Do you have ambidextrous organizations in your company?

The ambidextrous person uses the left and right hand with equal skill. In the world of management, the ambidextrous professional is the one who has the ability to exploit current capabilities while continuing to explore new opportunities for future development

One of the biggest challenges that organizations face in the face of uncertainty is how to simultaneously exploit the current business and explore new opportunities. Exploration usually generates radical (or discontinuous) innovation; Exploitation tends to produce more incremental innovation. Focusing too much on excellence in day-to-day operations can cause an organization to lose long-term vision and risk its future viability, while emphasizing exploration over organizational alignment can lead us to build tomorrow’s business at the cost of today’s. Hence, the need for a new organizational design that makes both exploitation and exploration possible is becoming more evident every day.

 

Ambidextrous Organizations: Exploitation and Exploration

In Ambidextrous Organizations, exploitation and exploration often coexist. To understand this, let’s explain what we mean by these two terms.

It is generally accepted that exploitation and exploration are two fundamentally different types of activities between which companies divide their attention and resources.

Exploitation-oriented activities are generally related to the operation of the core business through the execution and continuous improvement of current business processes or technological capabilities. It includes core processes, such as operations, sales, customer services, and finance and the continuous innovation of products, services, or processes, and the development of existing sales and operations channels.

The objectives of the operation are mainly commercial, financial and performance; It’s about efficiency, productivity, and results. Most of the income generated by a company comes from the execution of operating activities, it is what keeps it alive. In ambidextrous terms, exploitation is similar to right-handed writing.

Exploration-oriented activities are related to the development of future businesses by seeking new and often disruptive business models or new technological capabilities. It includes the development of new business models, new approaches to customers, radical innovations, and transformation projects that require new skills and the development of new digital competencies.

Exploration objectives are often more strategic and closer to vision, but the benefits are only achieved in the medium to long term and, as such, are less tangible and quantifiable than operational objectives. These goals aim to transform the business to significantly increase its growth and profitability. In addition, it is a high-risk activity and there is no certainty that the expected benefits will be achieved. In ambidextrous terms, it’s similar to writing with your left hand.

 

Ambidextrous Organizations

Ambidextrous organizations, in terms of management, are those that have the ability to effectively balance the exploitation of the current business and the exploration of new fields of action. In other words, they have the Dual skill: the ability to exploit your business of the present while also exploring new businesses constantly. This dual capacity in complex, uncertain and rapidly changing times becomes vital. So it is not surprising that operational duality has received so much attention in the management literature, since the publication in Harvard Business Review, of research carried out by Michael L. Tushman, which highlights, with empirical data, that operational duality leads to greater organizational performance, but at the same time emphasizes that the tension between two distinct capabilities such as exploitation and exploration make it very difficult to the simultaneity of both in organizations.

 

Different Approaches of Dual Organizations

Although there is consensus on the need to simultaneously exploit and explore to ensure the long-term viability of the organization, there is still no unanimity on the best way to achieve this, and complementary proposals have emerged to make an organization ambidextrous.

The traditional view of the ambidextrous organization revolves around the initial approach of O’Reilly and Tushman (HBR April 2004), which proposes a structural separation of different types of activities into different business units. How alternative, the notion of contextual ambidexterity, represents a complementary process introduced by Gibson and Birkinshaw (MIT Sloan June 2004), based on the creation of a specific organizational context and more flexible structures, which make it possible for employees to decide how they divide their time between exploitation-oriented and exploration-oriented activities.

 

• The ambidextrous structure-based organization It separates activities dedicated to operating current businesses from activities dedicated to exploring or developing new businesses. Innovative efforts are organized as structurally independent units, each with its own processes, structures, and cultures, but integrated into the existing senior management hierarchy.

 

The ambidextrous structure-based organization It separates activities dedicated to operating current businesses from activities dedicated to exploring or developing new businesses. New businesses are organized as structurally independent units, with their own processes, structure, and culture, but integrated with the main organization through close coordination between top management that makes it possible for exploration units to share important resources contributed by the parent organization (cash, talent, knowledge, customers, etc.) but at the same time the separation between units ensures that what makes them different is not the same as the main organization. New units will not be held back by the “command and control” mentality characteristic of traditional business units.

