Implementing Innovation: Ambidextrous Organizations
- Pietro Gatti
- Apr 16
- 3 min read
When we discussed the Innovator’s Dilemma, we explored the challenges established companies face in balancing the optimization of existing operations with the pursuit of innovation, one of which being having a company structure that supports and enables it.
Out of the different approaches, I wanted to explore ambidextrous organizational structures, in more details. The core concept is allowing for the simultaneous management of current business activities and the exploration of new opportunities.
Easier said than done. After a brief intro to the concept, we'll look comparatively at Fujifilm and Kodak before discussing difficulties in implementation and opportunities.
Understanding Ambidextrous Organizations
An ambidextrous organization is designed to pursue both exploitation—refining and enhancing existing products and services—and exploration—innovating and venturing into new markets or technologies. This dual approach enables a company to maintain its core business while also adapting to changing market dynamics. The concept has been extensively studied and applied in various industries, providing a framework for sustainable innovation.
If you are interested in further readings, this post on Ambidextrous Organization at Arthur D Little is rather interesting.
Case Study: Fujifilm's Strategic Transformation
Fujifilm serves as a compelling example of successful ambidexterity. Facing the decline of the photographic film industry, Fujifilm proactively diversified its business portfolio. The company continued to support its existing film business (exploitation) while simultaneously investing in new areas such as healthcare and high-performance materials (exploration). This strategic shift involved:
Structural Separation: Establishing distinct units for emerging business areas allowed for focused innovation without disrupting core operations.
Resource Allocation: Investing in research and development facilitated the acquisition of necessary expertise and technology for new ventures.
Cultural Integration: Promoting a culture that valued both innovation and the refinement of existing products ensured alignment with the company's overarching goals.
These efforts enabled Fujifilm to successfully navigate market shifts and emerge as a diversified entity.
Lessons from Kodak's Experience
In contrast, Kodak's experience underscores the complexities of implementing ambidexterity. Despite pioneering digital photography technology, Kodak hesitated to fully integrate digital solutions, largely due to:
Structural Rigidity: A centralized decision-making process hindered swift adaptation to technological advancements.
Resource Misallocation: Continued focus on the declining film sector limited investments in emerging digital technologies.
Cultural Resistance: An entrenched culture centered on traditional film products created obstacles to embracing innovative changes.
This reluctance to adapt contributed to Kodak's diminished market position.
Expect resistance: 3 obstacles to implementation
Implementing ambidexterity within organizations presents a complex set of challenges, even for those with a strong track record of innovation.
Leadership commitment and cultural alignment are foundational yet often difficult to achieve. Leaders must navigate the tension between maintaining efficient core operations and fostering innovative initiatives. This requires not only setting a clear vision but also cultivating a culture that supports both exploration and exploitation. Organizations frequently encounter resistance when attempting to shift established mindsets, especially when existing performance metrics and reward systems favor short-term efficiency over long-term innovation.
Structuring an organization to support ambidexterity involves creating distinct units for exploratory and exploitative activities, each with its own processes and goals. However, this structural separation can lead to challenges in coordination and integration. Exploratory units may struggle to gain legitimacy and resources, while exploitative units might resist adopting innovations that disrupt established routines. In addition to the leadership and cultural aspects discussed above, deliberate efforts to facilitate communication and collaboration are essential.
Resource allocation and performance measurement further complicate the implementation of ambidexterity. Balancing investments between core operations and innovative ventures demands careful consideration, as overemphasis on either can undermine the organization's overall performance. Additionally, traditional key performance indicators (KPIs) may not adequately capture the value generated by exploratory activities, leading to underinvestment in innovation. Developing metrics that reflect both short-term efficiency and long-term innovation potential is essential to support ambidextrous strategies.
No-one said it's easy - but it might be necessary
Organizations can take practical steps to address these challenges. Fostering a culture that values both innovation and operational excellence, establishing clear structures, aligning resource allocation with strategic objectives and developing adequate performance metrics all are critical components.
This is where external help can come to the rescue: they can provide valuable external perspectives and expertise, assisting organizations in designing and implementing ambidextrous structures tailored to their unique contexts. It might make all of the difference.
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