Organisational Ambidexterity
The world is changing faster and faster and the pressure of competition has increased massively. Companies that want to survive in today’s markets must be highly efficient. Best quality at the best price is required. However, in order to survive in the long term and not become irrelevant due to new technologies or market changes, creativity is just as important. Innovative products and services ensure survival in the long run.
This balancing act between efficiency (exploitation) and creativity (exploration) is referred to as ambidexterity. Since the beginning of the 21st century, organisational ambidexterity has increasingly become a central topic in management theory and practice. Over the last twenty years, several approaches to implementing ambidexterity have been developed.
The first concept of ambidexterity has been described as early as 1976 by the US management researcher Robert Duncan. It involves separating exploitation and exploration in time. The company concentrates on efficiency for a certain period of time and then focuses on creativity/innovation for a shorter phase. To achieve this, it must adapt its internal structures accordingly each time. This approach is today referred to as sequential ambidexterity or occasionally as temporal ambidexterity.
With the increasingly rapid technological and market changes, the sequential ambidexterity approach and the resulting constant need to realign internal structures has become more and more impractical. Based on this observation, the scientists Michael Tushman and Charles A. O’Reilly developed at the beginning of the 21st century the theory of structural ambidexterity. Under their approach, exploitation and exploration are carried out simultaneously, with a large part of the company focusing on efficiency while a smaller division is engaged in innovation. Tushman and O’Reilly described their concept in the book Lead and Disrupt, which became one of the most important management readings of our time.
Even a step further goes the concept of management professor Julian Birkinshaw, known as contextual ambidexterity. Birkinshaw argues that the dual structures required for sequential and structural ambidexterity require a high degree of coordination and integration, and thus have considerable disadvantages in practice. For this reason, he proposes an approach in which each individual employee is empowered to exploit and explore and to determine the focus according to the situation. A practical example of contextual ambidexterity is Google’s 80/20 rule. It requires employees to devote 80% of their working time to day-to-day business and 20% to the development of creative and innovative ideas outside their main job.
Regardless of which form of ambidexterity is implemented in the organisation, it is always individuals who must be able to exploit and explore and to flexibly switch between these two paradigms.
References
Andriopoulos, C., & Lewis, M. W. (2009). Exploitation-Exploration Tensions and Organizational Ambidexterity: Managing Paradoxes of Innovation. Organization Science, 20(4), 696–717. https://doi.org/10.1287/orsc.1080.0406
Birkinshaw, Julian, & Gibson, C. (2004). Building Ambidexterity into an Organization. MIT Sloan Management Review, 45(4), 47–51. https://doi.org/10.1136/bmj.2.2081.1472-a
Birkinshaw, J., & Gupta, K. (2013). Clarifying the Distinctive Contribution of Ambidexterity to the Field of Organization Studies. The Academy of Management Perspectives, 27(4), 287–298. https://doi.org/10.5465/amp.2012.0167
Duncan, R. B. (1976). The ambidextrous organization: Designing dual structures for innovation. The Management of Organization, 1, 167–188.
Gibson, C., & Birkinshaw, J. (2004). The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal, 47(2), 209–226. https://doi.org/10.2307/20159573
He, Z.-L., & Wong, P.-K. (2004). Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis. Organization Science, 15(4), 481–494. https://doi.org/10.1287/orsc.1040.0078
O’Reilly, C. A., & Tushman, M. L. (2013). Organizational Ambidexterity: Past, Present and Future. Academy of Management Perspectives, 27(4), 324–338. https://doi.org/10.5465/amp.2013.0025
March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71. https://doi.org/10.1287/orsc.2.1.71
Raisch, S., Birkinshaw, J., Probst, G., & Tushman, M. L. (2009). Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance. Organization Science, 20(4), 685–695. https://doi.org/10.1287/orsc.1090.0428
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