To Explore or to Exploit?

Exploitation or exploration? – This is no longer a question. If you want to survive in today’s business environment, you have to do both in parallel. It is difficult to look at these concepts as isolated islands, because an organization is a living organism that is constantly changing, and its adaptability to change and agility depends on its ability to simultaneously exploit existing business models and also move forward through the exploitation of new ones.
This dual approach, which is necessary for the long-term sustainability of an organization, requires some new models from modern HR. What is the role of Human Resources? How does HR help an organization to establish a dual/ambidextrous approach in a sustainable way?

Topics that become an integral part of the HR agenda in this context are, above all:
• How to build a corporate culture that supports the duality, that is, the ambidextrous nature of the organization?
• How to build a leadership team that has a dual/ ambidextrous mindset?
• How to incorporate the principles of duality/ambidexterity into the key HR processes of talent acquisition, talent management, performance management and organizational learning?
• How to link organizational design and duality, or how to support dual/ambidextrous approach through organizational design?

The role of HR is not to launch a revolution; HR should certainly be a strategic support for the evolution of the organization.
The story of the evolution and duality/ambidexterity of an organization is actually the story of how to ensure success in the long run, and not lose the short-term focus in business. Optimizing your business and focusing on results in the short term will generate profits, but in the long run it will encourage stagnation. On the other hand, constant innovation that loses execution from focus, will cause the company to sway and even lose its place in the market.

The balance between innovation and optimization has to be embedded in a model that the entire organization is living. This means that duality/ambidexterity must be embedded in corporate culture, organizational design and all other processes within the organization.

Corporate culture is a complex concept and the process of creating/changing corporate culture is part of a long-term agenda, which requires a minimum three-year action plan through which the desired mid-set descends top down. It is not the organization that is changing – the people are changing. Some studies show that about 70% of the impact on culture comes from the leadership team; that is, their decision-making, behaviors and values they promote, while about 30% of the impact is from employee education, training and employee engagement programs.

That is why one of HR’s key tasks is to win top management commitment to set the right corporate culture model. The leadership team needs to be actively involved in setting values and competency models that, through their behavioral indicators, will support the mid-set and behaviors that we want our organization to have. In this case, these are competencies that will support the dual/ambidextrous nature of the organization – a simultaneous focus on results and performance, but also on change, innovation, an agile approach. These competencies will form the basis for recruitment and selection processes, talent acquisition through talent programs, organization talent mapping, performance management, employee and organizational development.

In this way, we help the organization to identify and recruit people who already possess the desired values and behaviors, thus “importing” in the organization resources that help us shape the corporate culture we aspire to. On the other hand, if we combine the principle of duality/ambidexterity through competencies with performance and talent management, we direct our existing employees towards the desired behaviors.

The key ingredient, let’s say spice of HR cuisine, in all these processes, must be intensive, structured work with top management.

What does this mean?
Just as a business must continuously evolve in order to survive, the concept of leadership must also change. Leaders, as catalysts for change, should be carriers and main proponents and promoters of this dual/ambidextrous principle. The mindset, mentality for innovation has to live through them as role models and trough corporate culture they create.
The question is, is it at all possible to establish a culture in one system that will simultaneously support both – exploitation and exploration? Because, essentially, here we have two different mindsets, two different approaches to business. This is especially challenging in traditional, rigid systems, where everything that is new “just doesn’t fit”, or the idea of innovation is declaratively supported, but measured through the traditional prism of profit and focus on short-term performance.

The dual/ambidextrous approach means to reconcile the entrepreneurial spirit, the willingness to take risks, change, experiment, research, out of the box thinking, visionary, on the one hand, and on the other, focus on cost, efficiency, continuity, productivity, less risk and more direct approach. Exploration is focused on long-term goals and requires a flexible, decentralized organizational structure that allows us rapid change, while exploitation is all about short-term goals, execution and a centralized approach. Some companies seek to implement such a dual/ambidextrous model through an organizational structure that allows organizational units to function as relatively independent, with quite a decision-making autonomy, while at the same time there are broad frameworks that provide general guidelines for them. In this way, the organization can simultaneously apply different strategic approaches, and as a result of this duality we get innovation. The ambidextrous organization is capable of creating innovation, and various studies have shown that ambidextrality affects performance, sales growth, customer satisfaction and profit.

Corporate culture and leadership style in such organizations are specific. The top management mindset must also carry an ambidextrous, dual note to enable the duality/ambidextrality of the organization.
In today’s business environments where disruption and change is the rule rather than the exception, ambidextrous leaders not only strive to maximize existing efficiency, but will also be prone to innovation and risk. Leaders who do this successfully, manage to embrace duality, uncertainty and tension. For them, it is a comfort zone when exiting the comfort zone. They encourage innovation and then implementation, and they need to be able to apply different leadership styles depending on phase of process. In the exploration/innovation phase, they must be prepared to empower people to approach the problem from different points of view, experiment and make mistakes, while in the implementation phase the focus shifts to implementation of plans and minimizing mistakes. Tolerance of errors here should in no way be equated with tolerance of incompetence.

Leaders who live this duality use their vision to build and strengthen environments and corporate cultures that rest on the same principle – a principle that puts the sign “strategically” on both exploration and exploitation. This is how top management practically promotes different subcultures that share a common denominator. This denominator is a solid framework, while everything within that framework is fluid and flexible, but with a clearly defined direction. That direction is what connects. The path to reach your desired destination is wide open, and there is a space for creation and innovation.

One of the approaches we can come across is to create separate innovation hubs that allow the employees to distance themselves from the culture and processes of the mainstream business. However, these hubs cannot exist as completely isolated units if they are to add value to the business. The connection must exist. The main content for the hub needs to come from the business, and the outcomes of the hub’s work must return to the same business and help it to be successful.

That is why it is important for the innovation strategy to be a topic for top management and the CEO.

Let’s go back to the beginning – exploration or exploitation? If the company strives for long-term success, it must adopt a dual/ambidextrous approach and a mid-set. Successful transformation of corporate culture is based on intensive work with top management and unconditional promotion of goals and results as well as innovations. A clear framework and targeted destination, because you need to know where you want to get, and freedom to explore trails.

“Can you tell me where to go from here ?”
“And where do you want to get to?” Cat said.
“I don’t care …” Alice said.
“Then it doesn’t matter where you go,” Cat remarked.
“… Just to get anywhere,” Alice explained.
“You’re sure to get anywhere,” Cat said. – You just have to go long enough. “
(Alice in Wish for Miracles, Luis Carroll)

Dragana Stojanovic
About Dragana Stojanovic 1 Article
People/HR Processes Manager at Air Serbia

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