Corporate Explorer Fieldbook

CHAPTER 19Organizational Culture: The Silent Killer of Exploration

Charles A. O’Reilly III

CORE AND EXPLORE

Conceptually, the logic of ambidexterity is simple: to be successful, core and explore businesses require different architectures (people, structures, metrics, and culture), so they need to be set up as separate units – one for exploit and another for explore. This is straightforward but not necessarily easy to do in practice. The need to manage different organizational architectures brings with it significant challenges for leaders. Do we have the resources to set up separate units? Can we use different metrics and rewards? Will the existing systems allow us the independence needed to pursue very different strategies (e.g., finance, purchasing, legal, HR)? While these demands are difficult, perhaps the biggest silent killer of ambidexterity and the most difficult challenge for many leaders is the need to develop different cultures across the core and explore units.

The culture needed for success in a mature business typically emphasizes predictability, efficiency, incremental improvement, and compliance with procedures and processes. Being successful in an explore business requires almost the opposite – with an emphasis on autonomy, speed, experimentation, taking risks, and rapid adjustments to changes. The cultures required are completely different. Trying to manage an exploration venture with the culture of a core business is a recipe for failure.¹ How can a leader ...