Developing ambidextrous mindset: how to achieve innovation and organizational efficiency

Ambidexterity has emerged as a term in presentations, operations, and the business world, signifying an organization’s ability to balance current business exploitation with the exploration of new opportunities to generate fresh business prospects.

In the context of the new digital economy, innovation is paramount for corporate success, and both organizational and business ambidexterity have become vital tools to ensure survival in an increasingly competitive market.

In this article, we will delve into the significance of ambidexterity, differentiate between organizational and business ambidexterity, and underscore the necessity of innovation for contemporary business success.

Before discussing organizational and business ambidexterity, here is a brief overview of how some online dictionaries define the term ambidexterity:

• https://en.wikipedia.org/wiki/Ambidexterity
  Ambidexterity is the ability to use both the right and left hand equally well. When referring to objects, the term indicates that the object is equally suitable for right-handed and left-handed individuals. When referring to humans, it indicates that a person has no marked preference for the use of the right or left hand.

• https://www.merriam-webster.com/dictionary/ambidexterity
  ambidexterity
  Am·​bi·​dex·​ter·​i·​ty
  the quality or state of being ambidextrous

Ambidexterity in Organizations

Drawing from the dictionary definition and reinterpreting the ability to use both sides of the body’s limbs, in organizational contexts, we can consider ambidexterity as actions in two distinct realms: exploitation and exploration.

Actions or Initiatives of Exploitation

These refer to activities aimed at enhancing and increasing the efficiency of established processes, such as the core business or the existing well-known business. This involves the development of existing products and services through minor enhancements and incremental innovations. Exploitation also focuses on optimizing existing processes and resources to boost short-term efficiency and profitability.

Examples include production enhancement, mass production, and the sale of existing products, pursuit of scalability, efficiency and effectiveness improvements, task or process repetition, and the execution of the current business itself.

Actions or Initiatives of Exploration

Comprising activities focused on experimentation and the creation of new value propositions. In this context, disruptive innovation of products, services, or unique business models is sought. Exploration also entails investing in new ideas, technologies, and processes to innovate and grow in the long term. It, of course, involves substantial risks in analysis and decision-making.

Examples encompass aspects such as:

• Approaching opportunities in a novel and innovative manner.
• Analyzing information and variations of the sought goal and learning and innovating from it.
• Generating experiments and confirming the direction and value of the strategic journey.
• Being flexible enough without losing management and control.
• Cultivating a culture of discovery and innovation.
• Developing new products.

Modern Management Challenge

This presents one of the significant challenges of modern management and leaders in our New Digital Economy:

How can we be ambidextrous and simultaneously engage in both Exploitation and Exploration?

Focusing on just one, and the most common I see in the market, companies primarily concentrating on Exploitation (improving the current business), increases the risk of the company’s vulnerability to not prosper in this new digital economy and the constant market upheavals. The company might survive this approach for now, but it significantly diminishes the chances of achieving this “feat” in the long run.

Proposed Mindset

The mindset proposed here is based on the ambidexterity perspective presented above. It suggests considering these outlooks in two sub-contexts: Organizational Ambidexterity and Business Ambidexterity.

It is crucial for companies to be ambidextrous and segment ambidexterity into organizational and business facets. This approach allows for proficiency and capabilities in both organizational and business ambidexterity.

Organizational Ambidexterity

Organizational ambidexterity is a broad concept encompassing the entire company’s ability to simultaneously manage the efficiency of its current business model and the exploration of new business opportunities. It focuses on the organization’s capacity to balance and integrate its exploration and exploitation activities.

The following figure illustrates an example of this perspective:

In this context, operational areas or business units apply their advancements to serve both the company’s or area’s core business and the broader market.

One drawback compared to business ambidexterity is that it demands significant focus, effort, and overall investment to make everything work, potentially leading to issues or a loss of priorities and focus. The company may find itself needing to prioritize internal improvements within the organization over market innovations, as depicted in the figure below:

Business Ambidexterity

Business ambidexterity is a more specific term that focuses on particular business areas. It is the practical outcome of applying organizational ambidexterity to specific business domains, such as innovation, technology, and new product development. Business ambidexterity places a strong emphasis on the organization’s ability to balance and integrate activities across various business areas, including finance, marketing, operations, and others. For instance, a company that is successful in selling products to end consumers may decide to expand its portfolio to include B2B sales. In this case, business ambidexterity would be required to ensure that the company can operate efficiently and effectively in both markets.

The following figure provides an example of this perspective:

A significant advantage over organizational ambidexterity is that business areas can focus and be flexible as per the company’s overall need or strategy. Each area can act internally or in the market, adapting as required, as illustrated in the figure below:

Examples of Ambidexterity Contexts

We have examples of these ambidextrous approaches in the following companies. It’s important to note that companies can often exhibit characteristics of both organizational and business ambidexterity.

