Innovation—Building ambidextrous organizations

By : |March 17, 2006 0



Another
quarter and more results-the big are getting bigger and some of the smaller
firms are doing very well too, confounding the predictions of many analysts and
pundits who seem to believe that there is no place under the sun for any firm
which does not employ at least ten thousand people in this country.

The success of
companies like Geometric Software, Mindtree, and Zensar establishes clearly the
value that innovative niche players can add to the exciting software exports
industry. The showcase during the Nasscom Annual extravaganza in February will
see four small and four large innovation stars demonstrate just how this is
being done. While it could be argued that innovation is a do or die initiative
for smaller companies, the larger companies too, have shown that there is no
complacency in the industry. And the lead that India undoubtedly has over new
entrants into the offshore outsourcing space will continue to be sustained and
even extended.

The way to nurture
innovation in large organizations has been brilliantly laid out by Michael
Tushman, professor of innovation at the Harvard Business School. The “failure
of success,” as Tushman puts it, is three-fold-the structural inertia caused
by size, the social inertia caused by the age of organizations, and finally, the
pride and arrogance that is the result of success. The internal forces of
stability that result from organizational growth and success are a true double
edged sword since the pressure to continue to do what has been done in the past
with significant success can also lead to sluggishness in response to new
environmental dynamics.

To embrace innovation-big
organizations have to develop the skill of ambidexterity

Where does the
“locus of innovation” lie in any industry? Tushman argues that in emerging
industries where much is still to be discovered in terms of products or services
to be offered to existing or new customers, the rate of innovation is very high
in the technology cycle in the initial stages and declines over time as services
grow. These move towards a state of maturity. This is the time when a dominant
design emerges that characterizes the service. Also, opportunities arise for
process innovation around the design. Hence, the locus of innovation shifts from
the service itself to the process calling for a very different set of skills and
capabilities in a new alignment of the service. A case in point from the IT
services industry is the use of solution blue prints and automated code
generation that Zensar employs to automate the error prone and time consuming
processes of programming, is transforming the application development process in
the traditional system development life cycle in some organizations.

This is not to say the
product or service innovation ceases to be relevant in any mature industry.
Tushman argues that for large organizations to embrace innovation they have to
develop the skill of ambidexterity where they are able to continue exploitation
of clients with their core services while launching exploration into new
opportunities. Organizations, which are truly committed to this ambidexterity,
will have to make a strategic choice between the desire to set the innovative
teams free and the practical wisdom of leveraging managerial capabilities from
the successful exploitation of organizations for the benefit of the exploration
unit.

Finally, there is no
better advocate for innovation than Lou Gerstner, the legendary former CEO of
IBM who says, “I am a big believer in forcing change on large institutions
just for the sake of forcing change. The longer an organization stays intact,
the less successful it is. I’ve been absolutely convinced that you have to blow
things up and start all over again every few years, and that puts a whole new
face on people’s jobs. It gets them focused externally rather than
internally.”

In an industry where success can no longer be taken for
granted in the long term, with costs going up and competition looming, this may
well be one solution!

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