Lakhani Purpose: This article offers insight on how to effectively help incumbent organizations prepare for global business shifts to open source and digital business models. Findings: Companies that let their old culture reject the new risk becoming obsolete if doing so inhibits their rethinking of their future using powerful tools like crowdsourcing, blockchain, customer experience-based connections, integrating workflows with artificial intelligence AI , automated technologies and digital business platforms. As important as technological proficiency is, managing the cultural shift required to embrace transformative industry architecture — the key to innovating new business models -- may be the bigger challenge. Insights are theoretically, based on additional study, interviews, and research, but need to be tested through additional case studies. Practical implications: The goal is to make the transition more productive and less traumatic for incumbent firms by providing a language and tested methods to help senior leaders use innovative technologies to build on their core even as they explore new business models. Social implications: This article provides insights that will lead to more effective ideas for helping organizations adapt.
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Ambidexterity in an organization is achieved by balancing exploration and exploitation , which allows the organization to be creative and adaptable , while also continuing to rely on more traditional, proven methods of business. On the other hand, companies that focus only on exploitation may accept status quo performance and products and fail to reach optimal levels of success. Organizational ambidexterity is defined broadly, and several other terms are also highly related or similar to the construct of ambidextrous organization, including organizational learning , technological innovation, organizational adaptation , strategic management , and organizational design.
Things such as reconciling exploitation and exploration, the simultaneity of induced and autonomous strategy processes, synchronizing incremental and discontinuous innovation, and balancing search and stability also tend to refer to the same underlying construct as ambidextrous organization.
Whereas earlier studies on structural and behavioral mechanisms regarded the trade-offs between exploration and exploitation to be insurmountable, more recent research has paid attention to a range of organizational solutions to engender the existence of ambidexterity. Several antecedents, outcomes of organizational ambidexterity as well as related moderators have also been identified in the studies on structural and behavioral mechanisms. Ambidextrous organizational designs and organizational ambidexterity[ edit ] The studies on "ambidextrous organizations" take the organization as the unit of analysis and ambidextrous organizing is conceptualized as the simultaneous pursuit and combination of incremental and discontinuous innovation.
One is architectural or structural ambidexterity, which uses dual organizational structures and strategies to differentiate efforts towards exploitation and exploration. The other approach is contextual ambidexterity, which uses behavioral and social means to integrate exploitation and exploration at the organizational unit level.
Although both angles are related to the theme of organizational ambidexterity, they strongly differ in the way how they are configured. There has always been a debate of which of the two different approaches is right. The dual type allows both discrete orientations and fit across dimensions at the unit level but creates a misfit between organizational units. Some researchers argued that inconsistent structures may lead to low performance.
One factor would be the speed and type of technological change that organizations confront. On the other hand, the balanced type i. However, in a high-competitive environment, balanced structures may be better prepared to deal with the constant need for alignment. The role of leaders or managers is always highlighted towards building an ambidextrous organization.
Several recommendations have been made to organizations on how to achieve contextual ambidexterity, including using of meta-routines and job-enrichment schemes,  building trust with supervisees,  being supportive,  using complex behavioral repertoires,   and the creation of a shared vision. Successful organizations should be able to balance the hard elements discipline and stretch and the soft elements support and trust in their organizational contexts.
Outcomes of organizational ambidexterity[ edit ] Ambidexterity is beneficial to organizations in many aspects. As it is the ability to keep a balance between explorative and exploitative processes, the most core outcome of ambidexterity is innovation because innovation needs both explorative and exploitative aspects. Most theoretical models of innovation differentiate at least two processes: idea generation and idea implementation e. The generation phase is closely linked to explorative activities while the implementation phase is highly linked to exploitative activities.
Various organizations have been able to overcome organizational challenges and become more innovative because of ambidexterity. A study looking at 41 businesses found that ambidexterity was highly correlated with performance. Companies such as Apple , General Radio , Nordstrom and British Airways have all had continued success throughout the years because of their capacity for ambidexterity. From to , British Airways experienced increased profits and customer satisfaction. Although they were not directly testing an ambidextrous orientation, results indicated a positive performance effect of simultaneously pursuing exploitative and exploratory innovation under high dynamic and competitive environments.
A longitudinal study by Kyriakopoulos and Moorman showed that market orientation positively moderates the impact of pursuing high levels of exploitative and exploratory marketing strategies on new product performance; however, firms that pursue an ambidextrous orientation without strong market orientation display a significant reduction in new product financial performance.
