Organizational Ambidexterity: Exploration vs Exploitation

Overview

Organizational ambidexterity refers to a firm's ability to simultaneously pursue exploration (innovation, experimentation, new opportunities) and exploitation (efficiency, refinement, execution of existing capabilities). March (1991) demonstrated that firms favoring one over the other face suboptimal outcomes: over-exploitation leads to competency traps, while over-exploration leads to failure traps.

When to Use

Trigger conditions:

• User asks how to innovate without sacrificing current business performance
• User is restructuring an organization to support both R&D and operations
• User describes symptoms of a competency trap (good at the wrong things) or failure trap (too many experiments, no results)
• User mentions "explore vs exploit", "innovation vs efficiency", or "ambidextrous organization"

When NOT to use:

• For analyzing disruption from external entrants -> use grad-disruptive-innovation
• For strategic alliances to access innovation -> use grad-coopetition
• For internationalization decisions -> use grad-oli or grad-uppsala