity.
methodology similar to that for semistructured inter- As time went on, it was po
views: any time I heard mention of a document or jng—identifying more abstract
saw a document in use in a meeting or conversation, that drove recurring concern
I either immediately requested a copy or added it to a include coherent logics behind
list of documents that I requested as a batch. All such business, a nonprofit, or a g
requests for documents were granted. which I depict in Table 2; particu
ments such as "one-stop shop" that seemed
Analytic Methods ganize thinking and action; and debate about how
., . . , to interpret energy efficiency transactions going on
My overall analytic approach was iterative and ^ Cambrid but outside C
abductive, with the goal of building and refining which j coded as «insid
theory from rich case study research (Eisenhardt, in a memo Ume]in
1989). It involved four cascading activities: tagging, r .. , ,
theming, theorizing, and timing. These activities izaiona c a^ges.
ö' . .. . _ Tagging and theming generated over 200 codes,
arose m sequence but continued m parallel as I J, . , ° , . ,
■ j • f u x, • , , J , r many of which did not have clear conceptual
remained in the field gathering data. The nature of , J, . , . T £ ,
j . /? , , ,° . , . boundaries between them. I therefore began a pro
my engaged organizational historian role was that r , ... x . . T „ .
. 1 ,, , . „ j . . T j cess of more deliberate theorizing. I disambigu
there was no complete data set until I exited the , . . , , ?
r. u ,. j A. i ated codes, annotating, consolidating, or deleting
field; coding and theorizing in each phase led to . . , , °
insights that I shared with people in CEA, which
generated further data as I recorded the ensuing boun
conversations and activity. tional logic, I r
I imported all materials (2,000+ pages) into a helP
database using Atlas.ti version 6 (Muhr, 2011) qual- som
itative data analysis software. It enabled me to code a
passages within documents, query and visually vie
map relationships between codes, and autocode codes
text based on search strings. It also served as a Conc
repository for regular memos as I analyzed data cont
throughout the study period. play among C
My first pass of analysis focused on tagging. I th
coded large sections of my field notes into interac- outs
tion types, including board of directors meetings, energ
Core Group meetings, meetings with ESCo part- rec
ners, client meetings, informal conversations, and a
ethnographic interviews occurring spontaneously CEA
during my observations. I did grounded coding izati
(Glaser & Strauss, 1967) of key recurrent topics of failur
conversation, such as specific relationships with The
clients, partner organizations, and the city govern- Cam
ment, and how CEA portrayed its organizational way to
identity. I did some theory-driven coding, related an ext
to CEA as a hybrid organization. The guiding re- nizing.

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 2013 Jay 145

and to CEA
helped clari
In parallel w
day, in-pra
CEA actors,
tional chang
ORGANIZATIONAL CHANGE IN CEA
and describe
trends, I de
based on sen
To help valid
timing activ
Atlas.ti, I c
which show

TABLE 3

Phases of Change in CEA and the Role of Sensemaking about Paradoxical Outcomes
Phase 1: Phase 2: Phase 3:
June 2006 to May 2009 May 2009 to December 2009 December 2009 to May 2010

Initial/revised framing and strategy

Organizational logic Client service business. Public service nonprofit. Complex hybrid organization.
Founder: "I really wanted CEA to Ex-CEO: "CEA is starting to look Founder: "It's a very different
be private sector based, because more like a traditional nonprofit organization from what we
unless people in the private organization." envisioned a few years ago. More
sector are making money doing realistic, more adaptable to
things, you can't reach scale." conditions on the ground, and
more useful on the national
stage."

Identity framing One-stop shop. Laboratory/experiment. Catalyst.

CEO: "We have 5 ESCOs under Ex-CEO: "We are using CEA as a Client manage
contract with us as a one stop national laboratory." trying to be a catalyst. We are
shop program. . . . With one trying to be the thing that is
phone call you get audit, added to this mix of ingredients
financing, project management, that causes something to
oversight." happen."
Financial strategy Loans to finance C
from ESCo projects; grants to and consulting client fees,
taper.
Initiatives and actions Attempted sales of ESCo and Grant application to serve as CDM deal closed; CHeA project
finance services to clients via laboratory and national model, with MIT students proposed. Life
client managers. advising other cities based on sciences lab energy project
CEA learning. formulated. Small business
recognition program launched.
Outcomes and sensemaking about them
Paradoxical outcomes Residential customers do audits Gamma does audit but implements Alpha
but put projects out to bid, late internally, 11/2009. internally, 5/2010
2008.
Beta does audit but works with
other ESCo, 3/2009.
Sensemaking about Client manager: "We took such a Ex-CEO: "Documenting what Client manager: "I think [Beta]
success and failure hit with Beta and Epsilon that you've done is as important or should be viewed as a success. I
we really put on the brakes to more than what you accomplish. mean ... it doesn't help us, our
say what can we do differently. Test tubes. Laying down body of bottom line, but that's not the
We need to get people together to knowledge." purpose. We are trying to get
absorb these failures, and get people thinking about it and
common thought on how to taking action regardless of how
proceed and then proceed." they get there."
Founder: "[Alpha] could
win-win-win."

