Ambidexterity

Managers in the contemporary world face a contradiction where austerity in the developed world and the cost cutting measures in place mean that they have to increase efficiencies; on the other hand, the rapid pace of change means that they have to innovate to stay ahead of market trends and to trump their competitors.

Hence, managers have to both increase productivity and innovate at the same time, which means that they have to be ambidextrous or have the ability to manage contradictory strategies at the same time.

Of course, this is not always easy as the giant corporation, 3M found. It introduced the culture of Six Sigma practices in order to boost productivity.

However, this strategy resulted in falling revenues from innovation whereas productivity did increase and helped in reduced costs. The implications of this example is that managers have to both explore new opportunities and exploit existing avenues if they are to survive the brutal marketplace of the present times.

Exploration and Exploitation

The characteristics of exploration and exploitation differ as exploration is all about long-term targets and an organizational structure that is flexible and decentralized which gives it the ability to change with the market conditions.

On the other hand, exploitation is all about centralized structure, short-term targets, and focuses on execution instead of planning. This indicates that the goals of exploring and exploitation pull the managers in different directions.

Further, many managers view the present in terms of the success that they have delivered in the past. This attitude is enshrined in the organizational DNA, which makes it difficult to think about tomorrow in today’s terms and dwell on yesterday in tomorrow’s terms.

This contradiction is at the heart of ambidextrous management that is rare in contemporary organizations but something that has delivered exceptional results for its practitioners like Haier that went from being close to bankruptcy in the 1980s to a market leader now.

The Case of Haier

The strategy employed by Haier was to self-organize which means that it setup around 2000 units in the organization as independent entities and gave them the freedom to decide how they would strategize while at the same time abiding by the broad terms and rules of interaction set by the center.

In other words, these units were free to choose whether they would think about exploring new opportunities or exploiting existing avenues according to their capabilities.

The point here is that whereas the organization as a whole cannot exist in multiple timelines, if it is divided into self-organizing units, then it can deploy multiple strategic styles simultaneously.

Closing Thoughts

Of course, this approach is not without its drawbacks as some units would duplicate the strategies of the others and they cannot scale up to the level that the organization can as a whole. Hence, the implication of such a strategy is that it must be deployed only in highly diverse and dynamic environments.

Finally, the strategy of thinking about tomorrow and living in the present with yesterday’s baggage can prove to be daunting for many.