Constructing Adaptive Capacity

Hello Humantific readers. In this post we return to our?Secrets of Innovation Series and the subject of constructing adaptive ambidexterity in organizations. The recent report entitled “The Firm of the Future” from Bain & Company is one of the latest management advisory publications pointing out the importance of and shift towards operationalizing ambidexterity in future focused organizations.

“We’re beginning to see what the next generation of successful companies will look like….The firm of the future will manage two types of businesses—“Engine 1” of its core and “Engine 2” of its more innovative businesses.” Bain & Company 2017.

Accenture, Deloitte, Bain & Company, Detecon and others have all recently been offering up similar observations and advice to organizational leaders. Others such as Charles O'Reilly & Michael Tushman of Harvard Business School writing in Harvard Business Review have previously written on the subject reflecting their own research. It is a capacity referred to under different names that include Ambidexterity, Dual Engines, Exploiting/Exploring, Double Excellence, Dual Innovation, Integrative Innovation, Balanced Excellence, ThinkBalance, etc. With numerous different takes on the subject now tabled, some more practical then others, what they are all talking about is the notion of future oriented firms enabling two engines or streams of innovation, each with different characteristics.

Bain & Company:

“Leaders of the firm of the future will be toggling between running their core—today’s engine— as efficiently as possible, looking for sustaining innovations there. They will also need to create a new business—tomorrow’s engine—that reflects new customer needs, new competitors, new economics or all three.

Defining and building an Engine 2 requires creativity on several fronts. It is not enough to define a compelling vision or point of arrival; that is often the easy part. The task also requires identifying a first step that is focused and that allows rapid testing of the core idea, as well as thinking through subsequent moves that could be opened up by initial success.

The two engines demand different approaches. Discipline, repeatability, small continuous improvements, careful risk assessment and conventional financial analysis are the hallmarks of Engine 1. Agility, creativity and leaps into the financial unknown with the expectation that only a few investments will ultimately pay off are the chief traits of Engine 2.”

Accenture:

“A two-engine operating model holds particular promise for companies looking to achieve flexibility, as well as higher returns from their innovation investments. With this dual model, innovation engine 1 is laser-focused on making existing products and capabilities continually better. Engine 1 supports a company’s steady pace of evolution, and is a critical enabler of the incremental changes that propel a business forward. Innovation engine 2, on the other hand, drives big-bet innovations such as the introduction of entirely new product or service categories, an expansion into new markets, or the development of a new business model. Engine 2 efforts are disruptive and potentially game changing. When executed correctly, these innovations deliver a step-change improvement in organizational performance and competitive advantage.”

Deloitte:

“We asked if companies actually own a Division-X and if yes, to what extent they are successful. A staggering 75% of companies with the highest growth expectations for the coming 24 months (above 10%) also own an actual Division-X (or equivalent). We see this result as a clear indication of Division-X actually driving growth. Let your Division-X drive your growth. Your evolving experiments are kept in pendulum between the board and Division-X until you need to build a real business and commercialize the new products or services. The edge business might cannibalize the core but following the exponential curve, the edge business progressively becomes the core as it takes over in size and importance.”

Detecon:

“100% of the [70] surveyed [German] corporate innovation experts agreed that?defining an ambidextrous innovation strategy is an important management responsibility and?critical to corporate innovation capability.”

At Humantific we love to see others making these conclusions and suggestions because we work the human skill-building side of operationalizing ambidexterity in organizations. The recommendations tabled by Bain & Company, Deloitte, Accenture and others are good news for us.

One thing we do notice missing in the literature, as well as in numerous management consulting firms :-) is the HOW TO MAKE AMBEDEXTERITY VISION REAL part of the equation. After its been pointed out as important how do organizations operationalize ambidexterity in the everyday workplace? What and where is the skill-set? The academics and the management consultants admit that operationalizing ambidexterity remains the central challenge for most organizations.

As far as we can tell none of the large management consulting firms have really connected the dots between the goal of ambidexterity as a strategy and robust innovation methodology useful by organizational leaders in diverse complex situations that require changemaking. After strategy comes the enabling, building and execution. This is where Humantific works.

How did we get here?: Most of our readers will know that we have been working in the trenches with organizational leaders on sensemaking for changemaking initiatives for years and we have conducted various forms of research to surface the often complex goals of organizational leaders today. In our just published book Innovation Methods Mapping we undertook a multi-year study looking at 80+ years of innovation methodology history across multiple communities of practice.

Combined all of this helped us connect the dots between ambidexterity as a business need, ambidexterity ambitions, vision, strategy and the table top need for robust adaptable methodolgies that can be learned by organizational leaders in any industry.

We call that codified skill building program Complexity Navigation. Inside is a hybrid approach?that integrates the best of human-centered design thinking,?strategic problem solving and information visualization. At Humantific we believe these are future forward leadership skills. These are skills for leaders needing to tackle, in human-centered ways, a diverse array of organizational challenges in this era of Big Data, not just product/service design challenges. More about the program in future blog posts.

As part of the program we discuss in our experiencial skill-building workshops how to connect the dots across 10 dimensions of a typical organizational ecology. This is thinking of ambidexterity from a systems thinking perspective.

Innovation Ambidexterity System Interconnects:

GOALS: 1. Your Corporate Strategy, 2. Ambidextrous Innovation Strategy, 3. Values,

PEOPLE: 4. Teams Thinking Styles, 5. Teams Thinking Behaviors

INFRASTRUCTURE: 6. Processes, 7. Data/Information, 8. Technology, 9. Environments and 10. Culture.

At this point we have already learned alot about what it takes to build ambidexterity innovation cultures in complex organizations facing continuous external change. Among the good news is that executed properly ambidexterity as an innovation strategy can significantly help enable the embrace and building of diverse and inclusive organizational cultures.

"Leading and working in a firm of the future will feel different." Bain & Company 2017.

We agree! More in future posts.??

Related:

HUMANTIFIC: Actionizing Enterprise Adaptability: Making Sense of Ambidextrous Building Capacity

HUMANTIFIC: Integrative Thinking/Innovation Research: 2002-2017

HUMANTIFIC: Innovation Methods Mapping is Published

Bain & Company: The Firm of The Future: Dual Engines

Accenture: US Innovation Survey: Two-Engine Operating Model

Photos Credit: Humantific Complexity Navigation Workbook soon to be published.

For more information on this or other Humantific programs feel free to write to us at engage (at) humantific (dot) com