China, Innovation and the "Ambidextrous Organization"

Pirate flagAccording to Stanford Graduate School of Business Professor Charles O’Reilly, and Michael L. Tushman of Harvard, Companies that endure have the ability to perform simultaneous innovation on two conflicting fronts: incremental (improvement to existing products/processes) and radical (creation of new, potentially disruptive products/services).

When Ambidextrousness Fails:

Kodak is frequently cited as an organization that was unable to achieve this ambidextrous state. Although they invented the digital camera, it disrupted their traditional film business. This conflict resulted in them hesitating to move aggressively into the market space that proved so dominant it killed their main profit center, ultimately driving the parent company into bankruptcy.

The Apple “Pirates”:

Apple on the other hand was able to maintain their august Apple 2 product line while creating a band of “pirates” who constructed a revolutionary new computer, the Macintosh. Steve Jobs told his team of Mac mavens that “It’s better to be a pirate than join the navy.” Given that “navy” = incremental and “pirate” = radical, I would claim it’s best for organizations to have a navy and a band of pirates.

Apple would do it again decades later with a creation of a new “pirate” band (the iPhone team), one of whom we will have with us in Sun Valley, Andy Grignon.

Buick and Radical Innovation:

In his 2011 book American Wheels, Chinese Roads: The Story of General Motors in China, Author Michael J. Dunne (who recently joined GM as President of General Motors Indonesia) describes how GM was able to perform their own pirate moves with Dent 2014 Sponsor Buick. While the brand was maintained as a settled North American product in a stable market, GM simultaneously performed radical innovation to make Buick a sales leader in the chaotic marketplace and governmental climate within China.

The results have been quite dramatic. Buick set an all-time global sales record with sales topping 1 million in 2013. (1,032,056 deliveries topped previous 1984 record 1,003,345 deliveries) Since 2008, Buick’s global sales have increased 137 percent, outpacing any other American, European, Korean or Japanese auto brand.

To fulfill the requirements of an ambidextrous organization, often massive corporations with staid protocols must become flexible, nimble and adaptive when needed to adapt to a new market or technological opportunity.

According to Dunne in this revealing interview with ThoughtfulChina, he outlines just how Ambidextrous they became. GM “developed a spirit of entrepreneurship that was quite different from what existed in North America.” They needed to move quickly and adapt to a different culture, different tastes, and being in a partnership with SAIC, a Chinese state-owned manufacturing company.

Dunne also gives GM credit for being able to transcend the all-to-common problem where a multinational corporation is disconnected at the HQ level from the local, Chinese management. In this case local Detroit upper management was onboard, informed and supportive of the local GM staffers.

The net result is that radical innovation happened — and in a way that enhanced the existing product. New designs that were created for the international market are now being credited with very successful new Buicks being sold in the US.