Ambidextrous organizations can compete in established markets and develop new products and services for emerging markets simultaneously. Competing in established markets involves cost reduction, increased efficiency, and the adoption of incremental innovations that are exploitative. Companies can achieve development of new products and services for emerging markets through exploratory innovation.
In this post, we present to you everything you need to know about the ambidextrous organization.
Ambidextrous Organization Definition
Organizational ambidexterity refers to an organization’s ability to manage its business today while developing innovation strategies for coping with tomorrow’s changing demand. Just like the word ambidextrous refers to one’s ability to use both left and hand equally, ambidextrous organizations use both exploitation and exploration techniques to be successful.
A company is ambidextrous when it continuously solves the trade-off between being scale-driven & productive and fast & creative. Ambidextrous organization can be viewed from two angles:
- One is structural or architectural ambidexterity. These companies use dual organizational structures and business strategies to differentiate efforts towards exploration and exploitation. Structural ambidexterity includes dual aspects, with one aspect focusing on exploitation and the other focusing on exploration. It is also commonly known as the spatial separation of the dual strategies outlined above.
- The other angle is contextual ambidexterity which uses social and behavioral means to integrate exploration and exploitation at the organizational unit level. Contextual ambidexterity is a balanced aspect that takes a centralized position between exploration and exploitation. It is also known as hybrid strategies and parallel structures.
Although both angles are related to the theme of ambidextrous organization, they differ slightly in how they are configured. There has always been a lifelong debate as to which of the two angles is right. The dual type allows both fit across dimensions and discrete orientations at the unit level but creates a misfit between organizational units. On the other hand, the balanced type (that is contextual ambidexterity) is consistent with the systems approach to fit across multiple dimensions. However, it contradicts the notion that organizational choice is discrete.
Antecedents of Ambidextrous Organization
An ambidextrous organization is often a skill or capacity and can therefore be facilitated by either the CEO/Managers or the organization as a whole. From the structural ambidexterity’s point of view, organizations can solve the paradox by cycling through periods of exploration and periods of exploitation. However, from the contextual ambidexterity’s point of view, organizations need to address exploration and exploitation simultaneously and internally to achieve the goal of an ambidextrous organization.
Contextual ambidexterity is more challenging to achieve than structural ambidexterity because managing two inconsistent alignments within an organization simultaneously is far more complicated than managing one digital business strategy after another. This is why most studies on building ambidextrous organizations focus more on contextual ambidexterity than structural ambidexterity.
The role of managers or business leaders is always highlighted towards building an ambidextrous organization. The strategies for achieving contextual ambidexterity include being supportive, building trust with supervisees, using job-enrichment schemes/meta-routines, creating a shared vision, and using complex behavioral repertoires.
In addition, building an ambidextrous organization also involves other features of organizational cultures. Successful organizations should be able to balance the complex elements in their organizational contexts. Developing collective identity, establishing shared goals, giving a sense of belonging to every team member, and creating a culture of support all contribute to ambidexterity. A culture of excellence, decentralized structure, training, and recruitment are also essential aspects of establishing an ambidextrous organization.
Outcomes of Ambidextrous Organizations
Ambidexterity is advantageous to organizations at different levels. As it is vital to balance exploitative and explorative processes, the core outcome of an ambidextrous organization is innovation because it requires both exploitative and explorative aspects.
Innovation is the series of activities leading to discovering new things and introducing them to a social entity. Those new things must involve some notable changes/modifications from what has been in existence.
Ambidexterity also promotes other positive organizational outcomes apart from innovation. Studies have shown that exploitative and explorative innovation strategies are positively related to the sales growth rate. Most ambidextrous organizations have been able to overcome organizational challenges and become more innovative about ambidexterity.
Companies such as British Airways, Nordstrom, General Radio, and Apple have experienced continued success throughout the years because of their capacity for ambidexterity.
British Airways, for instance, experienced increased customer satisfaction and profits from 1981 to 1986. The management board of British Airways credited the improved performance to the formation of a more ambidextrous culture and leadership.
Levels of Ambidextrous Organization
The foremost definition of ambidexterity used to describe organizations; however, this concept has grown to multiple organizational levels, including business leaders, teams, and individuals. On a general note, ambidextrous organization successfully manages the dichotomy of exploitative variability reduction and explorative variability creation.
There is always conflict whenever there are both exploitive and explorative needs within an organization. This is where an ambidextrous organization is necessary. The fact remains that regulating the conflicting demands of innovation is a challenge for upper management teams in an organization and a challenge that affects all levels of the organization. Individual employees and the organization as a whole need to find lasting solutions and strategies to deal with conflicting demands in order to succeed in adaption and innovation to changing markets.
Ambidextrous Organization Leadership
The recent focus on organizational ambidexterity has become more focused on how leaders act ambidextrously to attain organizational ambidexterity. The management team may be responsible for facilitating the social base and context for ambidexterity. Considering that ambidextrous organizations require significant amounts of coordination, mobilization, and integration activities to maintain both exploration and exploitation. In addition, the CEO can access the most valuable information needed to avoid the separation of exploitative and explorative behaviors. The higher the interface between CEOs and TMTs in small-to-medium-sized organizations, the higher the amount of ambidexterity.
The construct of an ambidextrous organization leadership has a lot to do with different leadership styles. Transformational leaders encourage “out-of-the-box thinking,” question assumptions, and information sharing. Transformational leaders promote innovative and explorational thinking. Transactional leaders pay more attention to making incremental improvements and making the best use of existing business processes. The transactional leadership style also promotes exploitative behaviors.
- Opening leader behaviors to foster exploration
- Closing leader behavior to foster exploitation
- Temporal flexibility to switch between exploitation and exploration
Opening leadership behaviors include: providing multiple ways to accomplish business tasks, experimentation, and errors, while closing behaviors include sticking to plans, monitoring routines, and minimizing errors.
Ambidextrous organizations are always looking for the most innovative business ideas and strive to solve customers’ needs. This strategy is backed by a well-established culture of invention, curiosity, and bias for action. We hope the information we have shared in this post has given you a better understanding of the concept of the ambidextrous organization.