The Ingredients for Organizational Ambidexterity

lead-and-disruptFirst of all, what is organizational ambidexterity? In essence, it means that an organization is able to take full advantage of its existing assets and capabilities and apply them in the creation of new ones.

This is what Vijay Govindarajan has in mind when recommending what he characterizes as a “three box solution,” one that expands the leader’s innovation tool kit with a simple and proven method for allocating the organization’s energy, time, and resources — in balanced measure — across what he calls “the three boxes” or dimensions:

Box 1 The present: Manage the core business at peak profitability
Box 2 The past: Abandon ideas, practices, and attitudes that could inhibit innovation
Box 3 The future: Convert breakthrough ideas into new products and businesses

The three-box framework makes leading innovation easier because it gives leaders a simple vocabulary and set of tools for managing and measuring these different sets of behaviors and activities across all levels of the organization. The stability and sustainability of a profitable core business bankrolls the development of new products and/or services.

What does it take for an organization to become ambidextrous?

In Lead and Disrupt: How to Solve the Innovator’s Dilemma, Charles O’Reilly III and Michael Tushman identify and examine these four ingredients for successful ambidexterity, and I now quote from Pages 174-175:

1. A clear strategic intent that justifies the need for exploitation and exploration, including the explicit identification of those organizational assets and capabilities that can be used for competitive advantage by the exploratory unit.

2. Senior management commitment and oversight to nurture and fund the new venture and protect it from those who would kill it.

3. Sufficient separation from the exploitative business so the new venture can developers own architectural alignment and the careful design of the organizational interfaces needed to leverage the critical assets and capabilities from the mature side of the enterprise, including clear criteria to decide when to either drop the exploratory unit or integrate it back into the organization.

[Note: Two excellent examples would be Lockheed’s “Skunk Works” and Xerox’s Palo Alto Research Center.]

4. A vision, values, and a culture that provide for a common identity across the explore-and-exploit units that helps all involved see that they are on the same team.

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Charles O’Reilly III is the Frank E. Buck Professor of Management at Stanford University’s Graduate School of Business.

Michael Tushman is the Paul R. Lawrence, MBA Class of 1942 Professor of Business Administration at Harvard Business School.

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