Ambidextrous Organization

In order to ensure its long-term profitability, maintaining actual customers and leveraging new ones by innovating, a company has to find the right balance between exploration and exploitation phase (Harryson, 2006; Sawhney and Prandelli, 2000). Exploitation is linked to the creativity network and the inventions. As opposed to exploitation, exploitation relates to the process network based on the commercialization of innovations. In fact, exploration includes searches and discoveries of new knowledge and exploitation is more about selecting and using existing knowledge for application (Benner and Tushman, 2003; Grant and Baden-Fuller, 2004 and March, 1999). A company who succeeds to find equilibrium between the order and the chaos is called an “Ambidextrous organization” (Duncan 1976; Grant and Baden-Fuller, 2004; He and Wong, 2004; Tushman and O’Reilly, 1996). That means the company has developed an ability to design “dual structures” (Duncan, 1976) that facilitate the initiating stage and implementation stage of the innovation process. Indeed, “Organizational ambidexterity refers to an organization’s ability to perform two different things at the same time” (Gibson and Birkinshaw, 2004).

Moreover, for Levinthal and March (1993), an ambidextrous organization is a company who

“Engage in enough exploitation to ensure the organization’s current viability and engage in enough exploration to ensure future viability”.

It has to be the right balance. As Harryson (2006) mentioned it, a firm cannot be 100% on the exploration phase or 100% on the exploitation phase. Each company has to find its own balance in order to be profitable. In line with this argument, He and Wong (2004, 492) claim that

“The organizational tension inherent between exploration and exploitation may become unmanageable when both are pursued to extreme limits”.

References:

Benner, M. J., M. L. Tushman. (2003). Exploitation, exploration, and process management: the productivity dilemma revisited. Academy of Management Review, 28(2) 238–56.

Duncan, R.B. (1976). The ambidextrous organization: Designing dual structures for innovation, In: R.H. Kilman, L.R. Pondy, & D. Slevin (Eds.), The Management of Organization, vol. 1: 167-188. New York: North-Holland.

Gibson, C.B., & Birkinshaw, J. 2004. The Antecedents, Consequences, and Mediating Role of Organizational Ambidexterity. Academy of Management Journal, 47(2): 209-226.

Grant, R. and Baden-Fuller, C. (2004). ’A knowledge accessing theory of strategic alliances’.
Journal of Management Studies, 41, 61-83.

Harryson, S. (2002). “Why know-who trumps know-how”, Strategy and Business Magazine, issue 27, second quarter 2002, pp 1-6.

He, Z-L. and Wong, P-K. (2004). ‘Exploration vs. exploitation: an empirical test of the ambidexterity hypothesis’. Organization Science, 15, 481 – 94.

Levinthal, D.A., & March, J.G. 1993. The Myopia of Learning. Strategic Management Journal, 14: 95-112.

Sawhney M. and Prandelli E. (2000), “Communities of Creation: Managing Distributed Innovation in Turbulent Markets”, California Management Review, vol. 42, n°4, pp 24, summer 2000

Tushman, M. L., O’Reilly, C. (1996). ‘Ambidextrous organizations: managing evolutionary and revolutionary change’. California Management Review, 38, 8-30.