What’s a leader’s most important task? Some would answer maximizing organizational performance. Others might say planning the next generation of products and services. The correct answer is: both. Many organizations focus too much on the current and short-term business goals—it is easy to do when operations are established and profitable–without preparing for strategic changes in the future. The ability of a company and its leadership to simultaneously run the business and change the business is known as “ambidexterity”. Research shows that organizations that are ambidextrous perform better than and outlive those that are not. It’s why your company needs to evolve and create a culture that embraces exploration while it continues to implement what it’s doing right now.
Evolve to Survive
Here’s the danger if a company does not learn to be ambidextrous: If it puts too much effort in refining day-to-day operations, it risks being overtaken by the competition as market conditions change. Case in point is Kodak, which, although still alive, is worth only a small fraction of what it was at its peak in 1990. For years, the firm failed to plan for and adapt to emerging trends in digital photography and was forced into bankruptcy in 2012.
On the other hand, if an organization focuses more on innovation than it does on its current core business, it can find itself in a position like Ericsson, the networking company that invested too heavily in technology exploration while not working to improve its existing competencies. It suffered huge losses in the early 2000s as a result. In order to survive, Ericsson had to completely alter its business model, lay off nearly half of its employees and close most of its 100 innovation centers.
The balance between strategizing in both the present and the future is hard to achieve, but it determines the longer-term fate of most organizations. Companies should follow these guidelines to evolve and stay in the game:
Learn to Forget
Part of what makes organizations focus more on what’s happening now than what could happen in the future is that managers and employees develop mindsets based on what they have experienced. A company’s systems and procedures also become entrenched in business-as-usual. Leaders tend to look backward to their organization’s history when deciding where to go next when it would be better for them to forget the past to discover new paths forward.
Forgetting or “unlearning” in an organization is not easy, especially for employees who have been successful under the current system, but it can be the best way to encourage fresh exploration. This kind of initiative needs to start with top leadership. Company heads can help their organizations unlearn work habits by making organizational changes that stimulate new perspectives. One way would be to change the bonus or incentive system by, for example, making it based on team performance rather than individual performance. Another option would be regularly transferring senior managers’ responsibilities, or creating a mandatory job rotation program for mid-level professionals.
But Keep a Clear Vision
While a company needs to evolve, it should not lose sight of the overarching vision. Unlearning old ways in order to gain a fresh perspective on the future does not mean throwing the mission out the window. The opposite is true—an ambidextrous leader needs to maintain the vision and communicate it constantly to the whole organization so that it guides all business activity today and tomorrow. One company that does this well is Royal Dutch Shell. Their general business principles of long-term profitability, business integrity and sustainable development, among others, are a force behind all business decisions for their present-day strategy (maintain leadership position in oil and gas while reducing costs) as well as future innovations (explore new oil and gas reserves through acquisitions and projects).
Manage for It
The way a company manages its staff has an impact on its ability to be ambidextrous. Running daily operations successfully requires a great deal of knowledge sharing, so staff engaged in these activities should have every opportunity to learn from each other. This can be facilitated by, for instance, good documentation, the opportunitiy to share learnings from projects, and rewarding open knowledge exchange.
Alternatively, innovation—or what drives a company’s future success—relies on exploration and entrepreneurial thinking. Employees on this side of the business will benefit from practices like innovation challenges, research/ideas databases, job swaps and longer planning cycles.
Develop a Structure for Innovation
Normally, a company has processes and methods in place to make sure its current work flow is smooth and consistent. This is usually not the case with projects related to the future of the business, however. But it should be. While it shouldn’t stifle exploration, a company (especially a small- or medium-sized one) needs to keep the cost of exploration in check. So, it needs a structured way to assess new proposals against criteria as well as a set of procedures for experimenting with new innovations. The fast food industry provides a good example here. Many new products or services are tested in select cities before the decision is made to cancel or roll them out nationally.
Truly ambidextrous companies might be hard to find, but they are the clear winners. A study done on 215 UK companies’ performance over a 20-year period found that only three were able to transform their business strategies while also performing consistently well during the same time period. Evolving constantly is an organization’s biggest challenge but also its biggest reward.
Kate Rodriguez is a freelance marketing copywriter based in Munich. She has over 20 years of professional experience in public and private organizations. A former international trade analyst for the U.S. government, she also worked as a university career coach, specializing in international career search. Most recently, she was employed at Experteer as a customer service agent and online marketing manager.