Why do successful firms find it so difficult to adapt in the face of change – to innovate? In the past ten years, the importance of this question has increased as more industries and firms confront disruptive change. The pandemic has accelerated this crisis, collapsing the structures of industries from airlines and medicine to online retail and commercial real estate. Today, leaders in business have an obligation not only to investors but to their employees and communities. At the core of this challenge is helping their organizations to survive in the face of change.
The original edition summarized the lessons that the authors as researchers and consultants had learned over the previous two decades. Since then, they have continued to work with leaders of organizations around the world confronting disruptive change. With updates to every chapter, including new examples and analysis, this fully revised edition incorporates the lessons and insights that the authors have gained in the past five years. Two new chapters critically examine the role of organizational culture in promoting or hindering ambidexterity and its underlying fundamental disciplines. Using examples from firms such as Microsoft, General Motors, and Amazon, O'Reilly and Tushman illustrate how leaders can align their organization's cultures to fit the needed strategy, and how ideation, incubation, and scaling approaches, when used altogether, can successfully develop new growth businesses.
|Publisher:||Stanford University Press|
|Edition description:||2nd ed.|
|Product dimensions:||6.10(w) x 9.10(h) x 1.20(d)|
About the Author
Table of ContentsContents and Abstracts
1Today's Innovation Puzzle
In the past few years we've seen a number of well-known firms fail or go bankrupt (e.g., Blockbuster, Kodak, Sears) and more failures are on the horizon. This book describes what it takes for leaders to succeed in the face of accelerating change. It describes how some leaders and their organizations have been able to compete successfully in mature technologies and markets and transform their organizations by exploring in new domains (e.g., Amazon, IBM) while others have been trapped by their own success. Although this perspective is based on a substantial body of empirical research, the material described here is highly applied and moves well beyond the typical exhortations offered in most books on leadership and change.
2Explore and Exploit
This chapter offers two simple frameworks (the congruence model and the success syndrome) that illustrate the power of organizational alignment in driving organizational performance. It also describes how the alignment needed for success in a mature business can make it difficult to succeed in the face of change and why successful organizations, faced with disruptive change, sometimes fail. We illustrate this dynamic with a story of organizational success (Amazon) and one of organizational failure (SAP).
3Achieving Balance with Innovation Streams
Why do successful organizations fail? This chapter uses rich descriptions of two old companies (Sears and the Ball Corporation) to show how some leaders are able to help their organizations evolve and adapt to disruptive innovation. We elaborate on the innovation streams framework introduced in Chapter 1 to show how different types of change can require leaders to manage different types of alignments.
4Culture as Competitive (Dis)Advantage
Organizational culture can be a competitive advantage or a disadvantage. The term culture is often identified by senior executives as a critical element in organizational success. But what is it and how can leaders change it? This chapter shows how culture can operate as a social control system in organizations that can be a critical element in helping or hindering strategy execution. We show how the cultures needed for exploitation are different in important ways from those needed for exploration—and how leaders can align their cultures to fit the needed strategy. Using firms such as Microsoft and General Motors as examples, we show how leaders can change their organization's culture and how ambidexterity requires leaders to manage multiple cultures within the same firm.
5Seven Innovation Stories
Using the frameworks developed in the first three chapters, here we provide a set of detailed examples for how ambidexterity can operate. We describe how the leaders of seven different organizations (e.g., a newspaper, a manufacturing company, a high-tech firm, etc.) were able to meet the challenge of disruptive change. On the basis of these insights we identify three essential elements necessary for leaders to design ambidextrous organizations.
6Getting It Right Versus Almost Right
Here we expand on the insights from Chapter 5 and describe in detail a process that IBM uses to generate organic growth—the Emerging Business Opportunity (EBO) process—which enabled them to increase revenues by more than $15 billion during the period of 2000–2006. We also show how Cisco attempted and failed at a similar effort.
7The Three Disciplines of Organizational Ambidexterity: Ideation, Incubation, and Scaling
Facing the threat of disruption, many large, established firms have embraced innovation as a way to develop new growth businesses. Approaches such as open innovation, design thinking, corporate venture capital, the lean start-up methodology, and the business model canvas have been enthusiastically embraced—with mixed success. This chapter shows that while each approach has its merits, successful innovation requires large firms to be ambidextrous—to compete in mature and new markets simultaneously. Ambidexterity can best be understood as consisting of three distinct disciplines: (1)ideationto generate potential new business ideas, (2)incubationto validate these ideas in the market, and (3)scalingto reallocate the assets and capabilities needed to grow the new business. We show how many popular innovation approaches solve for only one or two of these three disciplines, which can lead to failure to innovate. To be successful at developing new-growth businesses requires all three.
8What It Takes to Become Ambidextrous
In this chapter we identify four major elements associated with more versus less successful efforts at ambidexterity. These are practical guidelines that can be used to help managers think about how to apply these lessons in their own contexts. We focus here on the question of what needs to be done to design an ambidextrous organization. What are the elements that leaders need to consider when implementing ambidexterity? What are the cardinal sins to be avoided?
9Leaders (and Their Teams) as Linchpins
Whereas the previous chapter focused on what needs to be done to implement an ambidextrous design, this chapter focuses on how leaders can do this. We provide examples of two leadership failures and three successes and, drawing on previous examples, conclude by suggesting five leadership principles that undergird the successful implementation of ambidexterity.
10Leading Change and Strategic Renewal
In this chapter we first provide some guidelines for managers to consider in determining whether ambidexterity is needed for organizational renewal. We then describe how the leaders of two organizations (IBM and Haier) successfully led organizational change and renewal that transformed their companies. Based on these, we conclude with six suggestions for leaders to consider when leading organizational renewal.