Ambidexterity and Acquisitions

Question 1

How can ambidexterity be achieved?

Answer 1

1. Internal Exploration
2. External partnership/Acquisitions

Trade-off between Integration and Autonomy is key for success of an “exploration” driven Acquisition.

• autonomy sustains the exploratory nature
• integration might be required to solve potential synergies, institutional inertia.

Question 2

What are the some Acquisition watch-outs?

Answer 2

1. Make sure company fits strategic vision
2. Proper assessment of buy vs make
3. Proper assessment of risk (integration risk, talent risk)
4. Proper assessment of acquisition costs (integration/autonomy costs)
5. Consider outside competition

Question 3

What is Ambidexterity?

Answer 3

The ability of a firm to exploit current products/services and explore future ones, with the aim of maintaining competitive advantage.

This can be done sequentially or simultaneously, according to the pace of change of the external environment.

According to March, these two activities compete for resources and this makes it difficult to execute both at the same time.

Exploitation is dedicating resources to the current product, market segment and processes.
Exploration is dedicating resources to new potential market segments, technologies, products and processes.

Question 4

What are the conditions under which an ambidextrous organisation is strategically more suitable?

Answer 4

When there high Strategic Importance and high Operational Leverage. (exploration and exploitation are integrated)

With High SI and low OL = Separate Business Unit
With Low SI and low OL = Spin-off
With Low SI and high OL = internalisation or contracting

Question 5

How can ambidexterity be achieved?

Answer 5

1. Corporate Venture Capital or Acquisition.
   Exploring new opportunities externally.
2. Business Development, creating new business unit internally but structurally separated.
   Pros: focused exploration and competence building.
   Cons: cultural separation and harder integration at later stage.
   IBM’s, Emerging Business Organisation (EBO)
3. Cultural ambidexterity. Continuously integrated exploration and exploitation. Empower individuals to be ambidextrous and choose between alignment-oriented and adaptation-oriented activities.

Question 6

What are the five propositions that O’Reilly and Tushman propose to increase the likelihood of ambidexterity?

Answer 6

1. Compelling strategic intent
2. Overarching vision and values
3. Clear consensus among the senior team
4. appropriate organisational architecture with targeted integration
5. Ability of senior team to manage conflicts.