Significant personnel Outreach coordinator hired 1/2009; Energy advisor hired 6/2009;
changes CEO Johnson resigns 4/2009. coexecutive directors, 12/2009.

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146 Academy of Management Journal February

institutional logics (Ewick & Silbey, 2002; G

1984; Scott, 2003), and (in italic) the actors
relevant to these dimensions. It borrows fr
conceptualizations by scholars studying the
between business, government, and nonpro
izations (Bryson, Crosby, & Stone, 2006;
2006; Waddell, 2005). key mechanism of change. Combining logics of
As its work evolved, CEA experienced three public and client service created the serv
phases of change characterized by a shifting bal- dox, an example of what Smith and Lew
ance among these logics. In Phase 1, CEA empha- called a paradox of performing. This pa
sized the one-stop-shop framing of its identity and faced when CEA unintentionally catalyzed
a business logic. In Phase 2, CEA framed itself as a efficiency work outside its client rel
laboratory, a logic associated with being a grant- Within ^ insütutional logic of a clien
funded nonprofit. Phase 3 was a period of more , ., . j. . & . t -i
, , r \, . business, these indirect ettects are seen as failure
balanced, complex hybridity, framed by the idea ot , ., , . , ,
. . i mi i , / . , because they do not draw revenue. Withm the pub
beme a catalyst. These phases are hard to precisely ,. , . . ..
, t. ° !,i , ,, L , , xl ■; lie service logic ot nonprofit organizations or gov
delmeate: although there are marker events that . , ,
, i j r. ., , ., . .. r., • ernment agencies, they are seen as success because
help dehne them (e.g., the resignation ot the CEO m , , ° , .. , _ .
a -l onnn 4l • r -u i f they advance city-level climate goals. This ambigu
Aprii 2009, the reorganization ot responsibilities . J , , . • i
among the staff in December 2009), these events ^ triggere
both signify and precipitate change. They represent sou§ht to
fuzzy but analytically useful boundaries in a pro- they init
cess of continuous change (Tsoukas & Chia, 2002). rentlY dom
Table 3 depicts these phases. ganizational identi
It is also possible to visualize the changes structural ch
through the results of my autocoding in Atlas.ti. They to
Figure 3 depicts the frequency with which the three comes, c
characterizations of CEA appeared in my primary became m
documents (interview transcripts, field notes, and these sh
archival documents). It shows that one-stop shop or suppor
laboratory/experiment was prevalent throughout spectives—
my observation period as the description of CEA. reflexivity.

FIGURE 3
Results of Autocoding for CEA Being Described as "One-Stop Shop,"
"Laboratory/Experiment," or "Catalyst"3
0.6
PHASE 1 PHASE 2 PHASE 3

0.5 *
I
I
0.4 1 I
I ♦ One-stop shop
I
Mentions/Primary ^ I 1 < Laboratory
Document I
I — -p- - Catalyst
I
0.2 I X
M V A I /
I /
0.1 I /

0 "1 fl| V m

C?5 0$ cfc ^
,cr <vd> ncr n?r ^
J? ^ ^ ^ ^ ^ ^

Time

' Primary documents included interview transcripts, single days of field observation, and archival documents.

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 2013 Jay 147

FIGURE 4
Navigating Paradox in Hybrid Organizations: A Process Model
External

Organizational identity perspectives

and dominant logic (e-8-> clients,
(e.g., "one-stop shop,author
t i• j i• i ,, , . . / "laboratory," "catalyst")
Institutional Combining '
opportunity institutional logics Maintenance, editing, (Re)int
(e.g., climate in hybrid or invention of as succes
change &■ orgamzation \ new orgamzational failure
energy (e.g., public-private \ identity
efficiency) partnership) \ I
\ \ ., Paradoxical
1 \ New actions
V , outcomes s „ . .
"Navigating" here is a delibe
metaphor. The image is that
paradox beneath the surface of the \ ^ le-8-> clients,
water. Now and again it surfaces, in \ J competitorsJ
prominent moments of success and \ Latent Emergent patterns:
failure or of their imagination. Unaware \ paradoxes of Stuckness
Oscillation
of the shape of the paradox, people > performing
run aground on it and get stuck. (e.g., service Splitting/differentiation
Behavioral complexity and
Aware of it, they find creative routes. paradox) innovation
An outsider above the scene—a
(Lewis, 2000; Denison,
customer, a researcher—can
Hooijberg, & Quinn, 1995)
help point out the paradox (hopefully
in time).

