UC Irvine's Merage School Research on Strategic Innovation
Contribute Ideas to Innovation@Merage

Organizational Ambidexterity

 

What Happens to Your Stats When Every Player Is a Switch Hitter?

 

Switch hitters have a significant advantage. Whether it's lining up the best billiards shot or reaching to return a serve in tennis, they simply have more options. It is this ability to approach each situation from whichever side is most advantageous that gives ambidextrous players a higher probability of success.

 

Running a business is a lot like that. Sometimes the situation calls for a focus on short-term performance. You exploit existing opportunities and skills, cut expenditures on unproductive activities, and maximize efficiency. In short, you ensure that your management systems, activities, and resources are coherent and aligned in support of the current demands of the business environment. At other times what's needed is adaptability. You quickly reconfigure your activities in response to a change in the market, or explore emerging opportunities that have the potential to improve performance in the long term.

 

It's common for a company to do better in one area than the other, or even to actively pursue one over the other. But a focus on alignment without adaptability can stall a company's performance and leave it living off its glory days, while its competitors have moved on. And adaptability without alignment can be very expensive, as a company incurs the costs of experimentation without reaping the benefits of successfully implementing and marketing its results. Business analysts believe companies that excel in both domains have a greater chance of longevity and success, particularly in dynamic environments. Such companies have come to be called ambidextrous.

The trick is how to do both in the same company. Most attempts to resolve this dilemma treat alignment and adaptability as competing, incompatible goals that must be kept separate from each other. Often the two are assigned to separate business units, or to distinct groups within a business unit. Other business units focus some days on alignment, some days on adaptability.
All of these rely on structural, top-down allocation of resources by managers.

 

Cristina Gibson (University of California, Irvine) and Julian Birkinshaw (London Business School) see alignment and adaptability as complementary goals that can be achieved simultaneously at all functions and levels in each unit, given the right company environment. The company builds processes or systems that motivate and enable individuals to make their own judgments about how to divide their time between alignment and adaptability. Every individual both delivers value to existing customers and watches out for changes in the task environment. They call this contextual ambidexterity because it arises from the systems, processes, and beliefs within a company (its organizational context).

 

To investigate how context can give rise to ambidexterity, and whether ambidexterity indeed correlates with performance, the authors selected ten multinational firms from a wide variety of industries. They interviewed and surveyed 4195 individuals from 41 business units in these firms, including the top executives in each. Individual responses were aggregated to unit-level measures.

 

The business units clustered into four groups, with significant differences in performance between each group. The highly ambidextrous group had the best performance, followed by the moderately ambidextrous, adaptive, and aligned groups. The researchers found no trade-off between alignment and adaptability at the business unit level, and conclude that it is not necessary to sacrifice one for other.

 

The research shows that four aspects of organizational context are necessary for the development of ambidexterity: discipline, stretch, support, and trust. Discipline is individuals voluntarily striving to meet expectations and commitments. Stretch is individuals voluntarily striving for ambitious objectives. Support is individuals helping each other. And trust is individuals relying on each other's commitments. All four must be present and in balance to form a foundation for ambidexterity. A disproportionate focus on discipline and stretch can lead to burnout and disillusionment, while an excessive reliance on support and trust can lead to not enough work getting done.

 

It is the role of the senior executive to put into place the systems that create such a context. Discipline is encouraged by clear standards of performance and behavior; open, honest, and timely feedback; and consistent implementation of sanctions. Stretch results from shared ambition, collective identity, and finding personal meaning in contributing to the organization. Mutual support is encouraged by giving individuals freedom of initiative and access to each other's resources, and by the example set by senior management as they provide guidance and help to employees. And trust is created by fair and inclusive decision processes, and having competent, reliable co-workers.

 

Gibson and Birkinshaw stress that it is not enough simply to set up a supportive context that includes these four features. An effective leader is still needed to resolve possible conflicts among the four attributes. For example, a focus on discipline might inadvertently discourage risk taking and undermine trust. In addition, ambidexterity can take years to develop, during which senior executives must follow through and provide consistent support for both alignment and adaptability. It is particularly important for senior executives to model adaptable behavior, and also intervene to actively nurture and encourage the adaptability and new ideas of others.

 

The good news is that there are multiple paths to achieving ambidexterity, so each company can start where it is and fill in what is missing. For example, one organization in the study started with good support and trust, then improved its discipline and stretch (through cost reduction, quality initiatives, personal commitments to strategic objectives, increased structure, and setting more ambitious goals). Others built adaptability skills on top of traditional models of alignment.  Your implementation strategy can be idiosyncratic, made to fit the history and values of your particular organization.

 

Source: Gibson, C. B., & Birkinshaw, J., (2004). The antecedents, consequences and mediating role of organizational ambidexterity. Academy of Management Journal, 47:2, 209-226.

Comments

No Comments