Wednesday, August 27, 2008

The Ambidextrous Organization

To achieve successful R&D and real innovation (bringing new things successfully to markets) is easy on paper but very hard in practice. Thousands of enterprises are struggling with this using a variety of methods, methodologies, instruments and organizations. Typical problems include how to ensure proper technology transfer, how (de)centralized should R&D and innovation be, how to initiate and foster new business, what is the right balance between short (improving existing business), medium and long term (create new business), etc, etc.

Recently I was recommended to read a 2004 article of the Harvard Business Review called “The Ambidextrous Organization”. It says, among others, that one of the main challenges companies face is to -at the same time- exploit existing business and explore new business. Companies need to be able to look backward and forward at the same time, while those two activities have very different requirements (e.g. in strategic intent, critical tasks, competencies, structure, compensation, culture, etc). Not surprisingly, companies struggle to deal with those conflicting requirements. In this article, the authors have investigated 35 attempts to launch breakthrough innovations in different industries. Their study shows that organizations use one of four possible ways to manage those innovations within their organizational structure. By far, the ambidextrous organization is the most (and only) successful one. An ambidextrous organization isolates the operation of the new business from the existing business by giving it freedom to organize and structure itself as appropriate, while it uses top-level executive involvement to keep the new business connected to the organization. Top-level involvement ensures visibility of the new business to the decision organs and evidences importance of the initiative to the organizations. 

This makes a lot of sense and seems relatively straightforward to apply. But how easy is it to put in practice in real organizations ….?