35 Managing Business Transformation with Ambidexterity
In today’s complex business context, addressing business transformation means that organizations must develop new capabilities to quickly adapt to both predictable and unpredictable environmental changes and create (and capture) new value.
External events such as the emergence of new technologies and new disruptive and innovative business models, the shortening of product life cycles and a more dynamic competitive landscape require new strategic responses.
Transformational leaders often address this challenge by adopting different combinations of information technologies, processes and resources that greatly affect the entire organization and lead to radical changes in its structure, culture, and behavior.
Additionally, transformational leaders typically face the need to push transformational change through multiple transformation initiatives that affect different levels and have varying impacts on the organization.
Although the possibility to engage in transformational initiatives often arises to respond to the opportunities detected by transformational leaders to generate new paths of value, these also involve greater internal complexity when all the initiatives are joined together.
Thus arises the need for transformational leaders to manage the dichotomy between exploring the opportunities offered by environmental changes and, at the same time, continuing to exploit day-to-day operations.
35.1 Ambidexterity Explained
Business transformation initiatives deliberately introduce organizational changes that are global and pursue ambidexterity, namely, the simultaneous combination of two different modes of operation within the organization.
Transformational leaders push transformational change through multiple transformation initiatives that affect different levels and have varying impacts on the organization
On the one hand, the exploitation mode, focused on the most efficient and flexible use of the existing organizational knowledge and resource base. On the other hand, the exploration mode, which seeks to go beyond the current base of knowledge and skills of the organization and focuses on the search for new sources of knowledge, resources, and the acquisition of new skills that foster speed, experimentation, and innovation.
For transformational leaders, the key is not only to be aware that both modes of operation exist and are different, but that they differ in terms of strategy, structure, processes, and culture and yet must coexist together. Every transformational leader must, therefore, learn to find an appropriate balance between both modes of operation within their organization, avoiding as much as possible overweighting one mode over the other.
35.2 How to Approach Ambidexterity Effectively?
Transformational leaders have different approaches available to achieve ambidexterity in their company.
Each of these approaches usually encompasses different initiatives at various levels that are usually grouped into the following:
Cultural change initiatives.
New organizational structures, including new roles and responsibilities.
New processes, aimed at continuous innovation and collaboration with partners.
Transformational leaders will typically strive to implement traditional exploitation strategies that clearly establish the strategic direction the organization must follow, allocate resources, and set priorities.
Every transformational leader must find an appropriate balance between the exploitation and the exploration modes of operation within their organization
However, when implementing exploitation strategies, the transformational leader must be aware that a highly rigid or programmed way of introducing changes in the organization can slow down, if not prevent, the exploration mode of new opportunities and transformation scenarios in the organization.
For this reason, it is highly recommended that transformational leaders use exploration strategies that are as open and agile as possible to guide and drive the discovery of new opportunities for the company.
35.3 Organizing for Ambidexterity
Companies sometimes create dual structures to make ambidexterity structural, meaning that they simultaneously maintain a traditional organizational structure for the exploitation mode and another open and agile structure for the exploration mode.
Under this dual approach, transformational leaders maintain a clear-cut separation between the activities involved in the exploitation mode and those of the exploration mode.
On other occasions, when the need to combine both approaches is justified, transformational leaders establish hybrid organizational configuration. Very often this means that transformational leaders must manage multiple transformation initiatives that come together within a single organization, which adds even more complexity to the transformation process itself.
It is highly recommended that transformational leaders use exploration strategies that are as open and agile as possible
Whether one organizational model or another is adopted, the most important thing is that transformational leaders ensure that each transformation initiative is aligned with the company’s overall strategic vision. To do this, transformational leaders usually create a specific unit with people dedicated to coordinating all initiatives and ensuring synchronization and collaboration in accordance with established business objectives.
35.4 Ambidexterity, Governance and People
Managing multiple concurrent transformation initiatives and the consequent structural and cultural changes that occur represent a major challenge for organizations, even more so the smaller they are.
For these and other reasons, many transformational leaders decide to implement a governance framework for transformation initiatives that regulates resources and responsibilities and seeks to seamlessly integrate them with business, IT, and people functions.
With a transformation governance framework in place, it is possible to more effectively address resistance to change and overcome many of the inertias that impede organizational change, replacing them instead with new, more innovative, and collaborative capabilities.
The most important thing is that transformational leaders ensure that each transformation initiative is aligned with the company’s overall strategic vision
Ultimately, transformational leaders must keep in mind that the transformation of a business organization must be carried out by and designed for people, so employees must always be at the center of any business transformation strategy by design.
Interpersonal and cultural aspects play a crucial role in a successful business transformation strategy based on ambidexterity.
Excellent communication with people and leadership are fundamental tools that must always facilitate employee collaboration between all business areas.
Maintaining continuous personal interactions at all levels of the company, understanding the objectives pursued and sharing the necessary knowledge between people should not only help reduce the economic and social costs of organizational transformation, but should also contribute to accelerating the entire transformation process.
35.5 Conclusions
Both exploration (represented by the opportunity for change) and exploitation (represented by business stability) must form an interdependent system and a mutually beneficial duality.
The above means that transformational leaders will need to learn how to best manage their business transformation initiatives accordingly.
Otherwise, exploration and exploitation can end up forming a duality of opposing, poorly balanced activities, which entails high costs for the organization and is a drag on the execution of the sought-after transformation.
As we have learned in this article, transformational leaders must not only focus on detecting good transformation opportunities through appropriate use cases and articulating the most effective and efficient way to implement transformation initiatives, but they will also have to decide on the emphasis and scope of ambidexterity in the organization as a key element of its transformative mindset.
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