Michael L. Tushman

Wendy K. Smith

Andy Binns

<article-ideainbrief class="article-ideainbrief">
 <h4 class="ideainbrief-title">The Idea in Brief</h4>
 <div class="ideainbrief-contents">
  <p>Balancing the needs of core businesses and innovation efforts is a central leadership task.</p>
  <p>Unfortunately, most CEOs cede that responsibility to core-business heads, because innovation efforts are typically embedded in their units. The result is that competition for resources and attention usually gets resolved in favor of the established business.</p>
  <p>On the basis of an in-depth study of 12 top-management teams at major companies, the authors suggest that CEOs take a very different approach. Specifically, they should:</p>
  <ul>
   <li>engage the senior team around a forward-looking strategic aspiration,</li>
  </ul>
  <ul>
   <li>hold the tension between the demands of innovation units and the core business at the top of the organization, and</li>
  </ul>
  <ul>
   <li>maintain multiple and often conflicting strategic agendas.</li>
  </ul>
  <p>When leaders take this approach, they empower their senior teams to move from a negotiation of feudal interests to an explicit, ongoing debate about the conflicting interests on which the future of the business depends.</p>
 </div>
</article-ideainbrief><p>In the fall of 2008, Mike Lawrie, the CEO of the London-based software firm Misys, asked his senior executives to prepare a plan for weathering the global economic crisis. When they reported back, at the top of their list of recommendations was to cut the company’s annual $3 million investment in Misys Open Source Solutions, a venture aimed at developing a potentially disruptive technology in the health care industry.</p>

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<p><span class="reprint">Reprint: R1106D</span></p>
<p>Although most managers publicly acknowledge the need to explore new businesses and markets, the claims of established businesses on company resources almost always come first, especially when times are hard.</p>
<p>When top teams allow the tension between core and speculative units to play out at lower levels of management, innovation loses out. At best, leaders of core business units dismiss innovation initiatives as irrelevancies. At worst, they see the new businesses as threats to the firm&#8217;s core identity and values.</p>
<p>Many CEOs take a backseat in debates over resources, ceding much of their power to middle managers, and the company ends up as a collection of feudal baronies. This is a recipe for long-term failure, say the authors. Their research of 12 top management teams at major companies suggests that firms thrive only when senior teams lead ambidextrously&#8212;when they foster a state of constant creative conflict between the old and the new.</p>
<p>Successful CEOs first develop a broad, forward-looking strategic aspiration that sets ambitious targets both for innovation and core business growth. They then hold the tension between innovation unit demands and core business demands at the very top of the organization. And finally they embrace inconsistency, allowing themselves the latitude to pursue multiple and often conflicting agendas.</p>

The Ambidextrous CEO

Reprint: R1106D Although most managers publicly acknowledge the need to explore new businesses and markets, the claims of established businesses on company resources almost always come first, especially when times are hard. When top teams allow the tension between core and speculative units to play out at lower levels of management, innovation loses out. At best, leaders of core business units dismiss innovation initiatives as irrelevancies. At worst, they see the new businesses as threats to the firm’s core identity and values. Many CEOs take a backseat in debates over resources, ceding much of their power to middle managers, and the company ends up as a collection of feudal baronies. This is a recipe for long-term failure, say the authors. Their research of 12 top management teams at major companies suggests that firms thrive only when senior teams lead ambidextrously—when they foster a state of constant creative conflict between the old and the new. Successful CEOs first develop a broad, forward-looking strategic aspiration that sets ambitious targets both for innovation and core business growth. They then hold the tension between innovation unit demands and core business demands at the very top of the organization. And finally they embrace inconsistency, allowing themselves the latitude to pursue multiple and often conflicting agendas.

The Ambidextrous CEO

Summary.

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