Exploitative vs. Exploratory Innovation: Not an Either/Or Decision

Organizational ambidexterity is what Jansen calls for in his substantial body of work around exploratory and exploitative innovation. His is a call for companies to develop the ability to pursue both of these types of innovation simultaneously. We believe that it is crucial to a company’s survival to do as he says. Exploitative innovation is opportunistic and keeps your current product line fresh and gives your sales team new news (it can also erode margin). Exploratory innovation can yield new value, completely replacing your current product set, or enhance it without cannibalization. Some would call this good portfolio management; others might call it a recipe for organizational psychosis.

To be more exploratory is in the organization’s best interest. Unfortunately, we live in a world filled with opportunity (distraction). In Hunting for Hunting Grounds we talk about sending out teams of hunters to discover new hunting grounds: new business units. Using the hunting party metaphor, it is the rare team that is out hunting for a herd of buffalo that does not come across a few antelope along the way; antelope that can keep them or their tribe going for just a little longer. Is stopping to hunt the antelope a distraction or a necessity?

An entrepreneurial answer is that the hunters should do both, of course. The cost for the entrepreneurial answer can be high. Seven of the original ten FedEx venture team members ended their marriages within the first 3 years of that entrepreneurial effort. Perhaps an organizational answer can be more supportive of a work/life balance. What can we do?:

  1. Leadership can clearly articulate and communicate a balanced strategy for growth – taking a little longer may be the right thing to do
  2. Have a truly cross-functional team with some experienced hands that, upon seeing an antelope, spin off a hunter or two and bring on some team members
  3. Agree to a process – not every product needs the same level of intensity as long as shortcuts are agreed upon by knowledgeable people
  4. Engender a slave like devotion to the Voice of the Customer for the great and the meek in your idea set
  5. Be properly resourced (time and money) – if you are unfairly stretching resources the results are predictable.

Your company will benefit from being able to do both types of innovation – and suffer if it cannot. The more competitive your market, the more pressure you will have to tilt toward being exploitative. We would argue…the more competitive your market the more important it is for you to be truly exploratory and find that new Hunting Ground.

Reference: Jansen, J.J.P.; Rotterdam School of Management, Erasmus University and the Erasmus School of Economics

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