Mechanisms for Achieving Ambidexterity in the Context of Digital Transformation: Insights from Digital Innovation Labs

Abstract

Digital transformation alters companies’ core value-defining activities. Companies must establish new work practices and change the work environment to create new value propositions leveraging digital technologies. Specifically, to maximize their investments in digital transformation while remaining competitive, they must achieve ambidexterity, which is the capability to balance exploration and exploitation flexibly. More and more companies strive to achieve ambidexterity by establishing digital innovation labs (DILs), where employees explore the opportunities afforded through digital technologies and ensure their successful integration into the main organization. This study analyzes data collected from nine DILs, examining how companies utilize them to achieve organizational ambidexterity. Our analysis reveals a nuanced view on the conceptualization of ambidexterity and how it helps in digital transformation: (1) DILs contribute mainly by transferring employees temporarily from the main organization to the DIL and back. Recombining mechanisms of different theoretical forms of ambidexterity addresses typical issues and tensions stemming from leveraging digital technologies in innovation activities. (2) We find that implementing ambidexterity through organizational design features of DILs provides a successful basis for digital transformation by creating innovations that complement companies’ value propositions with digital technologies.