Ambidextrous organization

Introduction

Guru Nagarajan– New Business Inv., Intel Corporation– Global MBA (09)

» Kenan-Flagler Business School, UNC Chapel Hill

– MS (Comp Sci)» University of Michigan

The Dare...

“I am a professor of strategy and oftentimes I am ashamed to admit it, because there is a dirty secret: We know a great strategy when we see one. In business schools we teach themand pin them to the wall. They are specimens. Most of our smartstudents raise their hands and say, ‘wait a minute. Was that luck or foresight?’ They’re partly right. We don’t have theory ofstrategy creation. There is no foundation beneath the multibillion-dollar strategy industry. Strategy is lucky foresight. It comesfrom a serendipitous cocktail”

Gary Hamel

General Mgmt Strategy Model

ENVIRONMENT

STRATEGY

COMPETENCE

ARCHITECTURE PERFORMANCE

ENVIRONMENT STRATEGY COMPETENCY

ARCHITECTURE

Industry StructureHyper-competitionValue Chain

NicheCostDifferentiated

EmergingGrowthProfit takingEndgameTurnaround

Skills linked with stratEffectivenessEfficiencyAdaptability

StructureSystems for planningSystems for rewards

Hyper-competition

Strategic Positions/Shifts

price

functionality

???

???

Paths to Adaptability

COMPETENCIES

ARCHITECTURE

INTENT???

The Corporate Hierarchy

corporate

business

functional

Corporate Level Strategy

corporate

Sbu1:Aircraft

Sbu2:Air Conditioners

Sbu3:Elevators

“SBU” Speak

Based on products (so we look like other products)

Based on competition for corporate resources (so we don’t cooperate)

Based on relative rankings (so we practice to deceive)

Based on current competitive advantage (so we don’t invest to build advantage)

Executive and Middle Manager Component

SELECT, NOURISH THE RESOURCES

LINK THE RESOURCES

Tacit

Robust

Embedded

Consensus

Differences Between Competitive Advantage and Core Competence

Competitive Adv:– Based on share of end

product

– Looks at advantage as a unit level resource

– Looks backward more than forward

– presumes boundaries are fixed

Competence:– Based on share of core

product

– Looks at competence as a corporate level resource

– looks forward

– presumes boundaries change

Adjudging a Core Competence Leveraged across products Makes a significant contribution to

perceived customer benefits Rare Inimitable

The language of core competence

Value migration Co-evolution White space opportunity Strategic intent Options taking Strategy is “subversive”

Are you sure you have a strategy?

“Diamond” in other words

Is the option inimitable?

Is it valuable or rare?

Is it durable?

Have we worked the diamond?

Path to Strategic Success

Is it a matter of the CONTENT of strategy?

Is it a matter of the FORMULATION of strategy?

Is it a matter of the IMPLEMENTATION of strategy?

Recap As strategy evolves, so should structure and

systems and style and staff and …. The rate of evolution is not equal across all S’s The choice between evolution and revolution is a

difficult one The impetus comes from the environment Most of the time, the early signals are ambiguous Most of the time, signals perceived late can only

be responded to by revolution Planning may help with effective response

Ambidextrous Organization

Re: Ivester at Coke

“An accountant by training, Ivester knew the math, but not the music required to run the world’s leadingmarketing organization”

WSJ, 12/21/99

Why folks don’t get “the music”

Confusing experience with facts Discomfort with ambiguity Casual use of language Muddled thinking Well, something akin to functional

fanaticism

Causes of Functional Fanaticism

Over-emphasis on “local” incentives Myopic thinking Lack of links across units Lack of attention to organizations as

integrated wholes Lack of ‘strategic’ or ‘general management’

view Lack of conceptual tools/insights

Decouple “New Opportunities”

How do you get over Functional Fanaticism?– Let the Left hand do stuff without the Right

hand– Provide autonomy

» To explore and create new opportunities

» To seek resources without shackles

Serendipitous cocktail

How does the serendipitous cocktail get cooked by the left hand?

- Explore “New” architectures/products

- Set the bar low where “Assumptions/$$” is high

- Set the bar high where ““Assumptions/$$” is low

Questions