In the sections that follow, I describe the three depicted in Figure 2. Although CEA did not have a
phases of change in CEA's organizational logic, fol formal mission statement in Phase 1, an approxi
lowing the elements of Table 3 and, Figure 4: the mation of such a statement can be found in a doc
organizational identity at the outset of each phase; ument dated May 2007.
the paradoxical outcomes in that phase; and the
The Cambridge Energy Alliance (CEA) is a new non
process of sensemaking and transformation to the
profit organization affiliated with the City that will
next phase. design, market, finance, manage, and document un
precedented efficiency improvements in the use of
Phase 1: One-Stop Shop Identity and energy, water, and transportation. The CEA will
carry out a massive $100+ million efficiency effort
Business Logic
offering new technical services and financing op
CEA was founded after two employees of the City tions to residents, businesses, organizations, and in
of Cambridge approached Sam Quinn2 at the Ken stitutions. Where feasible, the CEA will also support
dall Foundation in June 2006. The City had set a installations of new renewable and clean energy
target in 2002 of 20 percent reduction in green generation, and technologies that curb electricity
use during peak demand periods.
house gas (GHG) emissions by 2010 and had in
vested in some municipal energy efficiency proj Here we see the organization presenting itself as
ects. Its assessment of 2005 emissions, however, a "nonprofit organization affiliated with the City."
showed them going up, not down, and these em Said one founder, "We want the City's name be
ployees sought help in reaching the original target. hind it." At the same time, the founding team e
The City and Foundation jointly convened a visioned an organization clearly separate from th
group of energy efficiency professionals and entre City bureaucracy. They wanted an enterprise tha
preneurs. These advisors developed a business would be autonomous, flexible, replicable in othe
plan and established the idea of a cross-sectoral cities, and private sector oriented. CEA founde
Cambridge Energy Alliance described above and Sam Quinn explained:
I really wanted CEA to be private sector based, be
2 All persons' and nonfocal organizations' names in
cause unless people in the private sector are making
this narrative are pseudonyms. money doing things, you can't reach scale. It's pretty

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 148 Academy of Management Journal February

clear that energy efficiency is only going to

a truly impactful climate solution if the m
opens up and businesses profit by doing
right thing. Results from the field, however, gradually re
in keeping with this business logic, the founders' vealed that something else was going on. R
intention was for CEA to seek revenue from a 5 tial customers were calling CEA to do e
percent mark-up on energy efficiency retrofits and dits, then taking the suggestions t
from payments from government-created markets contractors for bidding in a search for th
for energy demand reduction and greenhouse gas price. CEA managers saw this as a prob
reduction. Revenue would come from a mix of pub- a conflict between its public service miss
lie and private actors but followed a fee-for-service need to sustain itself as a business. This s
logic, rewarding CEA for its efforts to "design, mar- from a Core Group meeting (12/2/08) illu
ket, finance, manage, and document" efficiency im- Person 1; Lefs keep in mind that projects [d
provements. Figure 3 shows that CEA frequently others' resources] don't produce revenue to
referred to itself as a "one-stop shop" for energy
efficiency. Person 3: From an organizational mission stand
Given the intention to generate revenue as a P°|nt- it>s ri8ht to do' but * doesn,t c
business would, the founders pursued financing a e entlty'
through private sector loans that could be paid off The following day, in a residential s
with interest as the organization grew its fee-based ing, participants said,:
revenues. Foundation and government grants were
intended to taper off over time. A seven-year financial f8ts0° f know people are doing
forecast dated May 16, 2008, presents this original ,ems but °ot usmg ICEA partoerl to
model. It anticipated $442K in fees for 2008, ramping Person 4: We can still capture that
up to $4000K by 2014. Grant revenue was anticipated _ „ ,, , , r __ . ^ . ,
, , , p T, Person 2: Yes but need CEA partner to be compen
to taper down from $100K m 2008 to $50K per year
by 2010. After seven years, at the end of 2014, CEA reve
would have paid off its debt and reduced GHG emis- o
sions in Cambridge by 10 percent.
In 2007 and 2008, the CEA founding team based Person
their work on this original concept, selecting an succe
array of energy efficiency companies and securing
ii.i i r- ■ t ,i r- , . „„„„ heating system but not through us then we lose
debt-based financing. In the first quarter of 2008, n Z , .,
, 0 , " track. Or massive uptick in audits in Cambridge.. ..
they begin outreach to large commercial and insti- what are our measu
tutional clients, an effort that accelerated when
Keith Johnson, hired as CEO in July of 2008, made This final question captures the essence of the
it a focus. In September 2008, they launched their problem. What can CEA count as success, given the
residential outreach program. Soon, however, they mix of a public logic that dictates reducing energy
began to confront paradoxical outcomes of use throughout the community and a private logic
their work. of achieving financial sustainability through trans
actional revenue with particular clien
should it make sense of indirect effects and their
„ j . , _ x „ paradoxical meaning?
Paradoxical Outcomes m Phase 1 r . ^ ° ™, . .,
After these conversations
Residential sector. CEA's outreach to homeo
ers began with a tripartite offering: a free hom
energy audit; installing or arranging for installa
of home energy efficiency measures such as
lation, air sealing, and heating system upgr
and financing for such measures via CEA pa
ships with two local banks. Originally, CEA a
ipated that customers would sign up for financ
and installation both because of the convenie
involved. Economic and policy analyses of ene
efficiency have indicated that transaction cos
a primary barrier to action (Brown, 2001). C

