Any business faces two basic demands: it must execute its current activities to survive today's challenges and adapt those activities to survive tomorrow's. Since both executing and adapting require resources, managers face an unending competition for money, people, and time to address the need to perform in the short run and the equally vital need to invest in the long run. This problem raises an important question—is it possible to do both well or is there an inevitable trade-off between executing and adapting?

Executing versus adapting

Tom Peters and Bob Waterman were among the first popular writers to draw attention to the managerial implications of this challenge, in 1982's In Search of Excellence,¹ where they argued that organizations must simultaneously be "tight" in executing and "loose" in adapting. This dialectic has been a central theme in management literature ever since: James Collins and Jerry Porras, for example, note the importance of both control and creativity in Built to Last,² Richard Foster and Sarah Kaplan examine the need to balance operating versus innovating in Creative Destruction,³ and Michael Tushman and Charles O'Reilly paint their vision of an "ambidextrous" organization that can operate as well as...