Exploratory units don’t just need the independence to develop their own alignments; They also need access to the assets and capabilities of large organizations. Therefore, they need to be separate and integrated. But nevertheless, both structures remain hierarchical, as they rely on business unit managers to judge how best to divide employees’ time between one set of activities and another.

Amazon is a prime example of the new generation of structurally ambidextrous organizations. Amazon’s leaders have been able to exploit mature businesses such as retail and distribution, where efficiency and incremental improvements are key, while leveraging existing assets and capabilities to explore new domains where flexibility and experimentation are best. When pursuing exploratory innovation, Amazon typically uses an ambidextrous organizational form with exploratory activities conducted in small, often geographically separated units. If a new approach proves successful, it integrates quickly, leveraging your internal logistics and processes to scale the new business.

By successfully balancing these two dimensions, Amazon has built a sustainable competitive advantage that has become accepted best practices across multiple industries. Now, not all businesses are able or willing to follow in Amazon’s footsteps. development path, and it doesn’t necessarily have to. The art is more about finding actionable organizational answers than specifically addressing the company’s own business context, taking into account its history, development trajectory, future, challenges, and strategic goals.

 

• Ambidextrous context-based organization emphasizes organizational context, such as culture and process, as drivers of ambidexterity rather than organizational structure. That is, it does not separate exploration and exploitation activities, but allows its professionals to make decisions between exploitation and exploration activities in their daily work, facilitating alignment and adaptability throughout the organization. For this to be possible, the right context, systems, processes and beliefs must be created that enable ambidextrous behaviours at the individual level, frameworks for networked contribution that go beyond the workplace and protect the spaces and times dedicated to exploration at all costs.

 

The ambidextrous context-based organization does not separate exploration and exploitation activities, but creates a dual operational structure, which makes it possible for individuals to devote part of their daily working time to both types of activities. For this to be possible, the organization must provide the necessary context for employees to develop the appropriate behaviors, such as acting outside the limits established for their position, and acting as true intrapreneurs in the development of new business opportunities. To foster this kind of ambidexterity at the individual level, greater attention must be paid to the human and cultural side of the organization.

Contextual ambidexterity is often a matter of necessity for many companies that lack the size to be able to segregate exploitative and exploration activities into separate units. This is the case of technology companies such as Google, Hewlett-Packard, 3M or Intel, which operate in a dynamic and highly competitive market, and must consolidate existing businesses while simultaneously maintaining their competitiveness in the face of the radical approaches of new emerging companies in their sector.

 

Re-imagining the structure

We therefore have to face the need for new organizational structures to interact with the new reality and the fact that the new imperatives of entrepreneurial ambidexterity are not achievable only with the hierarchical, highly centralized and bureaucratic structures that we have built since the first industrial revolution.

Organizations in the future must show the dual capacity to be dynamic and stable at the same time. Dynamic practices allow companies to respond nimbly and quickly to new challenges and opportunities, while stable practices allow us to maintain day-to-day operations and operational results. Agility is not incompatible with stability, quite the opposite. Agility requires stability for most businesses.

To master this paradox, as we have seen in Previous Thoughts It is necessary to New organizational design that has not one, but Two Structures. A structure focused on achieving day-to-day results of business and a Second Complementary Structure, operating as an agile network, Focused on new opportunities and demands of the future.

Within the organization, certain units and processes are operation-focused, with others primarily tailored to exploration. It is important to understand that both systems coexist under one organizational roof and are mutually reinforcing. This is the key to the success of the ambidextrous organization.

It’s about finding an operational balance between alignment and transformation. The leadership of the organization must therefore be able to direct and guide both types of structures, which is why certain units are hierarchically directed, through performance management centered on people and the team, while other units operate as self-managed teams, autonomous from the hierarchy, but aligned in strategy. Goals and values.

Finding the right balance between exploration and exploitation activities is not easy, but it is essential for the survival of organizations in a complex and rapidly changing world.

 

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