The Ambidextrous Organization

Anyone that works in a large company may be familiar with the ambidextrous organization. This idea was made widely known by Micheal Tushman & Charles O’Reilly of HBS. The purpose of the organizational model is to create an environment that is conducive to innovation without interfering with one’s current business operations. They essentially say that many companies lack innovative ideas primarily because their organizational structure doesn’t allow it.

The ambidextrous organization even goes beyond the use of cross-functional teams which are actually more popular in the corporate world. They say you essentially are creating an alternative organization within the primary organization that will be it’s own. They will be the innovators behind an idea. They will grow and sell the idea. They will manage it and will only be connected to the original organization at the senior management level.

An example of this model would be Wells Fargo & Co. I’m not saying they are an ambidextrous org but their structure will suffice for this example. Wells Fargo Financial is one major part of WF&C. WFF is it’s own business and while it provides similar services to WF&C they are strictly connected through senior management. That’s not to say that employees bounce back and forth from WFF and WF&C because they still are one large organization.

The reason I bring this whole topic up is because of the discussion of innovation. This really isn’t something that can be taught. Rather one must develop their own understanding. Until 2 months ago I realized I knew actually very little about innovation and how it fits within the overall org.

Innovation itself can be categorized into three types: incremental, architectural, and breakthrough or radical innovation.

Incremental focuses on current products/services and making small innovative increases to help maintain and grow current business.

Architectural innovation focuses on changes made to the organization to improve efficiency and cut costs. This is typically seen through large software applications or major technological changes such as a universal communication system that Chevron created to standardize everything worldwide and facilitate improved communication between departments and even employees.

Breakthrough/radical innovation is one that either makes other products obsolete or it creates new product markets. This is the kind of innovation companies look for but don’t find because their org is not conducive to it.

By understanding the differences between these types of innovation you can better strategize what you are doing and put the right people in the right places so that you can actually accomplish all three simultaneously. As long as you make the distinction and plan for all three innovation will naturally become a primary goal of your organization. For large companies this can be much easier due to larger capital resources.

Tomorrow I’ll post about how SMBs can apply this model even when you lack the resources that are typically necessary. While you may have questions in the mean time, go check out Innovation Point. They have a ton of great resources. I can’t actually post my other sources due to licensing agreements but this consulting firm has more than just the basics on their website.