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 2013 fay 149

markets lik
operating w
vices, buyin
public good
such, these
private tran
outside its u
improvemen
Thus, CEA g
"attributes
CEA gradua
their missio
citizens of C
and perhap
actions did
Instead they
to frame th
success. On
utility NST
increase in
through NS
energy use
in aggregate. ysis of the facilities was incorporated into the final
Such grants would require CEA to perform can- scope of work that the chosen ESCo wo
vassing and community event activities as well as expanding the range of efficiency
demonstrate contribution to citywide carbon and be done.
energy reduction goals. They would not, however, CEA managers did not see it this
create accountability based on individual transac- initially. The Beta case was experie
tions with homeowners—they aligned with a pub- mendous blow. It came one month
lie service logic rather than a client service busi- client, Epsilon, opted to implemen
ness logic. Paradoxical outcomes in the residential ciency projects internally rather t
sector therefore contributed to the transition from thus removing a second anticipated
Phase 1 to Phase 2 and the ascension of a nonprofit enue. CEA s CEO resigned from h
institutional logic, as depicted in Table 3. tion to reduce the organization's op
Large commercial sector. CEA's engagement and keeP * viable and took an unPaid
with large commercial, industrial, and institutional the board of directors' A conversatio
(C&I) energy users also began to produce paradox- the, remaining management team
ical outcomes that were pivotal to its organizational mak? sens,e of this outc°m(; and how
transformation from Phase 1 to Phase 2. CEA ini- ward' A client mana8er had this to
tially pursued these clients with a strategy aligned We took such a hit with Beta and Eps
with the institutional logic of a client service busi- really put on the brakes to say what
ness. It employed client managers with sales back- differently. . . . We need to get peopl
grounds who developed increasingly detailed absorb these failures, and get common
worksheets for tracking the progress of individual how to Proceed and then proceed,
projects through a sales cycle. Within a private sector, client service logic
This outreach to C&I clients was not, however, (CEA's interpretive frame in Phase 1), Beta w
altogether successful. Like the residential clients, failure, one that required active sensemaking.
several key C&I clients engaged CEA for energy
audits and advice but chose a different energy ser- ,
vice company for implementation. Some decided Sensemaking and Transformation to Phase 2
to conduct projects using internal resources or in- In the meetings and backstage conversations th
dependent contractors. In these cases, CEA had followed the Beta "failure" in the spring of 2009
made an important contribution to the client's en- CEA began reconsidering its approach to engaging
ergy efficiency efforts, but one for which CEA was and servicing clients, and in fact all aspects of t
not compensated. business model: its value-added and mark-up; the

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 150 Academy of Management Journal February

types of clients it pursued; and the quality

service delivery partners. CEA gradually set
a new strategy for large C&I clients. Rath
approach clients immediately with ESCos,
chose to take a more consultative approac
offer services with less intensive financia
physical capital investment, such as runn
ployee behavior change campaigns, that w
avoid placing CEA in direct competition with 501(c)(3) status with the 1RS, a key institutional
other ESCos. signal for nonprofit organizations. Their idea was
This shift in business strategy occurred as part of to depict the organiza
a wider reframing of the CEA organization and grants than it had be
Cambridge itself as a "laboratory." Although the ization had begun,
idea of CEA as an experiment or a laboratory had
been used in Phase 1 (see Figure 3), here it became „ T i_ TJ j r
. , j . . p ° Phase 2: Laboratory Identity and Nonprofit Logic
a central descriptor ot the organization among the J J
organization's senior managers. They framed fail- During Phase 2, dis
ures as necessary parts of a learning journey, new coming government and
approaches to the market as experiments, and the dominate the first half o
ultimate goal of the organization as developing meeting, an emphasis th
knowledge for the wider public. Core staff even and continued through
talked about bringing on a high-level volunteer to significant nongrant
explicitly strengthen that identity: period came from credits from the Forward Capac
, . „ . „ ity Market (FCM; a power industry mechanism to
Person 1: We could set a chief scientist—if Cam- . ... .. , .
, , . incentivize energy generation and efficiency m
bridge is laboratory, make sure we are learning. ... , . , . . fr . ,, /
Extends the metaphor. . . . Documenting what vestments), bu
you've done is as important or more than what you efficiency pr
accomplish. Test tubes. Laying down body of came from a q
knowledge. Energy Advisor tracking calls, what do- large C&I cli
ing, what works and doesn't. Experience. investments and chose not to participate in this
market themselves.
Person 2: Hypothesizing and testing, and moving on Personnel changes further reflected this shifting
when you ve learned. , . . , .. .. .
emphasis toward
During the same month, this ide
as laboratory underpinned CEA
grant from the Kresge Founda
would support CEA's staff in edu
ing other cities around the Unite
could replicate CEA but also lea
lenges. Cases such as Beta were
failures, but as failures from wh
could learn as CEA disseminate
CEA's founders also began to r
lidify some more structural chan
zation. Two distinct groups had
tinct logics and strategies: a sm
community outreach apparatus
consulting practice. While the
was being developed, the basic
tween the "small" and "large" businesses had Paradoxical Outcomes in Phase 2
flipped from its original business model: CEA had
assumed the large would subsidize the small, but During this second phase, CEA experienced a par
now grants acquired to support the small were sub- adoxical outcome with one of its largest potential
sidizing the development of a new model for the clients, Gamma. Gamma invited CEA to conduct free
large. This basic fact led to acknowledgements at energy audits on some of its facilities, then broke off
board meetings that CEA was coming to operate the engagement to conduct the recommended proj

