Okay. Well, welcome back again to our course on Strategic Innovation.

And in the last video,

we were talking about ambidexterity and ambidextrous organizations,

and we talked about two key things that you can do to build these.

One is separate the new business,

form a semi-autonomous unit rather than have it be a project team,

or a cross-functional team that's within the old organization,

that was the first thing.

And then the second thing was to provide senior management support.

Now, the senior management support side,

we didn't develop too much,

and there's a reason behind that.

The first thing to realize is you just need a lot of senior management support.

You need senior managers to overweight their attention to this potentially,

probably, fairly small new business.

There's this enormous tendency to think, "Well,

we should allocate our time roughly in accordance with

the size of the different businesses that we're running.

A small business shouldn't get as much attention as a big business."

But that's exactly the wrong way of thinking when we're

thinking about new markets and innovation.

It takes as much time to figure out how to enter a potentially large new market as it

does to figure out how you are going to maintain your success in a large existing market.

So, this might give you a sense as to why senior management is so important,

and why we need to emphasize this idea of senior management support.

Now in this video, what we're going to do is we're going to dive into that in more depth,

and we're going to do this in two ways.

We're going to talk about what the senior managers are

doing in terms of things that go across the organization, the software.

We're going to talk about strategic intent,

and identity, and culture.

And then we're also going to talk about how the senior managers,

and particularly the general manager,

what they're doing with their team,

how the senior team should be working.

So those are the two things we're going to focus on. So, the first one.

If you think of separating the business as the hardware,

then the software are the ideas and the people that support ambidexterity.

So, what are these ideas?

Well, the first thing is,

what is the strategic intent of the entire company?

What is the company's identity?

Here's where ambidexterity gives you some insight.

You need a strategic intent that makes

the need for both success in the existing business,

but exploration and success in new businesses clear.

You need an identity within the organization.

And the idea of identity is how people describe what's central,

and enduring, and distinctive about their organization.

You need to have that identity to be one that

validates the need for experimentation and innovation,

in addition to whatever it is,

to support the mainstream organization.

The idea here is that we need a strategic intent,

the overall strategy of the firm,

and then what the firm is about.

For both of those,

we need something that brings together the old and the new,

and so it acts as a soft integrating mechanism so that when discussions occur,

where the new business and the old business are both in play,

there's this overarching idea that both are essential to our future.

So, how do you do this?

Well, I think what you do is you point to the idea that in today's business environment,

even large firms don't have a very long, assured lifetime.

Research shows that firms have been turning over,

and turning, and succeeding,

and failing, and growing,

and dying faster and faster to the point that over the next two decades,

we're likely to have half the firms in the Fortune 500 turn over.

Very, very fast change.

And so, that's the fundamental characteristic of the environment that leads us to say,

we need our identity not to be about where we are now,

but also about where we're going to be.

We need both of them there because although it doesn't come up very much in the research.

I do want to tell you about one example that

I saw in my own research. It's quite a long time ago.

I was doing research at Data General,

a company which was an old, well,

it was a minicomputer company.

There were what were called the Seven Sisters.

There were seven minicomputer companies back in the 80's and early 90's.

And their transition was occurring towards workstations and personal computers,

the minicomputers industry was being squeezed.

And it was going through an enormous transition from

proprietary technological architectures to open technological architectures.

And I happened to be able to see Data General,

to observe a lot of their management meetings while they were going through this.

And one of the things that happened was they were fairly successful in this transition.

And this was one of the transitions where the new market threatened the old.

And so what started to happen was that the old business,

what was the old mainstream business, the proprietary business,

the business based on proprietary architecture,

people there started feeling like they wanted to get out.

That this was the dying business,

the new business had gotten to be successful enough

that it was clearly going to be the company's future.

So, what the CEO had done very well,

his name was Ron Skates,

is he had gone ahead and set up within all the top managers,

a very clear sense that we need both

these businesses to succeed for us to succeed in making this transition.

And that enabled people in

the traditional proprietary architecture business to stay there,

to know there was a pathway for them and so on.

So, it's very powerful to think about identity and strategic intent that validates.