Similarly, Lubatkin et al. Boundary conditions were also addressed on choosing between structural and contextual ambidexterity. For example, spatial separation was suggested as an appropriate solution for environments characterized by long periods of stability, disrupted by rare events of discontinuous change. Levels of ambidexterity[ edit ] The functional definition of ambidexterity was originally used to describe organizations, but recently this concept was extended to multiple organizational levels, including individuals, teams, and leaders.
On the most general level, the concept of ambidexterity implies successfully managing the dichotomy of explorative variability creation and exploitative variability reduction. Actually, regulating the conflicting demands of innovation is not only a challenge for the upper echelon of an organization but also a phenomenon that spans all levels of an organization.
Employees as individuals, collectives of employees such as work teams, and the organization as a whole all have to find strategies to deal with conflicting demands in order to succeed in innovation and adaption to changing markets. Some examples of strategies and tactics that could be implemented at all three levels of analysis were also listed out Bledow et al.
These examples are presented in Table 1, including a separation strategy in the Separation column or an integration strategy in the last two columns. Ambidextrous leadership[ edit ] Recently the focus on organizational ambidexterity has become more concentrated on how leaders act ambidextrously to achieve organizational ambidexterity.
Senior managers may be the key for facilitating the context and social base for ambidexterity. The model suggests TMTs are where processes such as information sharing and knowledge processing, which influence ambidexterity, are likely to occur.
Furthermore, it is the CEO who has the ability to access the most valuable and diverse information needed to avoid separation of explorative and exploitative behaviors. The greater the interface between TMTs and CEOs in small-to-medium-sized organizations, the greater the amount of ambidexterity.
The construct of ambidextrous leadership has also been linked to the combination of leadership styles Jansen et al. Leaders who are transformational encourage "out of the box thinking", information sharing and question assumptions. Transformational leaders promote exploration and innovative thinking. Transactional leaders focus on making incremental improvements and making the best use of existing process.
The transactional leadership style promotes exploitative behaviors. Ambidextrous leadership consists of three elements 1 opening leader behaviors to foster exploration, 2 closing leader behaviors to foster exploitation, 3 and the temporal flexibility to switch between both as the situation requires Rosing et al.
Opening leadership behaviors include: allowing for multiple ways to accomplish a task, experimentation and errors, whereas closing behaviors include; monitoring routines, sticking to plans and minimizing errors. The Rosing et al. Controversy and future directions[ edit ] Some scholars as well as practitioners have argued that established companies simply lack the flexibility to explore new territories.
A possible solution for big companies is to adopt a venture capital model — funding exploratory expeditions but otherwise not interfering too much with their operations. Another suggestion is for the use of cross-functional teams to achieve breakthrough innovations.
Still others have suggested that a company may be able to alternate between different organizational models, focusing on exploitation and exploration at different time periods.
High firm performance may however need to be sustained through continuous exploitation both on the market side, through business model innovation and technology innovation. If organizations base their evaluation and reward systems on the completion of routine tasks, employees will be more likely to conform to standardized procedures. Despite the controversy surrounding the possibility of organizational ambidexterity, it is likely to continue to be a highly researched concept in the future.
Future research is likely to focus on the role of ambidextrous leaders, ambidextrous teams and the social context of organizational ambidexterity. Rosing et al.
Ambidextrous Organization (HBR OnPoint Enhanced Edition)
Ambidexterity in an organization is achieved by balancing exploration and exploitation , which allows the organization to be creative and adaptable , while also continuing to rely on more traditional, proven methods of business. On the other hand, companies that focus only on exploitation may accept status quo performance and products and fail to reach optimal levels of success. Organizational ambidexterity is defined broadly, and several other terms are also highly related or similar to the construct of ambidextrous organization, including organizational learning , technological innovation, organizational adaptation , strategic management , and organizational design. Things such as reconciling exploitation and exploration, the simultaneity of induced and autonomous strategy processes, synchronizing incremental and discontinuous innovation, and balancing search and stability also tend to refer to the same underlying construct as ambidextrous organization. Whereas earlier studies on structural and behavioral mechanisms regarded the trade-offs between exploration and exploitation to be insurmountable, more recent research has paid attention to a range of organizational solutions to engender the existence of ambidexterity.
The Ambidextrous CEO
Product Description Publication Date: April 01, Corporate executives must constantly look backward, attending to the products and processes of the past, while also gazing forward, preparing for the innovations that will define the future. But as every businessperson knows, there are companies that do. These organizations separate their new, exploratory units from their traditional, exploitative ones, allowing them to have different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. Such "ambidextrous organizations," as the authors call them, allow executives to pioneer radical or disruptive innovations while also pursuing incremental gains. Of utmost importance to the ambidextrous organization are ambidextrous managers--executives with the ability to understand and be sensitive to the needs of very different kinds of businesses.