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 2013 Jay 151

ects with th
rial resourc
mented proj
from CEA. I
support it f
munity org
its. Yet they
sidered part of the community campaign to promote . ., rTJ » i ,,, .t ,,
r-~ . , , , , . „ r Author: [BetaJ could be seen as a success or it could
energy efficiency and demand reduction. One repre- be seen ag a fai
sentative from Gamma said:
Person 2:1 think it should be viewed as a success ...
I think there is a lot of opportunity for CEA to reach it doesn't help us, our bottom line, but that's not the
their goal without necessarily doing it themselves. purpose. We are trying to get people thinking about
And I think that has been . . . sort of a sticking point and taking action regardless of how they get there,
for me. Whatever we do, if we reduce our demand,
that will represent a significant decrease in green- Person 1: Because when we say "one-stop shop" I
house gases in Cambridge. And CEA won't have had question that. I think we are trying to be a catalyst,
to do very much. Perhaps they should embrace that We are trying to be the thing that is added to this
a bit more But my impression is if they don't do mix of ingredients that causes something to happen.
it, they don't want to have anything to do with it. There are a lot of ways we can do that, but when we
That's not a good city goal. They should be looking say "one-stop shop" that implies that we step up
at what I call the " parasitic opportunities." Not and we command everything and that is never going
trying to control that, as much as encourage and to be the case.
support that. Person 3:1 think that notion of being a catalyst is a
The Gamma quote further illustrates the contra- good one It's not just CEA making stuff happen.
diction at the heart of CEA's hybrid identity. As a There is stuff happening at federal and state level,
public service organization, CEA had city-level tar- There is municipal policy. There are other private
gets in terms of energy reduction (50 MW of peak initiatives. . . . The mission could/should address
... , .j j that context or include that context and talk some
load], penetration (50 percent of residences and , . ™A, , . . , .
, . r , . , . thing about what CEA s role is as a catalyst,
businesses], and capital investment ($100 millio
of investment mobilized). These could be reached
through a variety of means, including persuasion, P
education, policy design, and advocacy. Direct im- c
plementation is but one strategy. From this logic of
public service, "parasitic opportunities"—claiming
credit and press for others' work—would mean sue-
cess. On the other hand, CEA is a client service w
organization, with a business model dependent on de
project revenue to sustain its operations and pay of
its debt. From a logic of private service, "parasitic j
opportunities" are seen as failure and exacerbate
financial troubles. Thus, as CEA focused on oppor- c
tunities for fee income, they created the impressio
that "if they don't do it, they don't want anything t
do with it." The difference in Phase 2 was that they
framed such failures as a valid and important par
of being a laboratory and secured grants to support
communication of lessons learned. though
Person 6: We do get criticized
Sensemaking and Transformation to Phase 3 tha
anything, we are just recyclin
Gradually, however, CEA began more explicit
reflection on its definition of success and failure. In P
the late fall of 2009, I distributed a paper I h
written in which I began to identify paradoxical
outcomes and the challenge of interpreting them. h
This was the first encounter that members of CEA

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 152 Academy of Management Journal February

CEA continued to wrestle with what it mig

to give (or take) credit for others' actions, a
sustain itself as an organization in doing s
core staff explicitly reflected on the questio
began to more directly confront the tension
the institutional logics at play in the organi
doing so they produced a new, more complex
sis emerging from the idea of being a ca
CEA's direct involveme
said CEA would happily
Phase 3: Catalyst Identity and Complex H
L0gjc and the electric utility seeking to encourage effi
ciency efforts in Cambridge.
This synthesis appears in the May 2010 redraft- In this context, innovative initiativ
ing of CEA's mission statement: emerged, as described in Table 3. Fir
cessfully closed on an energy efficiency retrof
The Cambridge Energy Alliance confronts Climate ject with j commercial client,
Change by educating, inspiring, and assisting resi- of fee_based revenue th h
dents and businesses in Cambridge to improve the ,. . , ...
ff. . ,, . i. j j Phase 1. The client, an engineering and consulting
ethciency ot their buildings and reduce their ch- . . ° . ° b
mate impact. We work to overcome barriers that firm w
prevent people and organizations from implement- munit
ing efficiency measures in their buildings through CEA a
programs, outreach, and financing; creating new so- money on energy.
lutions to old problems. We work to share our sue- Second, CEA initiated client work that leveraged
cesses and our challenges with other communities its role as a community organization. It tried to
so that Cambridge can be a model for energy effi- broker a relationship between the Cambridge
ciency to communities across our nation. Our goal is Health Alliance—a potential customer for its new
transformational change of buildings and organiza- consulting services-and business students in a
tions so that energy efficiency and conservation is course on SUstainability. It also pursued an engage
realized across our society. ment ^ ^ Camb/dge Publfc Schools tQ ^
It is worth noting a few changes from the earlier with high school students in supporting energy au
statement to this one. In May 2007, the key verbs dits in both then homes and the school buildings,
were "design," "market," "finance," "manage," and Third, starting in early 2010, CEA began crafting
"document" (energy efficiency improvements), all a special program focused on laboratory energy use.
denoting processes associated with being a client Research laboratories in universities and life sci
service business. By 2010 the key verbs became ence companies account for the largest concentra
"educate," "inspire," and "assist"; "overcome" tion of energy use and greenhouse gas emissions in
(barriers); and "share" (successes and challenges). Cambridge. Their ventilation systems, however,
The mix of practices and goals could now include present unique challenges in energy engineering
grant-funded education and outreach, client-funded and in health, safety, and environment (HSE) com
assisting, and attempts at more systemic change. pliance. CEA realized that it could convene com
A set of structural changes served to balance panies, universities, energy experts, and City HSE
these client-service and public-service lines of ac- inspectors to tackle these challenges. Through its
tivity. In lieu of hiring a permanent executive di- ties to the City of Cambridge, CEA secured the
rector or CEO, the board of directors named the commitment of HSE inspectors to participate and
three core staff members as coexecutive directors in give laboratory organizations leeway for experi
early 2010. One would focus on managing large C&I mentation. Eventually, as laboratories pursued en
client interactions. The second would focus on res- ergy efficiency renovations, CEA hoped to be in
idential and small business outreach. The third volved as a service provider. This program design
would manage FCMt projects, finances, and report- combined the practice of consulting and client ser
ing requirements for CEA's grants. All staff and vice with the practice of community organizing,
consultants began logging their hours and activities thus integrating diverse bases of knowledge within
and internally billing time against either client CEA's team.
projects or grant-funded projects, such as commu- Finally, a shift happened in discussions about a
nity outreach in Cambridge or advising other possible recognition program for participants in the
communities. CEA program. This idea had long been held "on the

