Organisational Ambidexterity
Organisational Ambidexterity: secure the core business, develop the future at the same time.
Anyone searching for organisational ambidexterity usually has a concrete question in the background: how do we keep the core business and future development running at the same time?
This page sets out the research foundations, Swiss practical examples, and three patterns that explain why the balance quietly tips in most leadership teams.
For 30 years, management research has shown a consistent picture: ambidextrous organisations survive more often, grow more strongly, and achieve higher returns on innovation than those that focus on a single mode. What makes this finding hard to apply in practice is a structural logic. The operating system of every organisation, with its budget cycles, quarterly reports, and liquidity management, rewards the core business and penalises future investment. Under pressure, exploration is therefore the first thing to fall away, often without anyone having made a conscious decision.
The two strategic key questions of ambidexterity
EXPLOITATION
How do we earn our money today?
Optimisation, efficiency, securing the core business
Today
EXPLORATION
How will we earn our money tomorrow?
Development, experiment, building new capabilities
Tomorrow?
Figure: "What does ambidexterity mean?" — Bernhard Nitz, transformind GmbH 2026
Steering the organisation
AMBIDEXTERITY EXPLAINED SIMPLY
The constant balance between today's efficiency and future readiness
What is organisational ambidexterity?
Organisational ambidexterity describes the capacity of an organisation to sustain exploitation and exploration at the same time.
The concept itself is intuitive. What makes it hard to apply in practice is an economic logic against which every good intention loses on its own, unless structural measures are taken: the further a possible benefit lies in the future, the lower its relative present value and the greater the investment risk.
The term was coined by James G. March in Organization Science in 1991. It describes the central dilemma of every leadership team: the core business has to work today. The foundation for tomorrow has to take shape at the same time.
What do exploitation and exploration mean?
Exploitation stands for using, refining, and optimising what already exists: proven processes, a secured core business, reliable returns. Exploration stands for search, experiment, and variation: investing in capabilities that deliver no certain returns today, but that secure the organisation's ability to adapt to future conditions.
In the language of controlling: exploitation is the day-to-day business. Exploration is what there is never quite enough room for in the budget.
In the language of controlling: exploitation is the day-to-day business. Exploration is what there is never quite enough room for in the budget.
EXPLOITATION
Secure and optimise the core business
Using, refining, and optimising existing capabilities, processes, and business models. Reliable short-term returns, clear accountability, measurable metrics.
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Process optimisation
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Cost reduction
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Customer retention
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Quality improvement
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Risk reduction
EXPLORATION
Develop new capabilities and fields
Search, variation, experiment, discovery. Investment in capabilities that deliver no reliable returns today, but that secure the organisation's ability to adapt to future conditions.
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New business fields
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Pilot projects
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New areas of competence
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Market exploration
Why is it important to lead exploit and explore at the same time?
March showed in 1991 that an organisation which only exploits produces stable returns in the short term but runs into a competency trap over the long term. One that only explores develops new ideas but no economic basis. The decisive word is "simultaneously": exploration that pauses under pressure and is restarted afterwards loses its cumulative learning effect. The learning cycles begin again from scratch every time.
THE STRATEGIC CHALLENGE
THE REAL PROBLEM EMERGES UNDER PRESSURE
The operating system of every organisation speaks a grammar of its own: budget cycles, quarterly reports, and liquidity management reward exploitation and penalise exploration. Under pressure, the initiative whose benefit lies furthest in the future is the one that gets cut. That is economically understandable, yet strategically devastating. Once the crisis is over, the companies that pull ahead are those that prepared for the time after it, both before and during the crisis.
Organisations that only exploit achieve reliable returns in the short term but risk a competency trap. They become so good at optimising the existing that they lose the ability to respond to changed conditions.
