ysnas-01-01-web-tcm9-178095.jpg

Ambidexterity

Your Strategy Needs a Strategy

What

Ambidexterity is the ability to apply multiple approaches to strategy either concurrently or successively, since many firms operate in more than one strategic environment at once. Ambidexterity is not another color on the strategy palette; it is a technique for using the five approaches to strategy in combination with one another. The four approaches to ambidexterity—separation, switching, self-organization, and external ecosystems—depend on the degree of diversity and dynamism of the environment.

When

Most large businesses operate in multiple environments that change quickly over time—spanning many increasingly diverse geographies and product categories—and that are supported by a wide range of enabling functions. This diversity requires firms to be ambidextrous, because no single approach to strategy is applicable to a large firm in its entirety and over time.

How

The right approach to ambidexterity depends on how many different environments the firm faces (diversity) and how often those environments change (dynamism). A separation approach means that different approaches to strategy are managed top-down and are run independently from one another in different divisions or geographies. Firms applying a switching approach manage a common pool of resources that switch among the five approaches to strategy. Self-organization means that each unit chooses the best approach to strategy. In an ecosystem approach, firms source different approaches to strategy externally through players that specialize in the needed approach.

Ambidexterity in the business world means simultaneously exploiting and exploring, or running and reinventing, a business. Animals have used this mechanism for millions of years to forage for food effectively, and they must consider the same essential trade-off that companies do: whether to exploit the current environment or to go beyond the current environment and explore the unknown.

Giraffes, for example, employ clear and distinct approaches for balancing this trade-off. When food is abundant, as it usually is in the wet season, they don’t need a targeted strategy—there’s plenty of low-hanging fruit. In the dry season, however, giraffes need an explicit strategy for how frequently and how far away they should search for food sources, since staying too long at one grove will reduce yield and leave them too hungry to find the next food source. On the other hand, spending too much time wandering around looking for food will also make them vulnerable to starvation. Businesses, too, need to balance exploiting and renewing their advantage, especially when their current source of advantage is threatened due to technological change or competition. “Low-hanging fruit” for businesses is scarcer than ever, and they need deliberate approaches to achieving ambidexterity.

More on Ambidexterity

protected by reCaptcha

BCG Henderson Institute Newsletter: Insights that are shaping business thinking.

SUBSCRIBE