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 2013 Jay 153

back burne
nexus betw
"gold seal"
and storefro
as clients, o
benchmark
efforts be
CEA umbre
portunities
nition progr
2010 for pi
of the year.
munity bloc
ment, rout
The commo
closer synth
ics within t
before. They
ward servin
Cambridge b
CEA's disti
through its
they brough
in new ways
use and gre
homeowners
did not solv
which were
and operated
enue. They
innovative
combining
dox as
DISCUS
" " " 'time" (2011: 387). In the case of the service para
As a public-private hybrid organization, the Cam- dox, those elements are "the client" a
bridge Energy Alliance combined multiple institu- lie," the foci of service in CEA's m
tional logics under a single organizational roof. Given tional logics. The client-public relat
prior scholarship, we might expect these competing instance of a "part" and a "whole": C
logics to manifest as competing demands by external serve individual clients and, throug
constituencies (Oliver, 1991; Pache & Santos, 2010), whole Cambridge community and,
or competing priorities and claims about organiza- the planet. Smith and Berg (1987) iden
tional identity among internal constituencies (Glynn, and wholes as constitutive of many
2000; Kraatz & Block, 2008; Pratt & Foreman, 2000; cause they define one another—t
Zilber, 2002). These models (represented in Figure 1) interrelated—yet they can appear in
portray administrative leaders (Selznick, 1957) as me- or conflict in the course of group,
diators or negotiators among these constituencies. Or- and social life.
ganizational change occurs through episodic manage- The service paradox remains latent i
rial actions that compromise, avoid, defy, and an organization with dual client servi
manipulate external demands, or moves that delete, service missions. It surfaces from ben
compartmentalize, aggregate, or synthesize internal ters and demands navigation whe
identities. pear as both success and failure. In CEA's case, this
Through ethnographic analysis of CEA, I have occurred when it uninte
developed a process model of another, complemen- ported or enabled) tran
tary mechanism of change, one that is more inter- outside its umbrella of cli
pretative, iterative, and emergent in its emphasis actions are considered su

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154 Academy of Management Journal February

