Ambidextrous organization: Ambidexterity Inc.
Ambidextrous organization: summary
The most accepted definition of ambidexterity is a balance between explorations and exploitation; organizations capable of exploiting their existing competencies while simultaneously exploring new opportunities. James March refers to this as the exploration of new possibilities and the exploitation of old certainties. Exploitation includes such things as choice, refinement, production, selection, execution efficiency and implementation.
While exploration encompasses knowledge creation and analysis of future opportunities, organisations that engage in exploration to the exclusion of exploitation are likely to find that they suffer the costs of experimentation, but without gaining many of its benefits. These companies exhibit too many undeveloped new ideas and often too little distinctive competence.
A well-known example of too much emphasis on exploration is Ericsson, the telecom giant that led the development in the last century of the global system for mobile communications. At its peak, its R&D organization employed 30,000 people in 100 technology centres and with considerable duplication of work. Despite its strong focus on exploration, the company’s results went into steep decline. Ericsson laid off around 60,000 employees and closed most of its technology centres to put focus back on exploitation in order to return its businesses to profitability. Conversely, organizations that engage in exploitation to the exclusion of exploration are likely to find themselves trapped in stable equilibrium; going nowhere fast, but efficiently. Maintaining an appropriate balance between exploration and exploitation is a primary factor in the prosperity of any corporate system.
The paper looks at Ambidexterity in an organization, provides real-time examples of leading global businesses and introduces the six pillars required to build organizational Ambidexterity.