I’m constantly amazed by the lack of focus that many organisations and managers have on the future. ‘Now’ seems to be such a pressing priority that it is often the only thing thing that really seems to matter. To survive and thrive in the long term however, organisations need to be ambidextrous: able to exploit the now while simultaneously exploring and adapting to the future.
From a human perspective, the Oxford Dictionary defines ambidextrous as being “able to use the right and left hands equally well.” Natural ambidexterity is rare: one study of just under 8,000 children found that only 1.1% were reported as being mixed-handed. However, ambidexterity can confer certain advantages and to be highly skilled in some activities—such as touch typing and playing the piano—it is vital.
Within organisations the situation is not dissimilar. The term organisational ambidexterity was first coined by Professor Robert Duncan in 1976. Typically, organisational ambidexterity refers to the ability of an organisation to balance exploration and exploitation equally well. Again, this is not an easy skill to master—tension exists between these two “fundamentally different learning activities” and each places different demands upon an organisation.
Maximising returns by aligning and utilising existing resources and competences
An organisation’s ability to exploit its existing resources and competences hinges upon its ability to align itself around a clear strategy and to implement this strategy effectively. Competitive advantage is created by effectively and successfully exploiting the organisation’s existing competences and resources. Within the organisation, a laserlike focus on maximising returns results in a fearsome ability to implement and execute plans. Operational excellence is driven throughout—if improvements and refinements can be made, they will be made. The organisation functions like a well-oiled machine.
Seeking out new opportunities and adapting to changing environments
An organisation’s ability to seek out new opportunities and adapt to changing environments is determined both by its openness to the broader environment and its willingness to take risks. Competitive advantage is created by uncovering new opportunities through exploration and innovation—particularly innovation that is discontinuous and potentially disruptive. The organisation creates room for diversity and discovery, both internally and externally. Staff are encouraged to experiment and play. Risks are taken that increase the potential for game changing outcomes.
Understandably, just as it is difficult to write equally well with both hands, organisations frequently find it difficult to achieve balance between exploration and exploitation. Based upon my own experience and academic organisational ambidexterity research, I’ve devised a matrix that categorises organisations in one of four different ways. Do you recognise your organisation below?
Ideally, we all want to be conquerors but ambidexterity is not an easy skill to master nor is it necessarily a fixed state.
Start-ups are likely to begin as adventurers, looking for opportunities to exploit. As their ideas begin to develop and stabilise, they may move into being a miner, exploiting the competences and resources they cultivated to maximise gains from the opportunity they have discovered.
Similarly, organisations with a long-standing heritage that have been comfortable as miners for years may find themselves rudely awoken by the competition. This may then lead to a mad dash to adventure in a bid to stay alive.
In either circumstance, the abilities to both explore and exploit need to be mastered—even if not simultaneously. If a start-up never develops an ability to implement and exploit, no matter how brilliant their idea, business failure is likely to result at this early stage. In the same way, no matter how good an organisation is at exploitation, one day change will be required to stay in the game.
The real skill of the conqueror therefore is balancing the two skills as required. Knowing when to send your people out and when to solidify your current position. And when you have the capacity to do both at the same time.
Creating an ambidextrous organisation requires organisational awareness and commitment. Becoming a conqueror won’t just happen by accident! Just as becoming a concert pianist doesn’t happen overnight but requires hours of practice to strengthen and hone the skill of the less dominant hand, ambidexterity requires intentional design and development. Creating a truly ambidextrous organisation requires self-awareness and management awareness, a dedication to excellence and a willingness to take risks, all in the pursuit of building something great.
And for those of you who like the research…
Birkinshaw, J. & Gibson, C. (2004). Building ambidexterity into an organization. MIT Sloan Management Review, 45(4): 47-55.
Boumgarden, P., Nickerson, J. & Zenger, T.R. (2012). Sailing into the wind: exploring the relationships among ambidexterity, vacillation, and organizational performance. Strategic Management Journal, 33: 587-610.
March, J.G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71-87.
Raisch, S. & Birkinshaw, J. (2008). Organizational ambidexterity: antecedents, outcomes, and moderators. Journal of Management, 34(3): 375-409.
Exploiting but not exploring
Miner organisations are concerned with maximising returns from their existing resources and the capabilities they have now. Efficiency and gradual improvement is their focus as they seek to hit their monthly or quarterly revenue targets. Although there is some discussion about the future, the company will tend to keep their heads down and focus on the work at hand. They assume that all is stable and little is likely to disrupt their status quo; long-term revenue planning is based upon past performance and assumptions of security. The organisation tends to shy away from disruptive innovation and activities that impact their short-term revenue for fear of the impact they will have upon their existing business model and world view. Typically, all is well while the sun shines and short-term performance can be high; however, this “one-sided focus on exploitation…can result in a competency trap because firms may not be able to respond adequately to environmental changes.”