The modern company lives a profound dialectic between two almost contradictory necessities. In order to live today (to make money today), the company has to exploit the ideas that it developed some time ago, and has already successfully converted into products and services. But in order to live tomorrow (to make money in the future), it must explore new ideas and opportunities.
Good management of the tension between exploitation and exploration, in the combination of strategies and structures, resources, processes, and people, in both directions, is the trick to surviving in a competitive environment that demands simultaneous efficiency (productivity) and difference (innovation). There is tension and dialectic between mature ideas and the exploration of new ideas because the characteristics that make each aspect work well are very different.
In exploitation, the objective is to function through a routine with no room for error. All procedures and processes must be perfectly defined, so that everybody can carry out their job well. This is where quality reigns. Mistakes are not welcome, and people are evaluated on the economic results they produce by doing things well (perfectly).
In exploration, the main aim is to seek out the free and original generation of ideas. As Linus Pauling said, the only way to have good ideas is to have many ideas. According to some experts, the typical percentage of the sum of a company’s ideas that finally end up working is only 0.3%. Innovation is a desire for constant experimentation; an adventure waiting to be discovered. A passion. The exploiters’ work is totally focussed on short-term profits, while the explorers are focussed on discovery, without being sure that this will affect future profits. To put it in simple but graphic terms, the exploiters have their feet on the ground, and the explorers have their heads in the clouds.
The dialectic between these two extremes is complex, because the company needs them both. It is not possible to survive today with- out uniting the efficiency of the exploitation of mature ideas with the bold generation of new ideas, concepts, products and industries, that can be managed in a global environment of accelerated copy. The company needs both poles, but the poles are incredibly different, as are the people that work in them, the motivations that stimulate them, and their methods of evaluating success (economic results in one and ground-breaking ideas in the other).
Perhaps achieving a balance, a good relationship, between these extremes is the principal function of the company directors. Their job is to make both poles understand that they are two sides of one coin, and that they need each other: one cannot exist without the other. Perhaps they could ensure that each person spends some of every day working as both an exploiter of mature ideas and an explorer of new ideas.