James G. March, «Exploration and Exploitation in Organizational Learning», Organization Science, 1991
Organisational ambidexterity has been one of the most productive research fields in strategy science for more than 30 years. The evidence base is substantial, and its relevance for Swiss SMEs is immediately clear. In 2026 the same question arises in a new context: investing in AI today without securing the core business risks weakening the core business. Waiting to adopt AI until the core business is stable may mean waiting too long. Here too, ambidexterity is the structural problem behind the technology question.
RESEARCH FOUNDATIONS
Ambidextrous companies survive more often, grow more strongly, and achieve higher returns on innovation
Three independent strands of research arrive at a consistent result over 30 years. James March showed in Organization Science in 1991 that exclusive exploitation leads into a competency trap. Charles O'Reilly and Michael Tushman, across two decades of empirical work at Harvard and Stanford, demonstrated that organisations which sustain exploitation and exploration at the same time achieve significantly better survival and performance figures over the long term than companies that focus on a single mode. Nagji and Tuff showed in the Harvard Business Review in 2012 that the transformative 10 percent of innovation investment generates 70 percent of cumulative innovation returns over the long term. The three findings come from different research traditions, rest on different datasets, and reach the same strategic conclusion: ambidexterity pays off, measurably and consistently.
Compiled by Bernhard Nitz, transformind GmbH · Kilchberg, Zurich
01
MARCH, 1991 · ORGANIZATION SCIENCE
Those who only exploit run into a competency trap.
Pure exploitation creates a self-reinforcing mechanism: the organisation becomes so good at the existing that it develops neither the occasion nor the capability to question it. The finding holds regardless of company size.
02
O'REILLY & TUSHMAN · HARVARD / STANFORD
Ambidextrous companies achieve significantly better survival and performance figures over the long term.
Two decades of empirical research across hundreds of companies show that organisations which sustain both modes at the same time survive more often and grow more strongly than those that focus on a single mode. It is one of the most robust findings in strategy research.
03
NAGJI & TUFF · HARVARD BUSINESS REVIEW, 2012
The 10 percent of transformative investment generates 70 percent of innovation returns over the long term.
At companies with above-average performance, around 70 percent of innovation resources go into the core business. But those 70 percent generate only 10 percent of cumulative innovation returns over the long term. The distribution is exactly inverse.
The inverse logic of innovation returns, after Nagji & Tuff (HBR 2012)
Schematic illustration after Nagji & Tuff (HBR 2012). Actual distributions vary by industry and context.
PRACTICAL EXAMPLES
Why ambidexterity decides survival
What ambidexterity means in concrete terms is shown most clearly by two companies that faced the same starting situation in the same industry at the same time. One still exists today, the other does not. The example may already be familiar to you.
Photography industry · same starting situation, opposite outcome
PHOTOGRAPHY INDUSTRY · SAME STARTING SITUATION, OPPOSITE OUTCOME
Fujifilm
When digital photography emerged, Fujifilm's leadership developed a broad strategic thesis that covered both analogue and digital capabilities. The company invested in its existing film business and actively built new competencies in digital imaging at the same time, including chemical expertise for new fields such as pharmaceuticals and cosmetics.
Polaroid
Polaroid recognised the need for change and even set up structurally ambidextrous units for digital imaging. But the organisational identity was so strongly focused on analogue instant-photo technology that the digital unit never received the resources it needed. Exploitation dominated the internal allocation of resources. Each decision was rational on its own; in sum, the outcome was strategically devastating.
Polaroid filed for insolvency in 2001. The brand survives only as a licensing construct.
Source: Tripsas (2013), cited in O'Reilly & Tushman, "Organizational Ambidexterity: Past, Present and Future", Academy of Management Perspectives, 2013.
Fujifilm survives and diversifies. 2023: revenue over USD 20 billion.
SWISS WATCH INDUSTRY · 1970s
When you decide too late where you want to compete
The Swiss watch industry lost around 60,000 jobs in the 1970s. Not because it had the wrong technology. Quartz existed. Seiko built a business model on it. Most Swiss manufacturers stayed in the exploitation of their proven craft. The decision about which terrain should belong to them was made too late, or not at all. The field stayed empty until others took it.
