Business Growth - Exploring The Ambidextrous Organization

The Roman god Janus had two sets of eyes - one pair focusing on what lay behind, the other on what lay ahead. General Managers and corporate executives should be able to relate. They, too, must constantly look backward, attending to the products and processes of the past, while also gazing forward, preparing for the innovations that will define the future.

This mental balancing act can be one of the toughest of all managerial challenges - it requires executives to explore new opportunities even as they work diligently to exploit existing capabilities - and it's no surprise that few companies do it well. Most successful enterprises are adept at refining their current offerings, but they falter when it comes to pioneering radically new products and services. Kodak and Boeing are just two of the more recent examples of once dominant companies that have failed to adapt to market changes. Kodak excelled at analog photography but hasn't been able to make the leap to digital cameras. Boeing, a longtime leader in commercial aircraft, has experienced difficulties in its defense-contracting businesses and has recently stumbled in the face of competition from Airbus.

The failure to achieve breakthrough innovations while also making steady improvements to an existing business is so commonplace - and so fascinating - that it has become a battleground of management thought. For decades, scholars have spun theories to explain the puzzle and offered advice on how to solve it. Some have argued that there's no way out of the conundrum - that established companies simply lack the flexibility to explore new territory. Some have suggested that big companies adopt a venture capital model, funding exploratory expeditions but otherwise staying out of their way. Others have pointed to cross-functional teams as the key to creating breakthrough innovations. Still others have claimed that a company may be able to shift back and forth between different organizational models, focusing on exploitation for a period and then moving into exploration mode.

We recently decided to test these and other theories by taking a close look at the real world, examining how actual, contemporary businesses fare when they attempt to pursue innovations that lie beyond their current products or markets. Do they succeed in achieving breakthroughs? Do their existing businesses suffer? What organizational and managerial structures do they use? What works, and what doesn't?

We discovered that some companies have actually been quite successful at both exploiting the present and exploring the future, and as we looked more deeply at them we found that they share important characteristics. In particular, they separate their new, exploratory units from their traditional, exploitative ones, allowing for different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. In other words, they manage organizational separation through a tightly integrated senior team. We call these kinds of companies "ambidextrous organizations," and we believe they provide a practical and proven model for forward-looking executives seeking to pioneer radical or disruptive innovations while pursuing incremental gains.