Exploration and Exploitation in organizations – A framework for conscious balancing

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A burning question for organizations today is not whether to exploit their current business or explore new opportunities for growth, but rather how to manage both successfully.

We propose that the balance of exploiting current business models, and exploring new opportunities within and surrounding business models is key to a healthy business. 

The real challenge for organizations

When exploration and exploitation are combined, they form a unique competitive advantage. However, balancing exploration and exploitation is extremely difficult to do. This is because they each require different structures, processes, mindsets and skills. 

Therefore, this balance needs to be conscious and structured around two distinct orientations: one for exploration and one for exploitation.

Our Exploration and Exploitation framework is based on three building blocks: the organizations’ purpose, the governance system and the organizational setting and two key orientations: exploration and exploitation. 

Each orientation is characterized by a unique governance system (leadership, key business areas and goals) and organizational setting (capabilities, people & skills, systems & processes, structure and culture). 

The different orientations reflect the need for separation between exploration and exploitation activities, but the common purpose underlines the importance for integration that should be embedded in the company’s vision and strategy. 

Whether you want to “up” your game or reinvent your game, the Exploration and Exploitation framework sets up a clear and consistent context to consciously define and implement your own exploration and exploitation path.

Stay tuned for future posts surrounding the topic of Exploitation and Exploration, and the balance between as we dive deeper into this framework!