Shaping culture and structure in ambidextrous organizations

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TCI editorial office

June 18, 2021

In ambidextrous organizations, the cultures of "exploration" and "exploitation" clash. Management has the task of creating a balance between the interests and cultural ideas and designing structures accordingly. Ambidexterity then becomes a success factor in companies: The ability to innovate and the exploitation of existing potential ensure future viability and cash flow. How this works Dr. Martin Rost in the TCI interview.

Note from the TCI editorial team: You can also read part 1 of this interview with Martin Rost here: "Skills development takes place when people reach their limits" - Interview with Martin Rost

In ambidextrous organization "Exploration" and "Exploitation" unite

"Exploration", i.e. the ability to innovate, and "exploitation", i.e. the optimization of existing structures and processes, also differ culturally. How can these different cultures be united under one roof?

Uniting different cultures under one roof is a challenge for top management, but it is possible. On the one hand, it is important to create a common reference framework of values that applies to the entire company and is characterized by respect and understanding for the cultural diversity within the company. On the other hand, the divisions also need the freedom to develop a culture that promotes exploitation or exploration.

What comes first on the path to an ambidextrous organization: the development of (employee) skills or the development or reorganization of structures?

Structures can usually be changed more quickly than skills can be developed. Top management and some key middle managers should already have strong competencies at the start of the change process that are necessary for the realization of ambidexterity in the company. If you build "ambidextrous" structures without "ambidextrous" people, then the link between exploitation and exploration will be missing in the company. However, a large part of the lowest management level and employees do not have to be ambidextrous. They should develop a good understanding of the other areas in the company and contribute to the exchange of knowledge, but can and should specialize in the tasks in their area. Contributing to both exploitation and exploration is a major challenge for individuals and therefore consumes a lot of time and energy. It therefore makes sense for many people in organizations to specialize.

The task of top management: to ensure a balance

What role does the management level play in the development of an ambidextrous organization?

The top management team coordinates cooperation between divisions and employees with a focus on exploration and exploitation. The top management team also decides how the balance between exploration and exploitation should be structured.

Ambidexterity is implemented and shaped by middle and lower management. In certain situations, individual employees can also shape the balance between exploitation and exploration in their area. However, the top management team must create the scope for this and use visions, targets and incentive systems to set the direction for how this scope can be used.

What special leadership skills are required in such a change process?

In change processes, managers must above all win over the members of the organization to the new goals and tasks, support them in reducing fears and avoiding resistance within the organization. To do this, they must motivate and inspire employees, stimulate their creativity, respond to their individual needs, support them in developing their skills and ultimately serve as a role model. Bass and Avolio describe this leadership behavior as transformational leadership styleThis is particularly important for exploration.

In areas with a focus on exploitation, on the other hand, targets with performance monitoring and rewards form the central basis of management behavior. This transactional leadership generally supports the efficient execution of processes. However, employees in these areas should also be accompanied by transformational leadership, particularly in change situations. And in principle, change processes are constantly taking place as part of the digital transformation. Increasingly, part of the role of a "traditional" manager is being replaced by self-organization within the team. However, the central task of managers will remain to support every employee in overcoming challenges and in their own development. Robert Greenleaf has summarized this in the leadership style of "servant leadership".

What contribution can the Enterprise Transformation Cycle (ETC) make to such a change process?

With its dimensions, the ETC provides a good frame of reference for understanding how strategy, structures, the value creation process model, roles and responsibilities and personnel must interact in order to create an ambidextrous organization. This interplay is shown in my article.

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".

Source cover image: © Blue Planet Studio | Adobe Stock

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