How To Design an AMBIDEXTROUS ORGANISATION
How can leaders today design and manage their organisation to make it deliver both efficiency and flexibility? The authors explore the emergence of the ambidextrous organisational form, and propose a new concept called “the Enterprise Ecosystem” as a response to address the challenges facing companies in the 21st century.
Many CEOs we talk to nowadays recognise that their companies need to be more flexible to accommodate fast-changing customer demands. They are also under pressure to maintain a relentless focus on efficiency. The result is an uneasy feeling that their organisations are not up to the challenge of doing both well. This frustration shouldn’t come as a surprise because the still dominant 20th century models of organisation offer only an unpalatable choice: prioritise either efficiency or flexibility.
To maximise efficiency, the tried and tested approach has been to adopt a rigid hierarchical organisation based on top-down decision-making, high division of labour and formal rules, and lastly, policies and procedures optimised for an industrial, mass-production age. For enterprise-wide flexibility, the increasingly popular alternative is to embrace an “internal market” model based on loose networks of empowered experts, few boundaries, high informality, and horizontal interaction across a flat structure that aligns around values. Neither offers a silver bullet. So, companies risk “flip-flopping” between these extremes in endless rounds of re-organisation.
The challenges of the 21st century demand a new approach. A promising avenue of management research is focussed on the emergence of the ambidextrous organisational form – these are organisations that are capable of exploiting existing opportunities efficiently, whilst simultaneously exploring new opportunities and developing capabilities for the future1 . Whilst the concept is well established in management literature, how these ambidextrous forms of organisation are designed and managed in practice is much less understood.
Based upon our in-depth research and consultancy with companies operating in a variety of different sectors, we put forward a blueprint for designing an organisation as a network, with enough structure to make it capable of efficient implementation, but enough flexibility so that it is capable of rapidly learning and adjusting itself to its changing environment (please see About the Research).
We call this model of organisation the Enterprise Ecosystem. But what does such an organisation look like in practice? How does it reconcile the uneasy bedfellows of efficiency, consistency, flexibility, and creativity at a large scale? How can leaders design and manage their organisation practically to be capable of “doing both”, as Inder Sidhu of Cisco Systems puts it2 .
Demands on the 21 st Century Organisation
In looking for answers to these questions, we began by reminding ourselves what the 21st century organisation needs to deliver for superior performance. Boiled down to fundamentals, today’s organisation must be capable of two things: integration (efficiently bringing together products, services, people, knowledge, materials, and operational activities) and flexible adaptation (responding to varied and fast-changing customer needs, ideas, technologies, and business conditions).
Bureaucracy and the Search for Efficiency
Bureaucracy has developed a bad name. But still, many organisations continue to embrace the principles of bureaucratic work organisation based on strict hierarchy in the quest to efficiently convert inputs, including people, knowledge, and financial capital into outputs in the form of products and services. Rationally conceived, planned and executed hierarchies put managers in control of work activity to maximise productivity and minimise waste,
