Ambidexterity, referring to a company’s ability to manage current demands while being adaptable to changes in the environment, has been the subject of many management books and articles over recent years. Now, with AI looming and the environment changing big time, and it has become a must-have capability.
The challenge for companies, focused on winning the present while at the same time laying the foundation to win the future, is that emphasizing one priority can undermine the other. Recent research offers timely practical guidelines for overcoming the challenge of ambidexterity by examining key factors – sometimes complementary, sometime conflicting – that enable companies to focus on the present and the future.
The books say an organization should engage in enough exploitation to ensure it maximises current opportunities and engage in enough exploration to ensure its future viability; but they have often been less precise about how this is achieved.
In their recent study, Professor Andy Lockett, Dean of Warwick Business School and colleagues (see below), examine the antecedents of ambidexterity – the factors in place at the company that will support exploitation, exploration or both.
The research, based on a survey of 422 UK SMEs, analyzed four ambidexterity antecedents: the composition and size of top management teams; the existence of a clear written vision; the extent of investment in R&D; and a commitment to a company-wide continuous improvement process.
The key findings were that:
- The composition of the top management team makes a difference. The search for innovative ideas and approaches is likely to be wider with a more diverse team which brings in a wider set of perspectives and experiences. At the same time, diversity can cause conflicts within the team; however, the larger the team the more it will be able to overcome these.
- Top management team diversity also supports exploitation, although team size has no effect. This is because effective exploitation requires the search for pertinent information and knowledge, rather than just routine implementation activities. And this search is enhanced by a more diverse top management team
- Continuous improvement benefits both exploitation and exploration. The latter is somewhat unexpected, as the incremental approach of continuous improvement would seem to be counter to the bold innovation and experimentation required for exploration. However, continuous improvement seems to support a culture of change and of questioning the status quo, which lays the groundwork for more radical innovation.
- Another unexpected outcome of the research was that a clear vision for the company while useful to the organization when it concerns exploitation of existing products and customers, does not seem to make much difference to the success of a firm’s exploration tasks.
- Unsurprisingly, R&D benefits exploration – it is after all focused on preparing the future through innovation – and is of no benefit to exploitation. However, the researchers found that there is a point of diminishing returns in R&D and managing R&D efforts may be thus more complex than imagined. When the changing business environment urgently calls for innovation, companies need to be aware that over-spending on R&D can not only yield diminishing results, but may also divert attention from the effective exploitation required to maintain present success.
At a time of change and disruption across so many business sectors, most business leaders are only too aware of the persistent tensions and conflicts between exploitation and exploration. In this study the researchers argue that finding a balanced ambidextrous approach to resolving these tensions requires a better understanding of the antecedents of exploration and exploitation.
They highlight factors that can exacerbate the conflicts – for example, over-investment in R&D might benefit the company in the long-term but can undermine the company’s current success; and also identify factors that benefit both exploitation and exploration, such as recruiting a diverse top management team and implementing continuous improvement processes – valuable insights that can help organizations win the present and prepare for future success.
The authors of the study were:
Dr Oksana Koryak, of Cranfield School of Management; Professors Andy Lockett, James Hayton, Nicos Nicolaou and Kevin Mole – all of Warwick Business School.
Access the full research paper here:
Disentangling the Antecedents of Ambidexterity: Exploration and Exploitation. Research Policy (March 2018).