In today’s ever-evolving business environment, companies are constantly challenged to simultaneously stay competitive and prepare for the future. Many organizations face the common obstacle of maintaining their current success while adapting to new market opportunities, technologies, and challenges.
Take artificial intelligence (AI), for example. According to a report by management consulting firm McKinsey, 72 percent of organizations have adopted AI, with half implementing it across two or more business functions—up from less than a third just a year prior. This swift integration reflects the balance of innovation with a strategic effort to optimize existing operations.
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DOWNLOAD NOWCompanies are successfully finding ways to enhance productivity and efficiency by leveraging AI tools while continuing to deliver value through traditional practices. This dual approach enables businesses to remain competitive in an increasingly digital marketplace.
Combining what works with what’s new or needed has led to a vital concept—the “ambidextrous organization”—that allows businesses to bridge the gap between stability and innovation. It was coined in 2004 by Harvard Business School Professor Michael Tushman and Stanford Graduate School of Business Professor Charles O’Reilly, who co-teach the online course Leading Change and Organizational Renewal.
But what does it mean, and how can you apply it? Here’s an overview of what an ambidextrous organization is and how to implement it effectively.
What Is an Ambidextrous Organization?
An ambidextrous organization can operate businesses at several different maturity levels and is dynamic enough to balance exploitation and exploration.
- Exploitation: When you execute work in the existing business model. Exploitation favors predictability, stability, and efficiency.
- Exploration: When you explore entering new strategic spaces. Exploration favors flexibility, speed, learning, and discovery.
“This includes established businesses that make profit for today, along with more experimental and exploratory businesses that are still in development,” O’Reilly says in Leading Change and Organizational Renewal. “Ambidexterity allows the incumbent organizations to transform themselves.”
By linking the two, organizations can produce a more dynamic, profitable business model. If you’re interested in building an ambidextrous organization, here are five elements to consider.
5 Key Factors of an Ambidextrous Organization
1. Aligned Senior Management Team
An unaligned senior management team can create significant challenges within an organization. When senior managers aren’t on the same page, it often leads to internal politics, conflicts, and collaboration breakdowns, ultimately causing disarray that trickles down throughout the business.
To mitigate these issues, senior leaders must prioritize alignment through regular discussions and strategic planning sessions. By establishing shared objectives and encouraging open dialogue, organizations can foster a unified direction and minimize the potential for discord.
2. Strategy with Exploration and Exploitation
To succeed, your strategy must include exploration and exploitation opportunities to ensure the organization executes for today while innovating for tomorrow. Once identified, they should be communicated across departments with an overarching vision so everyone has shared goals and feels like they’re working on the same team.
Despite focusing on different areas, employees must be on common ground to understand the action plan and achieve business goals and objectives together.
3. Separate Architectures
As important as a common vision is, there must also be a clear line between exploration and exploitation.
Businesses without separate plans typically only orient toward short-term profits. Without longevity in mind, there isn’t room for innovation.
“By separating out the more exploratory ventures from the core businesses, the former can really investigate new technologies, new markets,” O’Reilly says in Leading Change and Organizational Renewal. “The mature businesses, or the exploitative unit, can really continue working toward more incremental improvements.”
4. Defined Exploration Plan with Dedicated Resources
For the exploration process to progress and succeed, mechanisms must be in place to ensure the employees responsible get the necessary resources.
For example, a technology company might form a small innovation team to experiment with emerging tools like AI or virtual reality. To thrive, the team needs adequate funding, technology access, and time away from routine operations. Without structures like regular funding reviews or executive support, the team won’t achieve its goals, stalling progress and limiting innovation.
With a structured approach, the existing business model can withstand changes while making efficient use of available resources.
5. Constant Leadership Support
To have an ambidextrous organization, you must have ambidextrous leaders who know and understand that innovation takes time to develop and execute.
“If you don’t have senior leaders who are visibly supportive of these businesses, then the short term will kill the long term,” O’Reilly says in Leading Change and Organizational Renewal.
Your leadership team must understand what an ambidextrous organization is and practice it to experience profitable results.
Building an Ambidextrous Organization
O’Reilly refers to leaders who build new businesses inside existing companies as “corporate explorers” in Leading Change and Organizational Renewal. These corporate explorers are responsible for driving the exploration function, leveraging ideas and resources from within to develop and advance new initiatives.
To successfully innovate and advance, they must own the following with support from senior leadership:
- Ideation: Generating breakthrough ideas for the potential new business model, leveraging methods like design thinking and creative problem-solving
- Incubation: Converting those ideas into a business proposition by conducting market research, performing customer validation, and testing each concept
- Scaling: Growing operations efficiently to meet increased demand while maintaining quality and controlling costs
For corporate explorers to succeed, the organization must align its structure, senior leadership, and processes to provide clear direction, identify emerging opportunities, and remove roadblocks to advance new ideas.
“This is really about leadership and championing innovation within an existing organization,” O’Reilly says in Leading Change and Organizational Renewal.
If you want to thrive in today’s dynamic business environment, it’s time to embrace ambidexterity. With the right balance and leadership support, your organization can achieve sustainable growth, adapt to emerging opportunities, and stay ahead of the competition.
To build this capability, consider taking the online course Leading Change and Organizational Renewal, taught by the faculty who coined the phrase. Through real-world examples, you’ll learn how to master stability and innovation to start building your ambidextrous organization.
Are you interested in learning more about building an ambidextrous organization? Explore Leading Change and Organizational Renewal—one of our online leadership and management courses—and download our e-book on becoming a more effective leader.
