A central issue in innovation management is the undesirable spillover of harmful routines and cognitive representations from core business to the exploratory innovation space, as dealt with in ambidexterity research. This paper examines a conventional manufacturing SME in a business-to-business market that developed renewable energy technologies in the scope of a new business unit, but has ultimately failed in the market. The aim is to examine how the interface between the old and new business was managed over time. Using an in-depth qualitative longitudinal case study, we investigated innovation processes over time and identified three major sources of failure. First, an organizational separation drift from a textbook-like to a looser form of separation allows for undesirable spillover of routines cannibalizing the new business over time. Second, a mismatch exists between the intended product-market strategy and the actual product-market exploration. A third source of failure is the simultaneous coevolution of several modes of separation, which increases management complexity.