Ambidexterity rarely fails for lack of the will to innovate. It fails for lack of the decision about what is developed at the same time.
Read more in our blog: Which terrain belongs to you?
AN ANALOGY FOR THE LEADERSHIP DISCUSSION
The compound interest of exploration
Nagji und Tuff haben gezeigt: 10 Prozent transformative Investition generieren langfristig 70 Prozent des Innovationsertrags. Wer diese 10 Prozent in der Krise auf null setzt, spart kurzfristig 10 Prozent und verliert langfristig 70 Prozent des Innovationsertrags. Genau wie bei einem Sparplan: Wer drei Jahre aussetzt, verliert nicht drei Jahre Zinsen. Er verliert den gesamten Zinseszinseffekt, der uneinholbar ist.
What counts is the minimum that is held even under maximum pressure. Whether that is 3 percent or 10 percent is secondary. Zero breaks the compounding effect.
Read more in our blog: Endurance over departure: why optimising alone costs you the future
DIAGNOSIS
Three patterns that make the shift invisible
01
Innovation is mistaken for exploitation
Process improvements, automation projects, and software upgrades count internally as "innovation". In terms of the Nagji/Tuff classification, these are core-business optimisations: valuable, but not exploration. An organisation that proudly points to its innovation projects can be at zero percent transformative investment if none of those projects explores a new business field, a new customer group, or a new value proposition.
In the last strategy meeting, most initiatives were presented as innovation along existing processes and for existing business models. Almost none were positioned as an experiment, outside the existing, with an uncertain outcome.
Telltale sign:
02
The bottleneck is located in the wrong place
When order intake is weak, it is tempting to locate the bottleneck in sales or in demand. That can be correct. But in many cases the real bottleneck lies deeper: in an organisation that has invested too little for years in the capability to develop its business model further. The crisis makes the bottleneck visible. It arose long before.
The executive team names the bottleneck as a lack of orders or weak sales. The last structural review of the business model lies more than three years back.
Telltale sign:
03
The future is thought of as "after the crisis"
"Once the situation stabilises, we'll invest in the future again." This sentence sounds reasonable. It overlooks the compounding logic. Exploration is an organisational capability that has to be built and practised. It decays when it pauses. Exploration that stops under pressure and restarts when relief comes has a fundamental flaw: the learning cycles begin again from scratch every time.
The leadership team cannot name which future investment was actively protected even in the last quarter.
Telltale sign:
04
AI pilots are running. The direction is missing.
Projects run in parallel: a new platform, AI pilots, process automation. Each given its own budget, each declared internally as a future investment. What is missing is a shared focus and a decision about which terrain the organisation wants to occupy over the long term. Under pressure, these projects are the first to be suspended, because none of them counts as indispensable. The result: fast pilots, slow impact, a benefit that is hard to explain.
Im letzten Strategiemeeting wurden zwar KI-Initiativen als Innovation vorgestellt. Eine gemeinsame strategische These dazu, wohin die Organisation sich bewegt, fehlt.
Telltale sign:
ORIENTATION
What ambidexterity means in concrete terms under pressure
How much exploration is realistic under pressure is shown by a familiar image: the pension savings plan in a difficult stock-market year. You keep it going even then, perhaps reducing the contribution. But you do not stop.
FIRST
A protected minimum investment in exploration
One that is not up for negotiation even under maximum operational pressure. That can be three people, half a day a week, or a small prototyping budget. Even if the 10 percent drops to 3 percent: the continuity is preserved. Zero breaks the compounding effect.
SECOND
An honest diagnosis of the real bottleneck
The real question is sharper: what concretely prevents this organisation from adapting to changed conditions? Whether it is order intake or a business model that has not been developed further for years makes a fundamental difference to the next measure.
THIRD
Ein Führungssystem, das die Balance aktiv steuert
Ambidexterity does not happen on its own. It needs a leadership team that consciously decides how scarce resources are split between exploitation and exploration, and that reviews this decision regularly.