30 May 2007Working Paper Summaries

Ambidexterity as a Dynamic Capability: Resolving the Innovator’s Dilemma

by Charles A. O’Reilly III and Michael L. Tushman

Can organizations adapt and change—and if so, how does this occur? There are two major camps in the research on organizational change: those that argue for adaptation, and those that argue that as environments shift, inert organizations are replaced by new forms that better fit the changed context. There are data to support both arguments. This paper discusses the idea and practicality of ambidexterity and shows how the ability to simultaneously pursue emerging and mature strategies is a key element of long-term success. Key concepts include:

Ambidexterity, the ability of a firm to simultaneously explore and exploit, is one solution to the innovator's dilemma as outlined by HBS professor Clayton Christensen.
Under the appropriate conditions, organizations may be able to explore new avenues as well as exploit their existing capabilities.
Strategic contradictions can be resolved by senior leaders who design and manage their own processes and, in turn, ambidextrous organizations. Leadership is therefore key.

Author Abstract

How do organizations survive in the face of change? Underlying this question is a rich debate about whether organizations can adapt—and if so how. One perspective, organizational ecology, presents evidence suggesting that most organizations are largely inert and ultimately fail. A second perspective argues that some firms do learn and adapt to shifting environmental contexts. Recently, this latter view has coalesced around two themes. The first, based on research in strategy, suggests that dynamic capabilities, the ability of a firm to reconfigure assets and existing capabilities, explain long-term competitive advantage. The second, based on organizational design, argues that ambidexterity, the ability of a firm to simultaneously explore and exploit, enables a firm to adapt over time. In this paper we review and integrate these comparatively new research streams and identify a set of propositions that suggest how ambidexterity acts as a dynamic capability. We suggest that efficiency and innovation need not be strategic tradeoffs and highlight the substantive role of senior teams in building dynamic capabilities.