Unlocking competitive advantage in an agile enterprise with organizational ambidexterity

Discover how organizations can leverage their competitive advantage in VUCA markets through organizational ambidexterity. Learn about an employee-centric enablement approach to evolve growth mindsets and the dynamics that jointly build a unique selling point in a highly competitive market.

Organizational ambidexterity as a key concept

Agile companies are highly competitive in the VUCA business world and require both existing and new competencies to succeed. Organizational ambidexterity is a key concept that allows companies to optimize and leverage their current competencies while developing new lateral ones.

Zara and Google have successfully achieved ambidexterity

Zara and Google are examples of companies that have successfully achieved ambidexterity. Zara’s “fast fashion” strategy allowed them to optimize their retail competencies while developing new skills in design, production, and logistics. Google’s expansion into cloud computing, mobile operating systems, and self-driving cars highlights their ambidextrous approach.

Organizational ambidexterity promotes innovation and the development of new products

The ability to use both existing and new competencies makes companies more adaptable, enabling them to quickly respond to new market conditions while building on existing competitive advantages. Ambidexterity also promotes innovation and the development of new products and services that meet current market needs.

A company as a “social system”

So, to develop such skills, it must be understood what a company actually entails. Science uses Luhmann’s system theory as an explanatory basis, which describes a company as a “social system.” Such a system describes how people interact with each other in a shared work environment, and how they function as a group through various rules of cooperation and organizational structures. An important characteristic of a social system in the sense of a company is not only to maintain itself, but also to develop further through feedback (conscious or unconscious). To understand this derivation, the following can be considered: companies generate revenue by providing and maintaining a product or service portfolio together with employees from the relevant departments (e.g. BizDevOps). If nobody works from tomorrow onwards, the work will come to a standstill, and the company would no longer make a profit – to put it simply.

Tesla as an example that absorptive capacity is the key to creating innovation

Science underlines this relationship: in a social system, the so-called “absorptive capacity” of the individual determines the absorptive capacity of the company. So, absorptive capacity describes the ability to absorb new knowledge, ideas, and innovations, to understand them, and use them purposefully adjusted in their respective context. This relationship is exemplified, for instance, by Tesla who specializes in electric vehicles and renewable energy. To be successful, Tesla needs employees with specific knowledge and skills. The company is known for hiring highly qualified employees who can develop and implement innovative technologies. They are therefore crucial to developing products and improving existing ones in order to secure Tesla’s competitive advantage. Absorptive capacity is therefore seen as key to creating innovation and adaptability in a constantly changing environment and critical success factor in evolving organizational ambidexterity.

The concept of employee learning experience

Learning and development (L&D) is vital for an organization, as the abilities of the organization are based on the abilities of its individuals. Traditional online training through Learning Management Systems is no longer sufficient. Nowadays, the focus is on personalized and sustainable learning methods, known as the “Employee Learning Experience,” to fill individual knowledge gaps.

The three main learning methods are e-learning, (virtual) instructor-led trainings, and master classes. These can help build a diverse portfolio of high-quality training content and be part of a learning ecosystem conveyed through learning paths. Master classes, in particular, can accelerate the learning curve and promote the implementation of best practices.

 

Growth mindsets

By providing targeted enablement opportunities for their own employees, companies also promote the evolution of “growth mindsets.” Employees with growth mindsets strive to build expert knowledge in areas of their very interest. Through the opportunity to network across functions and hierarchies, knowledge is shared and experts inside and outside of personal networks. Ultimately, this form of enablement and networking leads to intrinsic motivation which enables increased problem-solving and better decisions; in other words, L&D supports the development of organizational ambidexterity.

 

Google fosters training and development by offering a wide range of learning opportunities

An example is Google who fosters training and developing its employees by offering a wide range of internal and external learning opportunities. Employees can choose from a variety of courses, workshops, and programs to enhance their skills in various areas. Google also fosters an open and transparent learning culture that promotes the sharing of knowledge and experiences. One result of these structures is the “20%” method, where employees are given 20% of their time to work on their own projects. This commitment led, for instance, to the development of the Android operating system.

Internal idea forums, innovation labs, and idea workshops

Companies today use different methods to integrate ambidextrous structures. While these approaches may vary in structure and implementation, they all share the common goal of supporting bottom-up innovation by involving members of all hierarchies and departments. One approach is ideation hybrids, which are characterized by a low degree of formal structure and are often initiated as voluntary activities. Examples include internal idea forums, innovation labs, and idea workshops as shown at Google (“Google Ideas”, “Google X”) or Proctor & Gamble (“Connect + Develop”).

Incubation hybrids

Another approach is incubation hybrids, which aim to support employees in inventing and pursuing entirely new business models. Incubation hybrids often have fluid structures and are supported by the company with corresponding resources such as partial leave of absence and budget. Examples cover the corporate startup programs at BMW (“Startup Garage”), Unilever Foundry, and PepsiCo10.

Integration hybrids

Integration hybrids, on the other hand, have a strong formal structure integrated into the hierarchy of the organization, promoting collaboration between different departments and regions. They are often found as innovation departments, interdisciplinary working groups, or expert commissions as evidence from Nestle (“Global Innovation Network”) or General Electric (cross-functional team “FastWorks”) indicates.

Agile biotopes

Finally, agile biotopes are sub-areas of an organization that initiate transformation processes through agile pilot projects. For example, Siemens uses agile biotopes to promote innovation and agility in its various business units.

The listed examples are not exhaustive and only shows a selection of options for implementing exploration and exploitation simultaneously. The type and duration of ambidextrous structures depend on the respective challenges of a company.

Conclusion

Incorporating targeted employee learning experiences and holistic learning ecosystems is a hallmark of agile organizations. By fostering personal networks and growth mindsets, organizational ambidexterity is bolstered, leading to enhanced adaptability in the face of market volatility, uncertainty, complexity, and ambiguity. Such an approach has been shown to provide a competitive edge in strategic markets.