Employees in companies need certain skills, and so do companies. A company's competencies are more than the sum of its employees' competencies. In order to find the optimal balance between exploration and exploitation in companies, skills development must take place - both structurally and in terms of personnel. What is important here is explained Dr. Martin Rost, author of the article "Supporting the strategic and innovative capability of the company with competence management" in Volume 2 of the Enterprise Transformation Cycle "Mastering transformation projects with the Enterprise Transformation Cycle".

Note from the TCI editorial team: Click here to go directly to part 2 of this interview: Shaping culture and structure in ambidextrous organizations

Ambidexterity - core competence of companies

Ambidexterity - is an important capability of companies. In short, the term means that both the existing is used and optimized and new things are developed. Why is there often competition within the company between these two important building blocks of a corporate strategy?

Successful companies in particular are often very busy coping with the current challenges and further developing their existing and currently still very successful business areas. In some cases, companies also lack the financial and human resources to develop new technologies and business models in parallel. The "old" and newly emerging business areas compete for resources and management attention.

For example, German automotive manufacturers and suppliers have long made too little effort in the areas of future technologies such as alternative drive systems or autonomous driving as they have achieved good margins in the area of combustion engines and in some cases still do. Focusing only on future technologies would also not make sense for most companies, as the financial resources for the development of new business areas are earned in the existing business areas. Ambidexterity is about finding the right balance between exploitation and exploration.

How can companies avoid this conflict?

The members of the top management team must have a high level of sensitivity and appreciation for the needs and challenges of the areas with a focus on the current business areas and those with a focus on the newly emerging business areas. They must communicate this sensitivity together with the shared values of the entire company to managers and employees in all areas. Innovation and efficiency can only be optimally balanced and linked if there is a strong mutual understanding between managers and employees.

The conflict is also often avoided through the structural separation of areas with a focus on exploitation and exploration. In addition, many organizations have organizational units that can focus on both exploitation and exploration. One example of such units are product development teams that work together with the research department as well as with sales, service and production departments.

Skills development: focus on organization and employees

Ultimately, the competencies of an organization are the competencies of its employees. What skills are necessary for the successful implementation of ambidexterity?

The competencies of the organization result from the actions of the individuals involved. However, organizational competencies go beyond the sum of the competencies of individuals. The basis of organizational competencies are routines in which the physical resources, technologies and skills of employees are brought together.

The employees of an organization need skills to participate in existing routines on the one hand and skills to question, improve and further develop existing skills and also to create new routines on the other.

How do the required employee competencies differ in the areas of "exploration", i.e. innovative ability, and "exploitation", i.e. the optimization of existing structures and processes?

Competencies must always match the specific tasks and requirements of a position and an organization. The basis for the creation of competence profiles for exploitation and exploration are task and requirement analyses in the respective company as well as a competence model that can be derived from the company's strategy. Therefore, the question can only be answered in general terms to a limited extent. However, based on my research to date, I can summarize the following:

Exploitation processes require a very precise, error-free and planned approach. Employees should therefore perform their tasks very reliably and also be very resilient and ready to work under high capacity utilization. Highly developed skills such as a systematic and methodical approach enable the continuous improvement of existing routines.

In order to participate in exploration processes, employees need a high degree of initiative and the willingness to take responsibility and weigh up risks independently. They must also be highly capable of recognizing new requirements independently and closing existing knowledge gaps in a self-organized manner.

However, it is also important in ambidextrous organizations that employees can work well in cross-divisional and interdisciplinary teams and independently promote the exchange of knowledge between the divisions.

Skills development through independent problem solving and personal responsibility

How can the necessary skills be structurally promoted?

The majority of skills development takes place when employees solve problems independently in the course of their work. Organizations must therefore above all enable their employees to look for new solutions independently, and support and encourage them in doing so. People develop skills primarily when they reach their limits and have to rethink previous approaches in order to complete a task. Naturally, they also make mistakes in the process. Skills development is therefore also promoted by a culture of error. Project work and the use of agile project management methods, for example, which promote self-organization, provide scope for this type of skills development. Collaboration in teams in which employees from different functional areas work together is also very beneficial. Training courses can support employees in building skills if they are well aligned with current or future tasks.

Dr. Rost, thank you for the interesting interview.

The interview with Dr. Martin Rost was conducted by Dr. Katja Heumader for the TCI editorial team.

"Mastering transformation projects with the Enterprise Transformation Cycle" - published August 2020

The Transformation Consulting International has been supporting national and international transformation projects in companies for many years. Based on this extensive wealth of experience in practical implementation, the second volume entitled "Transformationsvorhaben mit dem Enterprise Transformation Cycle meistern: Projekte erfolgreich planen, durchführen und abschließen" (Mastering transformation projects with the Enterprise Transformation Cycle: successfully planning, implementing and completing projects) has been published by the renowned Springer-Verlag. As a continuation of the first volume, it takes into account the wishes and suggestions of readers and presents concrete transformation projects and situations in which TCI experts use the ETC in their daily work. The editors of the 500-page volume are Mario A. Pfannstiel and Peter F.-J. Steinhoff. You will find numerous theoretical and conceptual contributions as well as practical case studies on the "Enterprise Transformation Cycle".

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