Strengthening Innovation in a Dynamic Environment

The Best of Both Worlds

Certainly, juggling the various directives of an ambidextrous innovation philosophy across a large enterprise is easier said than done. But it can still be achieved by business leaders across industries, from startups to long established brands. Exploring disruptive innovation while maintaining incremental innovation can ebb and flow depending on the present demands of the company and its strategic mission. But having the best of both worlds is an important capability to develop.

These different modes of thought, optimally, can be transitioned to when a company needs to adapt and pivot, whether it’s turbulent or stable times in the market. Boston Consulting Group, in its blog on “Ambidexterity: The Art of Thriving in Complex Environments,” points out that, “Exploration and exploitation require different ways of organizing and managing. Exploration is facilitated by long-term targets, a flexible and decentralized structure, and a culture of autonomy and risk taking, while exploitation typically requires short-term targets, centralization, standardization, and discipline in execution.”

There are various approaches to ambidexterity but nonetheless it’s a critical asset to develop. Ambidexterity, BCG notes, can be achieved through four distinct approaches: separation, switching, self-organizing, and external ecosystem. Separation is the most common approach, which involves structurally separating units that need to deploy different strategy styles (such as an emerging business versus a mature business).

The switching approach, however, tends to be more dynamic. “Initially, an organization must deploy an exploratory style as it looks for a breakout product, service, or technology. Over time, however, it must transition to a more exploitative style in order to scale up and secure a profitable market position,” explains BCG.

When a company needs to employ both styles, there is a self-organizing strategy. “Here, individuals or small teams can choose for themselves which style to employ and switch between them over time. Companies achieve self-organizational capabilities by breaking the organization down into small units and creating individualized performance contracts.”

The external ecosystem approach tends to be more complex but is useful for companies operating in a diverse and dynamic environment. BCG notes, “Companies may need to orchestrate a diverse ecosystem of external parties in order to source the strategy styles they require.”

The Ambidextrous Imperative

In “Balancing Innovation with Ambidexterity,” All Things Innovation first delved into the ambidextrous approach. Innovators have long been tasked with being a flexible part of an ambidextrous team, as part of an organizational cog that can easily pivot and manage tasks on several levels. This ambidextrous approach entails focusing on the big picture for the company when needed, yet at the same time being focused on the small, incremental steps that often define and are necessary for entrepreneurship and innovation.

In “Exploiting the Present to Explore Tomorrow’s Innovations,” we further looked at the broader ambidextrous perspective. Macroeconomic factors in the current environment have now seemed to favor driving new revenue growth projects, whether it be short-term or longer-term investments. This brings up the dilemma that innovators often face: Innovate through exploitation or through exploration?

Looking forward to FEI 2024? The conference, which will be held June 10 to 12, will feature a session called “Zero To N Innovation: Attaining Ambidexterity,” presented by Harsh Wardhan, Innovation Program Lead, Google. The session will explore the assimilation of short-term and long-term process to deliver on both short-term and long-term growth goals. Register for FEI 2024 here.

Embracing Ambidexterity

While it may be challenging for companies to balance these two types of innovation, some organizations have successfully embraced ambidextrous approaches. We asked ChatGPT to select the top ten leaders of the pack. These examples showcase how companies across various industries can effectively manage both exploitative and exploratory innovation activities, allowing them to adapt to changing market conditions and sustain long-term success. Here are ten examples of companies known for their ambidextrous innovation efforts:

1. Google (Alphabet Inc.): Google is known for its commitment to continuous innovation. While its core business focuses on search and advertising (exploitative innovation), Google X, the company’s experimental division, explores moonshot projects like self-driving cars and other exploratory innovation.
2. Amazon: Amazon exemplifies ambidextrous innovation through its focus on both improving existing operations (exploitative) and exploring new business models and technologies (exploratory). The company’s success in e-commerce is paired with ventures into cloud computing (Amazon Web Services) and devices like the Kindle.
3. 3M: 3M is a classic example of an ambidextrous innovator. While consistently optimizing its well-established products (exploitative), 3M also encourages employees to spend a portion of their time on personal projects, leading to breakthrough innovations such as Post-it Notes and Scotchgard (exploratory).
4. Procter & Gamble (P&G): P&G has a history of balancing exploratory and exploitative innovation. The company is known for continuous improvement in its existing brands but it also invests in research and development to introduce new products and technologies (exploratory).
5. Apple: Apple, famous for its iterative product releases (exploitative), also engages in groundbreaking innovations. Examples include the introduction of the iPhone, iPad, and Apple Watch, which disrupted industries and created new markets (exploratory).
6. IBM: IBM has successfully managed ambidextrous innovation by simultaneously optimizing its traditional business in enterprise solutions and consulting (exploitative) while investing in emerging technologies such as artificial intelligence and quantum computing (exploratory).
7. Tesla: Tesla is known for challenging the automotive industry with electric vehicles and energy solutions (exploratory), while also refining its manufacturing processes and vehicle technologies (exploitative) to improve efficiency and product quality.
8. Microsoft: Microsoft, historically focused on software and operating systems (exploitative), has shifted its focus to cloud computing and artificial intelligence (exploratory). The company balances improvements to existing products with the development of new, transformative technologies.
9. Samsung: Samsung is a diversified technology company that engages in both incremental improvements to its existing product lines (exploitative) and disruptive innovations, such as the development of new display technologies and mobile devices (exploratory).
10. Nestlé: Nestlé is an example of a company that balances its focus on optimizing existing products (exploitative) with exploring new opportunities in health science, wellness, and personalized nutrition (exploratory).

Turbulent Times

Ambidexterity is tough to master. As the above list attests, some of the top brands in the world have strived for this strategic approach. Yet even for a larger enterprise, and perhaps because they are a larger enterprise, it is not always easy to distinguish between exploitative and exploratory innovation opportunities, much less capitalize on them. But the ability to explore and exploit is a critical capability to have in the present environment. That competitive environment should only increase in the future.

In their article on the subject, Boston Consulting Group’s conclusion still rings true today: “The imperative to achieve ambidexterity will only rise as technological change and economic turbulence increase the diversity and dynamism of the business environment.”

Video courtesy of Bosch Innovation Consulting