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236 CHAPTER 7 • ImPRovEmEnT sTRATEgy
managerial time, effort and the financial resources that would otherwise be used for
refining existing ways of doing things, thus reducing the effectiveness of improving
existing processes. Conversely, if existing processes are improved over time, there
may be less motivation to experiment with new ideas. So, although both exploita-
tion and exploration can be beneficial, they may compete both for resources and for
management attention. This is where the concept of ‘organisational ambidexterity’
becomes important. Organisational ambidexterity means the ability of a firm to both
exploit and explore as it seeks to improve; to be able to compete in mature markets
where efficiency is important, by improving existing resources and processes, while
also competing in new technologies and/or markets where novelty, innovation and
experimentation are required.
In their classic Harvard Business Review paper, O’Reilly and Tushman described the
2
difficulties faced by any firm that attempted to thoroughly exploit existing capabilities
while exploring new opportunities and called it ‘one of the toughest mental balancing
acts faced by managers’, saying that ‘it was unsurprising that companies in general do
not do it well’. Those that did, tended to organise separate operations that had very
different strategies, structures, processes and cultures and which focused on either
efficiency or innovation. This approach to achieving organisational ambidexterity –
putting in place ‘dual structures’ to focus on either exploitation or exploration – is
often called ‘structural ambidexterity’ and is closely related to the concept of opera-
tions ‘focus’ discussed in Chapter 2. Of course, such separate focused units will need
to be overseen at some higher level in an organisation. Even if units are structurally
independent they must be integrated into the management hierarchy. So, at some level,
managers will need to act in an ‘ambidextrous’ manner.

example anarchy at 6 Wonderkinder 3

It’s a problem every creative firm faces – how do you organise yourself so you can keep some
kind of control over what’s happening in the firm while not inhibiting the creativity of the
people that you are paying to be creative? When 6Wonderkinder, a Berlin-based developer of
‘Wunderlist’ (the task management tool), was founded in 2010 with only six people, it was
relatively easy to foster a creative and innovative atmosphere. But by the time the company
had grown tenfold, it was more difficult to preserve the ‘start-up spirit’. Chad Fowler, the
company’s chief technology officer, understands the importance of keeping the innovative
culture: ‘Probably every single company wants to maintain the feeling of being in a start-up, no mat-
ter how big they get.’ As the company grew it used several mechanisms to preserve the ‘start-up
spirit’, such as the yearly ‘Wunderkamp’, when all staff spend a week away in Bavarian forest
cabins or on the Baltic coast, and ‘Sexy Friday’ when developers get a day a week to pursue
their own passions – the aim being to challenge established patterns of working and encour-
age novel thinking. Christian Reber, the German chief executive and co-founder, says: ‘On
an assembly line you always get the work you expect. People do the stuff you tell them to do. What
we, here, try to achieve is that we regularly get the “wow” factor … if everyone acts like a CEO, they
make the decisions, [if] they are responsible for their own projects, then it completely changes [the]
dynamics.’ The relatively flat hierarchy is also an advantage in retaining skilled staff in a sector
where the competition for the best developers can be fierce. ‘The talent pool is extremely lim-
ited, people choose the workplace, especially developers, based more on the working atmosphere – the
culture, rather than the salary’, says Christian Reber.

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