Why high-performing organisations stay in equilibrium, and how to tell when yours isn’t
At the centre of how I work with leaders is a simple idea I call the innovation equation. Every organisation has to balance two forces: delivering reliably today and adapting for tomorrow. When those forces are in balance, performance is sustainable. When they fall out of balance, productivity, growth and morale decline, often slowly enough that no one notices until it’s serious.
Two forces, both essential
James March called these forces exploitation and exploration. Exploitation is refinement: efficiency, standardisation, doing what we know well. Exploration is search: experimentation, discovery, testing what we don’t yet know. An organisation that only exploits becomes efficient and obsolete. One that only explores becomes creative and chaotic. Neither survives for long.
Most large organisations I meet are heavily weighted towards exploitation. Years of efficiency programs, compliance demands and budget pressure have squeezed out the room to explore. The equation is out of balance.
Balance by design
Michael Tushman and Charles O’Reilly studied organisations that managed both at once. They called them ambidextrous organisations. Their insight was that balance doesn’t happen by accident. Successful organisations protect space for exploration, often in separate teams with different ways of working, while the senior team holds the two together around a shared purpose.
Balance in everyday leadership
Balance also happens in individual leaders. Kathrin Rosing, Michael Frese and Andreas Bausch described ambidextrous leadership: opening behaviours that encourage experimentation and new thinking, and closing behaviours that set routines, standards and deadlines. Good leaders switch between the two as the work requires. Too much opening and nothing gets delivered. Too much closing and nothing new gets tried.
Signs your equation is out of balance
- Every new idea has to prove its return before it can be tested
- Improvement work is always “after BAU”, so it never happens
- Your best people spend their time managing risk, not creating value
- The same problems appear in every annual plan
Restoring balance
Balancing the equation doesn’t mean abandoning discipline. It means deliberately creating space and leadership for exploration alongside strong delivery, then connecting the two so new ideas actually scale.
Balance the equation. Unlock the innovation within.
Curious where your organisation sits on the innovation equation? Let’s find out together.
References: March, J.G. (1991) Organization Science 2(1). Tushman, M.L. & O’Reilly, C.A. (1996) Ambidextrous organizations, California Management Review 38(4). Rosing, K., Frese, M. & Bausch, A. (2011) Explaining the heterogeneity of the leadership-innovation relationship: ambidextrous leadership, The Leadership Quarterly 22(5).