That we need to experiment and innovate at the same time that

we refine and achieve excellence and success in the mainstream business.

So that's the software, right?

And it's a way of conceiving what your firm is about.

The second thing is and on the software side is culture.

What is culture? Well a lot of you will have taken a course in organizational design.

It's about the values, and the behaviors,

and the norms, and the expectations that are shared in the company.

You might think of it as,

what's in the woodwork, what's built into the company?

It's all around us.

We don't think about it very often but it shapes how we think about,

what's a good decision about a product,

about how we talk to our boss,

about how we dress, all these things.

And generally, what you hear is that you want a strong culture in your organization.

It can be a competitive advantage.

But then, we think about this from the ambidextrous perspective.

It's like, well wait a minute, wait a minute.

First of all, they've just been talking on and on about how we need to align ourselves

differently in these different markets

and different markets that are in different stages.

In the mature one,

we want a culture that values predictability and efficiency and control and refinement.

In the new business, we want a culture the values,

experimentation and responsiveness and flexibility and

minimum viable product and working on a shoestring perhaps.

These are very different cultures,

these are very different ways of doing things.

So how do you have a culture that's both

cohesive and strong for the organization as a whole,

but then it's adaptable to different businesses that are in different market realities.

Well, the idea that I would offer is one,

is the idea of a loose-tight culture.

You make the culture tight in the sense that

certain core values are shared across the company.

Maybe this is a company where technological excellence and innovation around

a particular set of capabilities is critical.

For example, I grew up in Corning, New York.

It's a small town. It's a great place to grow up.

And Corning was the home of Corning Glass Works.

Corning Glass Works is why,

pretty much why Corning exists.

I got to know the company well as I grew up even though I never worked there

because it's a small town and my dad worked there.

Well, why am I going on about Corning.

Well, Corning has been a very very successful company if

we think about it from the ambidextrous perspective over a hundred years.

Because what Corning has done is said,

"Look we're all about glass,

we have world class capabilities in glass.

If there's something that glass can do,

our researchers are probably going to be among the

first to figure out how to make it do that."

Let's think about some of the things glass can do.

Well you can make windows out of glass,

but then cathode ray tubes needed glass and for a certain period of

time televisions where Corning was making its mainstream business.

You can do fiber optics with glass.

You can do dishware with glass and ceramics.

And the point is, that what Corning had as its tight part of

its culture is that our businesses are

businesses that work around something related to

glass and they're related to something where we can be excellent at it,

where it's tough to do.

And that's something that is tight across the company but it's loose.

The loose part of the culture is that the precepts of the culture

vary according to the needs of the individual units.

So for example, the dishware business was a retail business.

The fiber optics business was a high technology business,

cultures there are quite different.

So you wanted to have room to allow people to make decisions differently,

to move at different speeds,

to have different margins,

think of technologies in

different ways and build their cultures in each unit around that,

and align those cultures with the market needs,

but at the same time having this overall precept about what we're about.

That's the idea of a loose in a tight culture.

So that's another part of the software that enables ambidexterity.

I'm sorry I forgot, I wanted to show you with the phone here.

Corning's, one of its latest things is the idea of what they call gorilla glass,

the glass that is in the front of the phones.

So over time we've gone from plate glass, to fiber optics,

to gorilla glass and the company has made transitions each time,

this whole idea of the new and the old.

Once again the new,

the old launches the new,

the expertise we have from the old launches the new,

and then the new becomes the mainstream and from it comes the next new thing.

So if you think about where we've been so far, in this lesson.

Talked about the software,

these are ideas in people's heads, right?

What's the strategic intent,

what's the culture, what's the identity.

So these are design elements,

they're in that diamonds that we talked about a couple lessons ago,

and they're part of how we align things.

So that's a management aspect, right?

How do we make decisions to design an organization.

But you build these things to influencing people to take a different view.

That is more of a leadership task.

And so the second part of this lesson is about how ambidexterity,

building an ambidextrous organization,

running one of this is fundamentally also a leadership challenge.

And that's where we're headed next, to talk about that.

Leading Ambidextrous Organizations

Strategic Innovation: Managing Innovation Initiatives

Meet the Instructors