vice mission but failures for the client serv

sion. Ultimately, CEA navigated the parad
increasingly recognizing such catalytic act
intentionally fostering it, perhaps moving
what Waddock and Post (1995) call a "catal
alliance." The test of a first-rate leader may be the ability to
It is important to note, however, that this more exhibit contrary or opposing
innovative phase of navigation occurred after CEA ate or necessary) while still r
had exhibited some hallmark patterns of an organ- of integrity, credibility, and
ization grappling with paradox as characterized by tive leaders are those who h
Lewis (2000) and named in Figure 4. These patterns behavioral complexity to resp
show that innovation is by no means a guaranteed wide range of situations.... I
outcome of hybridity and navigating paradox. environment, then it must be r
The first emergent pattern was stasis, or "stuck- (Denison et al., 1995: 526
ness, a state in which people reflect on their situ- j suggest that CEA began
ation and realize that any action will have contra- form of behavioral comp
dictory effects. CEA had recurring discussions creatiye and d ic synt
about a recognition program for homes and small government, and nonpro
businesses investing in energy efficiency; a market- , . A ,. . ■, c_ . , , . ,
. 6 ., r. pie in CEA directly confronted and accepted the
me consultant proposed this idea m CEA s first , . , , . , . , . ,
° . , . , , . , , . . ambiguities involved in paradoxical outcomes, and
year but it had yet to be implemented three years . ° . , . , . , , r
i they explicitly articulated a more complex framing
later. Allocating resources to such a program meant . . , VT r . °
confronting a question at the heart of the service of ŒAJ L
paradox: Should CEA recognize projects it did not emer8ed tha
implement? service with the capability for community organiz
A second pattern is for individuals or groups of This is exactly the kind of innovative recom
people to reframe or escape the contradiction in bination that Stark (2009) called the sense of dis
such a way that one or the other side is no longer sonance. External perspectives from CEA
the actor's responsibility, a phenomenon described clients, filtered through my writing and conversa
as "splitting" (Smith & Berg, 1987). Structural dif- tion as an engaged researcher, partly enabled this
ferentiation can result, in which organizational more complex thinking and innovation. At the tim
subunits pursue contradictory strategies. In CEA's of observation, however, most of these innovations
Phase 2, the small residential team adhered to a were in the proposal stage, leaving open the possi
public service logic, while the large C&I team fo- bility that unintended outcomes might spur further
cused on client service. The important feature of sensemaking and transformation. The process of
this intraorganizational division, however, was that change is ongoing and emergent (Orlikowski, 1996;
it only arose after paradoxical outcomes were inter- Tsoukas & Chia, 2002; Weick & Quinn, 1999).
preted as either success of mission or failure of CEA's pattern of oscillation and then synthesis
client service delivery. The division dissipated follows a sequence of events similar to that d
when people began to understand outcomes in the picted in Gilbert (2006). That study showed tha
more complex frame of CEA as a catalyst with competing frames (of threat and opportunity from
multiple definitions of success. new technology) could eventually coexist among
Temporal splitting, a third pattern, results in an seniQr ^ who were «above the fray» of ev
oscillation behavior in which the actor alternates d decision maki ^ Gilbert> l la d an
between polarities (Johnson, 1996; Lewis, 2000). . ., ,
j. . . ,.r .. ' . , . . . . insider-outsider role m the studied case. The man
We see this m the life of CEA, which began by r^A. j
.tl , j , agement structure of CEA s coexecutive directors in
asserting city-level goals, then developed a fee-for- J? „ r . , , , , A ^ „ , ..
service business model, then oriented itself toward Phase ? enabled what Gilbe
grants to support its operations with less direct team frame integration. It is impo
client accountability. The process model devel- however, that what Gilbert identifie
oped in this paper helps explain how such oscilla- might be more properly termed
tion can occur, as we see in the shift from Phase 1 structural differentiation, since it i
to Phase 2. ent organizational divisions holding the competing
Scholars of paradox have differed among them- frames. Owing in part to CE
selves as to whether and how any lasting résolu- integration and synthesi
tions of paradoxes might be possible. "Workable Gilbert's field site.

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 2013 Jay 155

Implications for Theory For institutional theorists, further work is needed

m,. .. i a- . . , . .. to integrate the process model in this study with
This article otters an important contribution to , . , ,. r. , . . . , J ,
i . j . .. i .. mechanisms identified m prior work, such as those
scholarship on hybrid organizations and organizing . . . . _■ , ,
•j • . • i , ., j . , depicted in Figure 1. How do managers make sense
amid institutional complexity (Greenwood et al., .r . . ? . , ° ,
on-i-i-i I* j i .. .. , , t of paradoxical outcomes when they have external
2011). It develops an iterative process model of r . . .... ,
change in hybrid organizations, showcasing the actors mak
value of process-oriented research and theorizing. ?eir beha™r,
The model features an interpretative process differ- factl°n
ent from prior mechanisms of change that the liter- be ,u
ature has described, such as external institutional bem§ "holo
shock, power struggles among internal and external organiza
factions adhering to particular logics, and episodic overa 1 ldent
responses to conflicting demands (Fligstein, 1997; tion did no
Glynn, 2000; Pache & Santos, 2010; Thornton & even when
Ocasio, 1999; Zilber, 2002). In the interpretative residential a
process I describe here, change occurred as people more interpr
invented new ways to frame their organization-as phasized w
a "one-stop shop," then as a "laboratory," then as a however, if
catalyst—when they confronted the latent para- P^e en8ag
doxes of a hybrid organization. Rather than ex- (Kaplan, 200
plaining "who wins" in a process of contestation, pretive app
this mechanism explains when people may be ex- ^he both-an
pected to take innovative action at the nexus of through act
multiple logics. ganizational conflict and transform power struggles
The findings are therefore important for scholars identified in prior scholarship? This is an impor
interested in sites of innovation, and for addressing tant direction for future empirical research, which
the possibility that combining institutional logics could be done through a similar style of research in
might generate novel practices and organizational a more contentious context. Theory development
forms (Murray, 2010; Stark, 2009). The case of CEA through such work could yield a more comprehen
suggests that combining logics does not always lead sive process model, one that integrates elements of
to innovation; instead, it can lead to stuckness or the models forwarded here in Figures 1 and 4.
oscillation between logics. Innovation, as in the Another direction for institutional theory is to
Phase 3 of CEA's development, seemed to occur to further explore the idea that institutional logics do
a greater degree when people were reflectively n°t necessarily compete, contradict, or conflict
aware of latent paradoxes and had linguistic hooks, continuously. Multiple logics can create latent par
such as "catalyst," to describe a way through them. adoxes (Smith & Lewis, 2011) that only surface at
This more complex understanding of organiza- particular moments in time. In CEA's case, those
tional identity created a space for combining di- moments involved particular unintended conse
verse forms of tacit knowledge (Stark, 2009), in- quences of organizational action that appeared as
eluding consulting and community organizing in both success and failure through the lens of mult
laboratory energy use. It is for future researchers to pie logics. These consequences were particularly
further operationalize and quantify this capacity salient for CEA in the context of resource scarcity
for reflection on paradox and (through comparative and thus an imperative to avoid failure. This find
study) to more systematically assess its contribu- ing suggests a need to identify not only the "re
tion to innovation. sponses" to competing logics, but also the condi
More generally, other moderators and interven- tions and processes throu
ing processes for innovation may exist in hybrid competing in the first pla
organizations, and these will be critical to explore. 2011). Resource scarcity—
Scholars and practitioners often laud the trend of (2011) identified as trigge
creatively melding elements from business, govern- may be one such condition.
ment, and civil society organizations (Senge, potentially quantitative style
Smith, Kraschwitz, Laur, & Schley, 2008; Waddell, relevant (Edmondson & McMan
2005). They do not always identify the challenging when hybrid organizations c
organizational processes behind realizing that ere- contradiction, confusion, a
ative potential. tively smoother sailing.

