On 2nd April, our workshop on organizational ambidexterity and culture of innovation took place in Newark, USA hosted by W.L. Gore.
The presenters conveying insights on the topic were:
Bret Snyder, Chair of the Board of Directors — W.L. Gore & Associates
Glenn Gomes-Casseres, Director of Corporate Incubations — Bose Corporation
Gina O’Connor, Professor of Innovation Management — Babson College
Doug Munk, Director of New Business Ventures — Nestlé USA
Wendy Smith, Professor of Management — University of Delaware
We have gathered the main insights shared by the presenters on how corporations should build ambidextrous organizations and nurture a culture fitting for both core and new business models, presented below.
1. Managing competing demands
Innovation is defined by opposing and interdependent tensions, for instance those between exploring and exploiting. The exploit side is hierarchical, focused on efficiency and today, while the explore side is organic, structured on experimentation and developing for tomorrow. Yet, the two sides need one another so that the core continues being efficient and prolonging today into tomorrow, and the exploration unit can get the resources necessary to develop.
These tensions can be seen at all innovation levels, between global and local demands, between missions and markets, profits and people, or stakeholders and shareholders.
Because the competing demands seem in opposition, leaders many times feel that they must make either-or choices. However, as the oppositions are interdependent, they would gain more by asking how they can start making both-and choices. This requires leaders changing their perspective, and starting to harness the interdependent opportunities by navigating ambidextrously between them.
“We want to make a choice and go with it because these kind of competing demands open up for a lot of uncertainty. As leaders we want to be certain, to deliver a plan, and be clear with people how to execute it. The problem with that is that in this space of competing demands, choosing one option only makes the other demand take even more of your time — which leads to a vicious cycle.” — Wendy Smith
2. Developing sustainable ambidexterity
Depending on the organization, companies develop different styles of ambidexterity. Startup companies focus more on temporal ambidexterity, which cycles between exploration and exploitation depending on leadership mandates. Contextual ambidexterity is also a choice, as it presupposes that everybody in the company knows when and how to explore and exploit.
However, the more companies grow, the more they can realize that this way of doing ambidexterity is not sustainable on the long-term. Instead, companies should lean toward structural ambidexterity as it separates the explore and exploit sides into distinct departments which are nonetheless connected and interdependent. This allows for clearer separation of tasks and roles, including the introduction of innovation specialists into the teams.
“Structural ambidexterity is emerging as the approach that companies are evolving toward as they become mature. As a result, now you can tune the management system in a way that permits instituting roles and responsibilities for the employees doing explore and exploit. This allows us to grow capabilities, to get better, and to start talking about cultural alignment within the exploration group.” — Gina O’Connor
3. Freedom and boundaries
Ambidexterity requires companies to establish a culture based on open communication, self-reliance, and passion for experimentation. Otherwise, the risk is that speed and creativity will be lost through the hierarchical pipeline, which will lead to employees remaining in their silos and not establishing innovation mindsets.
Innovation, however, should not be done by chance, there should be an overarching vision for what can be achieved. Likewise, a set of boundaries should be defined so that innovation does not go in unruly directions.
With this mix of freedom and boundaries, teams can be enabled to think ambidextrously as they have sufficient space and responsibility to innovate. Importantly, micromanaging can be counterproductive as it takes up time and resources unnecessarily. The majority of choices can be taken by the team, with managers and leaders reserving the right to veto for the most important choices.
“For project success, you need to pressurize change with vision for what could be achieved, incentivize it as much as possible, push necessity, and then add the right amount of resources and the right people.” — Bret Snyder
4. Leveraging the Mothership
There are many advantages to working in big companies which can sometimes be overlooked when comparing them to startups which are fast, flexible, and horizontally-structured. Yet, big companies have a major advantage in the resources they have to grow new business areas.
Looking at the three horizons of growth model, both H1 and H2 efforts should be done within business units, differentiated in their focus on profit and growth, respectively. Though H3 projects should be worked on separately from the organization, they should still leverage its resources. Focused on experimentation — not creation — H3 bets can utilize the expertise residing within the core to optimize for success.
“We are all in big corporations, we can act agile but the important thing is that we can’t be a startup, so the next best thing is to take advantage of the Mothership. H3 is somewhat separate from the Mothership. It’s important for it to not compete with the other divisions. If H3 bring us a great idea, we can’t steal it. So our commitment to them is that we will explore it, we will gain conviction in it, but they launch it.” — Glenn Gomes-Casseres
5. Harnessing collective wisdom
Within large companies, there is value in harnessing the collective employee wisdom. This can allow the whole organization to innovate, not only the innovation department. Moreover, because companies are made up of people with such diverse skills and backgrounds, this can ensure a good mix of creative ideas that range from incremental to breakthrough.
To galvanize the organization to innovate and give passionate employees the possibility to make their ideas a reality, companies should establish crowdsourcing platforms. The best ideas collected on the platforms can be presented during pitching days and then in front of leadership. The pitching days can also serve as incentives for employees to participate, as they receive public recognition and appreciation for their ideas.
“The crowdsourcing platform is leveraging both the growth engine and driving culture so that people realize that innovation is their job. We are always engaging employees through videos because many of them could see this initiative as a one-off thing. But what we want to do is transform the entire organization so that this becomes the source of innovation.” — Doug Munk
We are half-way through our spring calendar, with still some events across Europe and in the US. I you want to dig deeper into new business creation topics, our Allianz-hosted workshop on 13th June in Berlin will cover working with both internal and external startups for innovation. You can read more about it, as well as seeing the full calendar, here.