The Importance of Establishing Ambidextrous Organisations

Businesses face many challenges but one of the most important is the ability to effectively allocate the business resources and attention between the current business and future opportunities. In other words, balancing between exploitation or exploration.

On one side, managers have to focus on sustaining their business with incremental changes and refinements of their current offering while on the other hand also devoting enough resources to the exploration of possible innovations and future viabilities.

In the long run, companies need to focus on both, the present and the future. This might seem like an obvious statement, as it is commonly known that a key ingredient for success is to have a clear vision and goal for both the short term and the long term. However, how many examples of established multinational corporations that failed to integrate innovation can you name? Kodak, Blackberry, and Toys R Us are just a few.

In this article, we will discuss a possible solution to the innovation dilemma: the implementation of Ambidextrous organizations. In their book ‘Lead and Disrupt - How to solve the innovator's dilemma’ Charles O’Reilly & Michael Trushman define ambidextrous organization as organizations that focus on both exploiting and exploring by managing current business demands while also adapting to changes in the environment and innovating.

All this might still seem very vague and you might be wondering what is the real value of ambidextrous organizations? Well, the essence lies in the way ambidextrous organizations are structured.

Organizations following an ambidextrous model separate their explorative units from the exploitive ones, therefore enabling them to develop different processes, cultures, and structures. The two units remain closely linked to each other at the senior executive level. As seen in the picture below, other structures of organizations integrate the exploiting unit in their current business and units while ambidextrous organizations separate them.

Graph retrieved from: https://researchapi.cbs.dk/ws/portalfiles/portal/58421749/kit_shan_nicole_fung.pdf

It has been proven that Ambidextrous organizations are more successful than Functional Design, Cross-Functional teams, or other types of organizations. A study published in Harvard Business Review analyzed 35 attempts to launch breakthrough innovations undertaken by 15 business units in 9 different industries. The results were clear cut: when it comes to launching successful products or services businesses that follow an ambidextrous structural approach are more likely to achieve their goals.

Hence, it is important for Entrepreneurs to structure their business in a way that emphasises the current business but also fosters innovation; and long-term thinking and planning. A balance of both is necessary for the long-term survival of a Start-Up.