Examples of Organizational Ambidexterity

Apple

A company known for its constant innovation while maintaining a high level of operational excellence. Apple launches innovative products like the iPhone while efficiently managing its supply chain and operations in physical and online stores (https://www.apple.com/supplier-responsibility). It also has numerous environmental initiatives (https://www.apple.com/environment). Apple initially started as a personal computer company but evolved into a provider of integrated services and solutions, including the iPhone, Apple Music, iCloud, and Apple Pay.

Google

A company recognized for its ability to innovate while preserving a strong organizational culture. Google develops innovative products and services like Google Search while maintaining a user-centered culture (https://about.google) and robust talent management (https://about.google/belonging).

Toyota

The Japanese automaker is known for its approach of continuous improvement but also fosters a culture of innovation and experimentation (https://www.toyota.com/brand). It combines these two approaches, reflecting its leadership position in the automotive market.

IBM

A classic example of a company that has continuously adapted and innovated throughout its history. IBM started by manufacturing punched card machines and was one of the early companies in the personal computer industry. Over time, it evolved into a provider of IT solutions, software, and consulting services, demonstrating its adaptability and constant innovation (https://www.ibm.com/products).

3M

A company renowned for its innovations since its inception. It maintains a culture of innovation that has led to many inventions, such as Post-it notes, Scotch tape, and waterproof sandpaper (https://www.3m.com/3M/en_US/p/).

Mercado Livre

An Argentine e-commerce company that has cultivated a culture of innovation and process agility while also emphasizing operational efficiency. Mercado Livre has invested in open innovation initiatives, such as startup accelerators, to stimulate the creation of new businesses (https://www.mercadolivre.com.br/institucional).

BeGreen

A Brazilian technology company that develops solutions for solid waste management and invests in innovation to expand its operations (https://begreen.com.br/sobre-a-begreen). It maintains a strong focus on operational efficiency through process automation and technology adoption (https://begreen.com.br/visitas-guiadas).

Examples of Business Ambidexterity

Amazon

A company capable of constant innovation in its business approach. It started as an online bookstore and has since evolved into an e-commerce giant, offering services like Amazon Prime, Amazon Web Services, and Alexa. Simultaneously, it maintains a high level of operational efficiency in its supply chain and logistics (https://www.amazon.com).

Netflix

A company known for its constant innovation in its business model, introducing new services such as video streaming and original content production, while maintaining a high level of operational efficiency across countries (https://help.netflix.com/en/legal/corpinfo) and on various devices (https://devices.netflix.com/en).

Tesla

The American electric car manufacturer is renowned for its technological innovations and is proficient in efficiently managing its supply chain and manufacturing (https://ir.tesla.com/#other-documents-events). It combines these two dimensions to create high-quality, technologically advanced products. Tesla is also known for its long-term vision and commitment to making renewable energy accessible and widely available.

Airbnb

The accommodation-sharing platform started as a simple business idea but quickly expanded and innovated its service offerings (https://news.airbnb.com/about-us). Airbnb identified market opportunities and innovated its business approach to become a market leader in its industry.

Nubank

This Brazilian fintech has an innovative business model, offering digital banking services in an affordable and customer-centric manner. Simultaneously, the company maintains a strong focus on operational efficiency with automated processes and a lean structure (https://international.nubank.com.br/about/).

Movile

A Brazilian technology company with a diverse portfolio and a culture of innovation and entrepreneurship, always seeking to develop new businesses and expand its presence in new markets (https://www.movile.com.br/sobre).

These are just a few examples of companies that have successfully implemented both organizational and business ambidexterity. Each of these companies effectively balances innovation with operational excellence, allowing them to grow and adapt in an ever-changing market.

Concluding

Due to the increased risk of investment loss, focus, and prioritization on exploration in Organizational Ambidexterity, it primarily revolves around internal and existing value deliveries within the organization. Business Ambidexterity, on the other hand, is more closely associated with external activities of the respective business, such as entering new markets and introducing new products for the given business. It’s essential to emphasize that both are crucial for the survival and prosperity of companies in an ever-changing market.

By focusing on Business Agility and business prosperity, I would like to emphasize:

• Investing in Business Ambidexterity is a way to enhance the assurance of a company’s survival and, more importantly, to increase the likelihood of business success. Of course, it’s always necessary to evaluate on a case-by-case basis, within each organization, whether this is an appropriate strategy for that particular company.
• Risk Management is essential to ensure that both Organizational Ambidexterity and Business Ambidexterity are executed safely and sustainably, allowing the company to reap the benefits of innovation without compromising its financial stability, operational efficiency and effectiveness, and its reputation in the market.

So there you have it, folks! Come join us, and together, let’s accelerate the capabilities and results of your businesses!