Ambidexterity.

The art of ambidexterity

In this context, we speak of ambidexterity. In a business context, ambidexterity is the ability to act efficiently in day-to-day business and monetise it successfully, while at the same time responding flexibly to new challenges and markets and actively shaping them. In companies with established ambidexterity, employees take on the role of visionaries who not only react to the market, but also shape it by developing forward-looking products, services and solutions.

Ambidexterity is particularly relevant for German companies, which are often faced with the need to preserve long-standing traditions while at the same time driving innovation in order to remain competitive. The ability to be ambidextrous enables SMEs and corporations to strike a balance between utilising existing resources and exploring new opportunities.

The challange

The challenge in establishing a culture of innovation for SMEs and corporations is to understand that managing and selling existing business models, portfolios or brands (exploitation) is different from inventing the future and bringing new business models or products to market (EXPLORE). This requires a very conscious allocation of resources between the exploitation and exploration phases. The challenge is to invest separately in the two phases and thus in two different portfolios. It’s like repairing the roof of a large warehouse because it’s leaking, while at the same time installing solar panels for energy conversion.

Ámbidexterity needs al place

A lived innovation culture that promotes ambidexterity is the fulcrum that enables companies to reconcile these seemingly contradictory goals. It creates the breeding ground where both the efficiency of the core business and the bold exploration of new horizons, the dawn of a new era, can thrive. This requires a place where friction can occur, where different actors come together and where there is a critical mass of people. In such a place, people are encouraged to think outside the box and take risks, while the importance of discipline and focus is promoted. These places of innovation teach the different business units how innovation works and support organisational structures. The old corporate architecture is largely an architecture of control. It makes a culture of innovation impossible.

How to create ambidexterity 

A key challenge is to develop and nurture two cultures, one focused on exploitation (using existing resources and skills) and the other on exploration (looking for new opportunities). Here are some recommendations.

1. Separate units for exploitation and exploration: A common method is to create separate units or teams within the company. One team focuses on the core business and optimising existing processes (exploitation), while another team focuses on innovation, research and development of new ideas (exploration).
   
   
2. A culture of flexibility and adaptability:
   The company should foster a culture that values flexibility and adaptability. This means encouraging employees to develop and experiment with new ideas, while respecting the existing processes and traditions of the (family) business.
   
   
3. Resource allocation and support:
   Management must ensure that both exploitation and exploration activities are adequately funded and supported. This includes allocating budgets, time and human resources in a way that supports both approaches.
   
   
4. Leadership and vision: Company leaders should communicate a clear vision that encompasses both exploitation and exploration. They should lead by example in striking a balance between preserving what exists and being open to what is new.
   
   
5. Encourage learning and knowledge sharing: Ongoing dialogue and knowledge sharing between exploitation-focused and exploration-focused teams can lead to better alignment and integration of the two cultures. This can be promoted through regular meetings, joint projects and interdisciplinary teams.
   
   
6. Incentive systems and performance evaluation: Incentive systems should be designed to reward both the achievement of short-term operational goals (exploitation) and long-term innovation and development (exploration).
   
   
7. Balanced risk appetite:
   (Family) businesses must maintain a balanced risk appetite that includes both safe, proven approaches and calculated risks for innovation.

By following these recommendations, a business can successfully develop a dual culture that supports both exploitation and exploration, which are critical to long-term success.

Lived culture of innovaton

The biggest challenge for companies is to create a culture of innovation. In exploration, a culture of openness to new ideas and flexibility of approach is crucial. Very few companies live and breathe this. It starts with management creating an environment that fosters creativity and supports innovation. Exploration also requires a higher degree of risk-taking and tolerance of failure. It’s important to foster a mindset that sees taking calculated risks and learning from mistakes as part of the innovation process. Exploration often benefits from a diverse team that can bring different perspectives and ideas. In implementation, it can be beneficial to have a team with specialised skills and experience to carry out specific tasks efficiently. Clear goals and expectations need to be set and communicated in both exploration and implementation. In exploration, these goals may be broader and more open to interpretation, while in execution they are more specific and measurable.