The new reality of business leadership

Disruptive technologies, rapidly evolving customer needs, geopolitical uncertainties, global competitive pressure: In a constantly changing economy, companies must act faster and more flexibly than ever before. In this new reality, it is no longer enough to be efficient – or only innovative. The true discipline is ambidexterity, the ability to optimize the existing and simultaneously create the new. 

But how can this balancing act be achieved? And why is it today more critical than ever?

1. Ambidexterity: Definition, origin, and scientific foundation

What does ambidexterity mean? The term ambidexterity comes from Latin and means “bothhandedness.” It was coined in organizational research by Michael Tushman and Charles O’Reilly (1996). They define ambidexterity as an organization’s ability to pursue incremental improvements (exploitation) and radical innovations (exploration) at the same time.

• Exploitation refers to the use and optimization of existing resources, processes and business models. The aim is to increase efficiency, quality and reliability.

• Exploration describes searching for new opportunities, technologies and markets. It emphasizes creativity, experimentation and willingness to take risks.

Why is ambidexterity not a contradiction?
For a long time, it was assumed that companies must choose either exploitation or exploration; each requires different structures, cultures and leadership models. However, research over the past two decades shows that the most successful companies are those that master both simultaneously – consciously, structurally, and strategically anchored. Companies with high ambidexterity achieve aboveaverage innovation rates, are more crisisresilient and grow more sustainably.¹

2. The ambidexterity dilemma: Why implementation is so difficult?

Structural and cultural tensions: The challenges of ambidexterity run deep in the DNA of many organizations.

• Structures: Efficiency demands clear processes, hierarchies and control. Innovation, on the other hand, requires flexible, agile teams, flat hierarchies and room for experimentation.

• Culture: Efficiencyoriented cultures reward error avoidance, stability and planning. Innovation cultures encourage risktaking, experimentation and learning from mistakes.

• Leadership: Efficiency requires monitoring, steering and goal orientation. Innovation requires inspiration, empowerment and tolerance for uncertainty.

The dilemma: The logics of efficiency and innovation often contradict each other in daily operations. Many companies swing between extremes — they are either too efficient (and thus sluggish) or too innovative (and thus unstable). The art is to find the right balance and systematically connect both poles.

c. Leadership ambidexterity: The role of leadership

Ambidextrous leaders are bridgebuilders:

• They recognize when control or freedom is needed,

• They foster talents who are effective in both realms,

• They craft a vision that connects efficiency and innovation,

• They intentionally hold tension fields and use them as a source of transformation.

Case: Since Satya Nadella became CEO, Microsoft has fundamentally transformed—from a pure software company to an innovationdriven cloud and AI leader. The company remained economically successful because the core business was evolved, not abandoned.

4. Methods and tools for ambidextrous organizations

a. Innovation management

• Stagegate processes: Separate incremental from radical innovations.

• Open innovation: Actively involve startups, customers and external partners.

• Corporate venture capital: Enables strategic investments in innovation leaders.
   

b. Agile methods

• Scrum & Kanban: Support fast learning and iterative development.

• Design thinking: Sharpens user focus and fosters creative solutions.

• Lean startup: Reduces risk through early prototyping and rapid customer feedback.
   

c. Performance management

• OKRs (bbjectives and key results): Make strategic ambidexterity measurable.

• Balanced scorecard: Bridges classic KPIs with innovation metrics.
   

d. Cultural enablers

• Error culture: Allows learning without loss of face.

• Innovation ambassadors: Make ambidexterity visible in the organization.

• Internal innovation challenges: Activate the creative potential of the entire workforce.

5. Strategic implications: Ambidexterity as a competitive advantage

a. Resilience and crisis strength
Ambidextrous organizations can react swiftly to disruption while systematically building new capabilities. This makes them more robust against external shocks.

b. Sustainable growth
Organizations that enhance existing business models while exploring new ones grow more stably, irrespective of shortterm market fluctuations.

c. Employer attraction
Ambidexterity fosters a work environment that balances security and creative freedom. That attracts talent wanting both performance and meaningful development.

6. Success factors and pitfalls

Success factors:

• Clear vision and strategy

• Topmanagement commitment

• Balanced allocation of resources

• Transparent communication about progress and setbacks

Pitfalls:

• Silo mentality across units

• Middle management overload

• Lack of error tolerance and intolerance to uncertainty