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156 Academy of Management Journal February

Limitations and Additional Directions more useful. In the domain of energy efficiency, by
for Future Research contrast, such conflicts are not nearly as overt. Ef
. .. , , . ficiency retrofits in buildings have a dual public
This article presents an exploratory, theory- , . . , . . ,
, r. . , . , . ™. . . and private benefit, yielding both cost savings and
building field study, using CEA as a strategic re- „ , .. 7, . ? ,
i -, ,w x „ • . pollution reduction. So too m other domains where
search site (Merton, 1987) tor answering questions .. . ,, , . , , . ,
, . , . . . . . t.. . actions can yield public and private good: agricul
about hybrid organizations that combine institu- . ^ ° , ,,
, ,J . 4 , . , , , . , . . ture practices that reduce input costs and poliu
tional logics. As hinted above, the model devel- .. f . . . t f .
, . ° . . .. , . tion; process safety management in manufacturing
oped here must be tested and refined m other con- , . , . .. ,
1 . „ , , that saves lives and equipment; preventative health
texts to more fully establish its validity and measures t
generahzability In particular four features of the als and
CEA context and this research study bear mention effort
as particu arities. good might proceed with
First, Cambridge, Massachusetts, is not a typical actors
town-as detailed above, it has plentiful resources shouldbe
and political support for energy efficiency initia- whole reia
tives. On the one hand, this means that I can more which
easily attribute CEA's challenges to the paradoxes primari
of hybrid organizing. On the other hand, the con- conflict,
text supportive to CEA is also supportive for com- Comparat
peting energy service companies and contractors. problem
This fact may therefore increase the likelihood of Finally
transactions occurring outside CEA s client service active ref
relationships, and it may thereby make the service their
paradox more salient. Studies of similar initiatives plex, inno
in other contexts might show whether competitive logics. W
context moderates the effect of the service paradox occurred
on the life of hybrid organizations. tion as a resea
Second, it is worth noting CEA s particular strat- in-pro
egy for solving the problem of energy efficiency: to their at
directly engage clients and encourage their invest- success
ment in energy-efficient building retrofits. The ser- sensema
vice paradox might play out differently in other from phase
organizations, for example one that conducts ipant obser
benchmarking and rating of energy-efficient build- future
ings in an effort to encourage energy efficiency of paradox
investment by others. Such organizations may, spective
from their inception, intend to be catalysts and occur en
indirect in their effects on social change (Waddell, relevant g
2005; Waddock & Post, 1995). They may not at- a meth
tempt CEA's tight integration between a client-ser- change (
vice business model and a community service non- ies, it
profit model, which made paradoxical outcomes observat
particularly salient. Research on organizations tak- mental
ing a broader range of strategies in a similar prob- gagemen
lem domain might be valuable in clarifying scope
conditions for the service paradox. , . _ „
mi . j , . r . c cp • Implications for Policy and Practice
Third, certain features of energy efficiency as a r J
problem domain may instill bias toward models of This study strikes a cautionar
change that are less centered on conflicting inter- neurs and policy makers looki
ests than other models have been. Where there are port hybrid, cross-sectoral, p
zero-sum games in cross-sectoral collaborations— enterprise organizations. Pr
for example, between real estate developers and assume that success and failu
landscape conservationists (Layzer, 2008)—it is define amid a combined miss
easy to see how factions and conflict may arise. (to individual clients) and p
There, more politically centered models may be economic, social, or environm

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 2013 /ay 157

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Understanding conflict, paralysis, and movement Jason Jay ([email protected]) is a lecturer at the MIT Sloan
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