The Ambidextrous Organisation
Businesses need to optimise for the present whilst also designing and creating for the future. Ambidexterity can support innovation, but also transformation
The concept of the ‘ambidextrous organisation’ was first described by Charles O’Reilly and Michael Tushman in their 2004 HBR piece as a way to capture the challenge inherent in businesses being able to make steady improvements to existing models whilst still developing breakthrough innovations. This, they said, was akin to the challenge of constantly looking backwards in attending to the products and processes of the past whilst also gazing forwards and preparing for the innovations that will define a new future.
They studied 35 different attempts to launch breakthrough innovations that were undertaken across nine different industries, looking for those instances where the business was able to simultaneously pursue incremental innovations for existing customers whilst also developing breakthrough innovations for new customers.
The research showed that the companies that had successfully balanced simultaneous exploitation of existing models and more radical exploration of future shared some common characteristics — most notably in maintaining a degree of separation between the traditional areas and the exploratory ones, so allowing for different processes, structures and cultures to emerge, whilst also keeping links between the units tightly integrated at the senior executive level. More than 90% of these ‘ambidextrous organisations’ ended up achieving their goals, far higher than the other ways of structuring for breakthrough innovation.
The commonalities and differences between the exploratory and exploitative areas of the business and how they link and interact are key. O’Reilly and Tushman showed that successful ambidextrous organisations had been able to set up structures that were independent enough to enable breakthrough innovation and different ways of working to emerge whilst connected enough at the senior level to keep them aligned to vision, strategic goals or needs. This requires the senior teams and management to be ambidextrous in understanding the divergent needs of the different kinds of business areas, combining the ability to make difficult trade-offs or decisions with the visionary thinking required of entrepreneurs. The senior team must also be committed to operating ambidextrously. A compelling vision relentlessly communicated by that senior team can articulate a goal and direction that can enable the exploitation and exploring parts of the business to co-exist and thrive, and bring to life the benefits of both types of operating model for employees.
The need for breakthrough innovation has certainly not declined since the research was done in 2004, and the business environment has if anything become even more characterised by rapid change and unpredictability. So the concept of an organisation that can ambidextrously optimise for the present whilst simultaneously creating the future is a powerful one.
But in the modern environment where value is increasingly shifting from long-term, sustainable competitive advantage to generating and exploiting a series of transient advantages, businesses need a continuous flow of new propositions and breakthroughs. This can only happen if there is enough separation in the early stages to ensure that new thinking, cultures and ways of working are given sufficient space to thrive and are not suffocated by legacy and hierarchy. But then the bigger opportunity is for these new ideas and operating models to catalyse a much wider transformation across the entire organisation. For that to happen, as concepts are commercialised and scaled there should be growing commitment and integration not just at the most senior level, but at all levels through the organisation, and a more seamless flow between exploit and explore.
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