This is my first article in what I hope will become a series: four paragraph summaries of academic papers. The Ambidextrous Organization is an HBR paper by Charles A. O’Reilly III and Michael L. Tushman. It describes the conflict organizations face between capitalizing on traditional sources of revenue, and exploring opportunities for new, radical innovation.
Shifting industry structures, definitions, and offerings are no easy thing to cope with: yet they are constant challenges to companies. However, merely being aware of these changes and desiring to copy or even out-do them is not enough. O’Reilly and Tushman argue that traditional cross-functional teams or innovation groups do not adequately provide the combination of flexibility and resource sharing required to achieve radical innovation from within a structured corporation.
Instead, they point to “ambidextrous organizations”, ones where the team innovating or exploring new opportunities is separated from the core of the firm, but still tightly integrated with upper-level management. It’s stated that ambidextrous organizations are not as susceptible to detrimental inter-team competition as cross-functional or unsupported teams are, since they work under the same management as those teams working on the company’s traditional offerings. Uniquely, they also offer the ability to break away from the organization’s traditional constraints in culture, processes, and structure – thus their ability to innovate into what the company does not yet offer.
The authors offer an example: In the mid-1980s, contact lens producer Ciba Vision faced competition from Johnson & Johnson’s disposable contact lenses. In trying to out-innovate J&J, Ciba President Glenn Bradley oversaw the formation of two separate but integrated structures: the conventional contacts team focused on operational efficiency stayed in Atlanta; the teams focused on innovation worked out of Germany. Each team had the freedom to implement its own HR, development, and production strategies. In order to achieve sharing of resources and centralization around one goal however, all innovation-focused teams reported to the VP of R&D who was a liaison between internal stakeholders. In tremendously simplistic terms, the strategy worked deftly.
The Ambidextrous Organization is that which can balance a focus on its traditional money-making offerings, while also pushing new boundaries and developing innovations. In the authors’ words, they exploit the old and explore the new. The key to their success is to form “organizationally distinct units that are tightly integrated at the senior executive level.”