Embracing innovation through organizational ambidexterity
Organizational ambidexterity is a concept that gets a lot of attention in the for-profit world. And rightfully so—ambidexterity demonstrates strong ties to innovation and financial performance. It’s surprising no one seems to be talking about how ambidexterity could benefit the nonprofit sector. That said, we’re getting warmer with a Management Decision study published last year on ambidexterity in a public nonprofit organization in France. The results of that study imply that we should start paying closer attention to organizational ambidexterity in the context of the third sector.
What is ambidexterity?
Ambidextrous organizations can successfully exploit and explore simultaneously. In the context of innovation, exploitation refers to an organization’s efforts to improve upon existing knowledge. Exploitation is present-focused (think “refine,” “streamline,” and “implement”). For nonprofit context, think of your most successful, longest-running program. Exploitation means maxing that program out to have the most significant possible impact today.
Exploration, on the other hand, refers to the search for new knowledge. Exploration is future-focused and loosely connected to the current activities of the organization (think “discover,” “risk,” and “experiment”). Consider ways that your community may change in the future. There will likely be new or evolving needs that current services would not effectively meet. Exploration means figuring out how to potentially respond to those new or changing needs when the time comes.
Truly ambidextrous organizations explore and exploit at the same time, according to O’Reilly and Tushman’s definition. They do so by forming separate yet connected exploration and exploitation units. These distinct units have separate formations, procedures, and cultures but are tightly linked by a common, overarching strategic intent.
Why does ambidexterity matter?
Ambidexterity answers a fundamental question: how do organizations succeed today and ensure their survival and relevance tomorrow? O’Reilly and Tushman coined the term “ambidextrous” about organizations in 1996, and since then, there have been hundreds of empirical studies done around ambidexterity in for-profits.
The research consistently tells the same story—in uncertain environments, ambidexterity leads to innovation, financial performance, and long-term survival. These are all topics that mean a lot to us in the nonprofit world as well, if perhaps, for fundamentally different reasons than those held by for-profit businesses.
How does ambidexterity apply to nonprofits?
Nonprofits, like for-profits, need to develop new ideas and put them into action through innovation. Nonprofits also need healthy revenue streams to support the mission. And ultimately, nonprofits need to adapt to survive and sustain relevance in the future. We should be having a conversation about ambidexterity as we think about how nonprofits will help solve the most pressing societal challenges of tomorrow while consistently meeting our community’s needs today.
As nonprofit leaders, it’s our job to fit people, information, and technology together so that our organizations have the best odds of achieving their missions. Based on the research, it’s not a leap to suggest that nonprofits take a page from the for-profit sector’s book and look to ambidexterity. There are probably nonprofits out there doing this. We need to find them and study them.