The Ambidexterity in Digital Transformation

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Digitization is an all-encompassing phenomenon that touches almost every aspect of our society. This is no different for companies. In response to rapid and revolutionary developments, companies are increasingly trying to implement strategic, technological and organizational changes. This has become known as digital transformation.

There are two ways of distinguishing transformation: representative and generative digital transformation. The first is the automation of existing business functions through new and intelligent technologies. The second is about the generation of new products and services through digital platforms.

The challenge for companies is to integrate these two forms of digitization into their business strategies. This challenge is referred to as digital ambidexterity and, while the concept of digital transformation has been rapidly gaining traction, it is still unclear to many companies what exactly it means amd what the possible impacts of digitization and digital transformation are for companies.

The Growing Popularity of the Term “Digital”

Ambidextrous, in general, refers to the ability to use one’s left and right hands equally. “Ambi” is derived from Latin and means as much as both; “Dexter” means good or auspicious. Therefore, “Ambidexter” literally means "both auspicious."

In  business, ambidextrous refers to taking advantage of circumstances and opportunities by conducting business activities that redefine the current business model by taking risks. If the company performs well on both fronts, it could experience rapid and sustained growth.

Ambidextrous Leadership is a leadership style in which the leader possesses these qualities.

In practice, the Ambidextrous Leader is one who does not avoid risk. At the same time, under his leadership, operational inefficiencies are being eliminated and new leadership activities are being implemented in the current business model. Ambidextrous Leadership is strongly positively associated with business performance and improved outcomes for both startups and established companies.

The transformation in the media and professional literature has not yet translated into a growing interest in scientific literature, so the term is probably still too vague and too ambitious. Furthermore, it is often not clear what the starting and ending point of this digital transformation is. Companies tend to shy away when radical changes are proposed with no clear end goal in sight.

However, the concept appeals to the imagination and expresses a sense of urgency to find a suitable strategic, technological and organizational response. These technological developments have made a fundamental and radical change of the inner business processes, revenue models and customer orientation necessary. Companies must master the art of reinventing themselves in response to the development of these digital innovations, but also.

Representative Scanning

Representative digitization is, in fact, a continuation of automation with other intelligent means:  Existing business processes are digitized and automated. The emphasis here is on replacing existing tasks with the use of smart ones. Where the emphasis in the previous generation of digital transformations was on replacing routine tasks, automation shifts increasingly towards non-routine tasks. This massive digitization will eventually lead to smaller organizations with great autonomy for intelligent digital systems that have automated key business processes.

Business ambidexterity has received many definitions, including organizational learning, technological innovation, strategic management, business design and organizational adaptation, simultaneity of induced and autonomous strategic processes, and the search for balance. They all point to the same underlying concept of business ambidexterity, which often involves finding the right balance, such as balancing efficiency and flexibility, low costs versus differentiation, global integration versus local responsiveness, and short-term profit versus long-term growth.

Generative Scanning

Generativity is a relatively new concept. Generativity denotes the ability of any independent system to create, generate, or produce a new output, structure, or behavior without any input from the system originator. Generativity is the ability of a technology to spontaneously generate services and products by a large, varied group of people. A technology is generative when it is scalable, adaptable, accessible, easy to use and portable.

Balancing is a definition, or requirement, of entrepreneurial ambidexterity that has concrete interfaces with the ambidextrous leader. Thus, he can carry out various activities of prospecting, learning, or both, related to the discovery of new knowledge or market opportunities. This encourages innovative developments that aim to secure the company's future and generate sustainable economic profit.

The profile of the ambidextrous leader is usually linked to advances in knowledge and technological advances. Prospecting, on the other hand, is associated with refining and expanding existing skills, techniques, and technological prowess that create returns.

It goes without saying that every company needs a different kind of leadership at certain times. The environment is often highly competitive and faces many complex conditions. A good leader must, therefore, be ambidextrous and have the ability to perform several actions simultaneously and go through several multilevel learning processes.

Balanced Leadership Styles

Representative and generative digitization differ in many respects and are often at odds with each other. Representative digitization refers to standardization and automation and, therefore, to reducing business complexity. Generative digitization, on the other hand, refers to the generation of new ideas with the help of large groups of people and/or companies. Existing companies will eventually have to find a way for these two digitization strategies to co-exist linked together.

Here, digital ambidexterity is a great challenge, especially for more traditional and hierarchically organized companies. The question is how these companies can incorporate representative and generative digitization into their existing IT infrastructure and organizational structure.

This adaptive ability means that ambidextrous leaders have the ability and skills to compete with their company in a rapidly changing marketplace where the emphasis is on incremental innovation, efficiency and cost reduction. On the other hand, they must also have the ability to thrive in an environment that favors flexibility, speed and innovation.

As a result, the ambidextrous approach to leadership leads managers to focus too heavily on short-term success and long-term failure. That's why the effective manager maintains a good balance between different leadership styles. In some situations, a transformational leadership style is desirable, at other times transactional leadership would work better.

Therefore, good leadership behavior is characterized by adaptability, risk tolerance and employee awareness of the need to be ambidextrous. Ambidextrous leadership is often labeled as the ideal leadership style for this reason.

Ambidextrous Leadership in Reality

The challenge is to translate the concept of ambidexterity into a realistic business scenario. For this, there needs to be a clear and strategic intention behind the ambidextrous leader's decision. This intention must include viable prospect possibilities. It's not easy, especially if people in the company are already used to a different leadership style. It's also hard to know when to take that step back and when to give more responsibility to others. Digital transformation is an overarching concept that is still not well defined and whose implications are still difficult to oversee.

Discussions about the meaning and consequences of new forms of automation using robots, intelligent software agents, sensor technology (representative digitization) and digital platforms (generative digitization) largely overlap. Both forms of digitization must include the concept of digital transformation.

Digital transformation implies a radical but, above all, coherent review of strategy, customer orientation, technology, business processes and competence and organizational structure. An important aspect of this is digital ambidexterity, the ability to integrate representative and generative digitalization into business strategy and organization simultaneously and in conjunction with each other.




Edited by Erik Linask
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