The answer to these challenges is the ‘ambidextrous organization’: an organization that balances the stability and scale inherent in legacy organizations with the much needed flexibility and speed to respond to changing customer and industry needs.
And whereas the need for balancing these competing demands has become widely accepted by leaders it still remains one of the greatest organizational challenges as many companies still grapple with failed innovation initiatives and organizational transformations.
In order to respond to this challenge we have zoomed-in the key bottlenecks and pain points that legacy organizations face when trying to incorporate innovation and change within a stable system and we created a clear and strategically aligned framework for ambidexterity.
What to expect and how to successfully manage an ambidextrous organization.
You cannot keep doing what you do, hoping for different results.
In the same way you can’t organize for efficiency and predictability and aim for innovation and change. Within such a dynamic and continuously shifting environment, it becomes clear that organizations need to operate on a parallel mode: ensure short-term efficiency and profitability through established routines and processes as well as explore future opportunities for growth through agile structures that can innovate, test and scale in a quick and iterative way.
Our Exploration/ Exploitation pyramid is based on identifying the different kinds of structures, processes, senior teams and leadership behaviors that contribute to exploitation and exploration and providing the right context for them to flourish.
Governance System for exploration & exploitation.
A system of governance that is based on driving profitability of existing business is typically based on forecasting and detailed planning within well-established and relatively known markets and/or customer segments. Here, a decision-making hierarchy can be very useful as it provides clarity and a strong sense of direction. In unpredictable and unstable contexts however, such as when exploring the possibility of entering new markets or customer segments, a new system of governance is needed: one that is responsive to change, nimble and agile. Here, leaders need to step away from delegating and provide a supporting and empowering context that supports teams and individuals to experiment and innovate.
Organizational Setting for exploration and exploitation.
Organizing for exploitation is traditionally based on a stable, hierarchical structure with clearly separated tasks and minimum interactions between business segments. This structure coupled with rigorous, comprehensive and linear processes enables the business-driven exploitation of efficiencies. The organization is viewed as a hierarchy and people value stability and control.
To enable innovation, however we need to replace organizational silos and business functions with the idea of interfaces and collaboration. Here, the imperative is customer-driven exploration of opportunities, change and variability. An organizational context suitable for exploration therefore combines a clear set of goals, roles and responsibilities together with a small set of processes such as timely overviews of activities and results. This set up allows quick decision making and reactions to change. High-performing and self-organized teams with end-to-end responsibility and full accountability replace the traditional business-function led hierarchies. Agile teams need people who are thriving under conditions of change, are self-motivated and are laser focused on delivering customer value. Informal feedback and collaboration is paramount but follows a clear set of tools and processes.
Ambidextrous Leadership as the glue that holds the distinctive alignments together.
In order to turf wars and tensions between the two systems due to resource constraints, cultural misfits or internal hostility the exploration focused teams are connected to the traditional organization through a robust, clear and ambidextrous purpose, set by the senior leadership team. A clear purpose (that is encapsulated in a clear mission and an ambidextrous strategy of both efficiency and innovation) ensures that different organizational configurations can coexist and play to win together.