Ambidexterity in business: run the core, build the new

The term comes from Latin: ambo means both, dexter means right. It means being two-handed. Exploitation stands for making use of the existing, exploration for exploring the new. That organisations must constantly renew their portfolio of services is nothing new. However, digitalisation and the complexity of markets have greatly accelerated innovation cycles. Added to this are ongoing changes in the economy, society, politics and above all technology. They challenge the adaptability of organisations again and again.

Where requirements are known, standards, reliable processes and targeted improvements can make sense. The existing business must perform, serve customers and remain economically viable. Development also takes place here: processes and products are reviewed and improved. Exploitation therefore means more than continuing routines unchanged.

Where the right solution and the way to get there are still uncertain, assumptions are tested step by step. Different professional perspectives and feedback from customers help to develop new offerings or ways of working. Early results also serve learning. This requires a recognisable task, guard rails and decisions about which approaches will be pursued further.

Two questions help with the classification. How high is the uncertainty in the company's relevant environments? And how difficult is it to plan one's own work processes? If both values are low, efficient working is appropriate: optimising existing processes and products. If both are high, there is a double uncertainty. Then it is about innovation and new ideas for unusual customer expectations.

For leadership, this results in two types of decisions. It decides on structures and processes, builds them and accompanies them. And in the process of developing solutions, it brings about the necessary substantive decisions. The uncertainty itself is processed in the team. This requires a leadership culture that allows decisions under uncertainty alongside the familiar routines based on knowledge and predictability.

An innovation initiative may need time before its benefit can be reliably assessed. At the same time, the core business needs reliable capacity. Leadership decides on the resources for both tasks and on the different working conditions. If the same routines and expectations are used for every task, important differences can remain hidden.

Ambidexterity brings paradoxes with it. The ability to manage them shows in five areas of tension. Leadership connects with others and can at the same time step back, keep its distance and also decide against others. It acts, asserts itself and brings things to a conclusion, and it deliberately slows down for self-observation and reflection. It creates freedom that allows the new and dissolves the established, and equally ensures structured processes, order and rules.

The fourth tension concerns the boundary with the outside. Leadership feeds in relevant unrest from outside and at the same time protects its own area of responsibility from irritations so that concentration remains possible. The fifth is the tension between exploration and exploitation itself. On one side is skilful handling of not knowing: setting out to search and asking the right questions. On the other side, existing knowledge and experience are deliberately exploited to solve problems.

Separate forms of work need a regulated connection. Insights from development must be able to reach the existing business. Experience from sales, operations and customer relationships is relevant for new solutions. This connection is called structural coupling. Specifically, it concerns suitable forms of communication, decision paths and the adoption of viable innovations.

The helpful opening question is: where do we already know the requirements and approach, and where do we first have to work them out? It is then examined which structure, competences and ways of working are required for this. Agile methods can support exploration. Using them alone does not answer any question of resources, strategy or leadership.

One way to do this is communication spaces that are detached from the core business. There, leadership works out strategic positions on changes in the relevant environments. These spaces are structurally coupled with the organisational units that provide thematic contributions.

In this way, existing know-how becomes a competitive advantage over start-ups that cannot draw on this resource, and it does not slow down innovation. What remains to be settled is the allocation of resources as well as workplaces and working conditions for the employees of the core business and the internal innovation wing.

Ambidexterity distinguishes between the reliable execution of the existing business and the exploration of new possibilities. For a known service, repeatability and quality are important standards. With a new option, customer assumptions and feasibility must first be tested. Leadership decides which resources both tasks receive and when an exploration is continued, adapted or ended.

The units must not be completely isolated from each other: experience from the market and operations must flow in both directions. A new idea can use existing competences. At the same time, it can show which routines of the core business no longer fit. Ambidexterity is therefore not a mere division into “old” and “new”, but a recurring leadership decision about priorities, interfaces and shared learning processes.

Agile ways of working are often recommended as an answer to accelerated innovation cycles. Ambidexterity is the organisational principle that makes it possible to deal with this challenge. Both approaches belong together. Agility begins with organisation and culture and ends with methods and techniques. A rigid company that merely introduces agile methods will fail.

On the foundation of corporate culture, three levels can be distinguished. The organisational level covers the form of organisation with primary and secondary organisation, the leadership structure and the communication and decision routines. The competence level describes knowledge, will and ability, i.e. know-how, attitude and personality, and skills and abilities. Only then come methods and techniques: agile methods such as Scrum or design thinking and overarching techniques such as adopting the customer's perspective.

The organisational and cultural basis is the necessary condition for agile methods to be successfully introduced and used. The levels must be in harmony, whether agile or not, so that the goals set are achieved in the respective style. Before using agile methods, it is therefore worth checking whether the context supports the initiative or whether other methods would make more sense.

In the systemic understanding, an organisation is agile and capable of innovation when it recognises uncertainty about a required solution and the way to reach it and uses agile ways of working for this in a targeted and skilful manner. This includes the ability to build up or dismantle structures as the situation requires that allow and support such ways of working.

Agile working makes sense when the concern and the picture of the solution are unspecific and the process cannot be planned because there are too many unknowns. The less specific these parameters are, the more important it becomes. If goals and approach are known and concrete, classic forms of work prove more efficient. For the organisation as a whole, both apply: the choice is made for each situation on the basis of the information available.

The characteristics differ significantly. In classic working, requirements and approach are known, change requests create unplanned effort, and the customer is hardly involved because the goal is fixed. Clearly defined processes, clear hierarchies and standardised communication routines make it possible to handle unambiguous assignments efficiently.

In agile working, the approach is worked out step by step. Iterative coordination and changing requirements are planned in, and the customer is closely involved. Teams organise themselves, take on a high degree of personal responsibility and reach decisions quickly through informal communication and stand-up meetings.

Behind this are two attitudes to change. Classic project management treats it as a risk to be managed and avoided wherever possible. Agile project work accepts it as part of the project and as an opportunity for innovation. The result is evaluated accordingly: in the first case by the degree to which the initially defined specification was implemented, in the second by the usefulness of the finished product for the customer in their context.

The central element is the iterative approach with a feedback loop of build, measure and learn, as described by Eric Ries. Agile leadership comprises all measures that make decisions and behaviour in an area of responsibility fast, flexible and well adapted. Its principles are capable employees and teams, a culture of trust with good relationships, effective communication and little direct leadership and regulation.

Many challenges arising from growing volatility in the relevant environments cannot be met with yesterday's solutions. Even companies whose business model is not fundamentally called into question by digitalisation need new forms of organisation to exploit the opportunities of digitalisation, the transport transition or the energy transition. Behind the topic of agility, for all its fashionable exuberance, there is therefore a serious development problem of organisations that should be dealt with in a targeted way. This is Wimmer's argument.

A prerequisite for agile structures in established organisations is the insight that these forms cannot be extended to the entire organisation. In them, those involved are meant to learn to handle key leadership tasks on their own responsibility through self-organisation. The deliberate and structured engagement with developments in the relevant environments remains an essential leadership task. It is a fallacy to believe that agile frameworks dissolve leadership tasks and automate the steering of the organisation without hierarchy in team-based processes.

The frameworks themselves show the limit. Classic agile frameworks such as Scrum focus on a single product and the associated product team. They do not address relevant environments. Scaling frameworks such as LeSS or SAFe partly take up topics such as budget planning and do not ignore the environment completely. They too are mainly concerned with how several teams work together on one product.

The demands on leadership therefore go far beyond agile frameworks. It has to maintain the balance between exploitation and exploration at the level of the organisation. Conversely, the prerequisites for organisational ambidexterity make an organisation agile.