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.
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).
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.
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.
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.
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.
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.
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?
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.
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.