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Recently I realised that some of the theories that I studied during my time at Erasmus University Rotterdam (Innovation Management) can be applied to my personal life as well. Because in a way, personal development is innovation management applied to one’s personal life.
So in this article, I want to zoom in on one of these innovation management theories, namely the exploration-exploitation cycle.
The theory: exploration and exploitation
Like all management theories, this one is also mostly just faff and words. Trying to describe stuff that happens in real life, without really getting involved (sounds very manager-like, doesn’t it?). But these theories can sometimes offer a fresh new outlook on a situation, which can be helpful in understanding the situation better.
So that is what this theory is as well. It recognizes that there are two modes for a company to work in.
The first one is exploration, which is defined by the terms ‘search, variation, risk-taking, experimentation, play, flexibility, discover, innovation’. You can think of this as the R&D department of a company. Trying to come up with new products to keep the company profitable.
The second mode is exploitation, which is described as: ‘refinement, choice, production, efficiency, selection, implementation, execution’ (March, 1991). This corresponds with the production department of a company. The repetitive process of producing products that have been designed during the exploration phase.
The literature on this topic tells us that these two modes are best applied in completely separate situations. This is based on a study by Harvard Business Review. They found out that ambidextrous organisations were significantly more successful than other organisations that attempted to combine exploration and exploitation.
The Ambidextrous Organization
‘They separate their new, exploratory units from their traditional, exploitative ones, allowing for different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. In other words, they manage organizational separation through a tightly integrated senior team.’ (HBR, 2014)
Why were they more successful? Well… no one really knows… And that’s because management studies is not a real science. You can read about how and why scholars think it works, but there is no definitive answer to that question. A few options:
- Strong management team with a clear vision
- Cross-contamination prevention
- The exploration unit remains separate and independent, therefore it is shielded from distractions that take place elsewhere in the company
- Cross-fertilization promotion
- Tight coordination at the managerial level, which leads to the explorative units sharing important resources from the traditional units
Underneath you can see the description of both phases, as defined by the HBR article.
| Exploit | Explore | |
|---|---|---|
| Strategic intent | Costs, profit | Innovation, growth |
| Critical tasks | Operations, efficiency, incremental innovation | Adaptability, new products, breakthrough innovation |
| Competencies | Operational | Entrepreneurial |
| Structure | Formal, mechanistic | Adaptive, loose |
| Controls, rewards | Margins, productivity | Milestones, growth |
| Culture | Efficiency, low-risk, quality, customers | Risk-taking, speed, flexibility, experimentation |
| Leadership role | Authorative, top-down | Visionary, involved |
Applying the theory
So what can we learn from this theory that we can apply to our own life? I think first and foremost it is important to recognise that we are humans and not corporate entities consisting of a myriad of people/departments/units. We are just one simple individual person. Therefore we cannot simply duplicate and apply this theory to our lives. But there are some interesting points to take away from it.
1. Applying in series, not parallel
For companies, it is important to be ambidextrous by focusing on exploration and exploitation at the same time. They have to do this, so that when their current product line is falling out of favour with the market, they will have a new product ready to push through the throat of the customers.
But for us as individuals, that doesn’t really work. Therefore I think it is important to take this notion of ambidexterity and take it apart. Instead of doing both activities in parallel, we can do them in series. Make it into a cycle. You can have a dedicated period of exploration, which you can follow up by a dedicated period of going into monk-mode. In this monk-mode, there are no destractions. It’s a period of complete dedication, focus, and consistency. It corresponds with the exploitation mode for companies. Check out the table above for more inspiration.
For me personally, that is reflected in sporting plans for 2023. In 2022, I took the time to explore multiple different physical activities. Running, swimming, scuba diving, free diving, unicycling, road cycling, yoga, and many more! But after this year of exploration, I realised that it was time for a year of exploitation. Therefore my sporting goals for 2023 will be tailored toward running, building routines, and finding consistency.
2. Life is not cyclic, it’s chaos
I introduced the idea of a cyclic movement in the previous point, but here I would like to make the amendment stating that life isn’t really that black and white. And although calling it a cycle and talking about predefined phases definitely 100% satisfy my autistic desire to put everything into boxes, it is also important to point out that life is much more complex than that. This means that the modes of exploration and exploitation can sometimes overlap, or look a bit awkward. You’ll be able to learn, innovate, and experiment while you are still in exploitation mode. That just means you break up your exploitation mode briefly to innovate further. Only to continue exploiting more afterward!
3. Having a vision helps
Finally, I think it’s good to have a look at the first takeaway from the innovation management theory about ambidexterity. ‘Strong management team with a clear vision’. This is a lesson that we can also apply to our own life. Because I truly believe that having a strong vision of where you want to go helps you to hold the different explorative-exploitative phases in line. If you are experimenting without a vision or any idea or direction, then you’ll never be able to leave the exploration mode. Consequently, you’ll be stuck in a situation where you try, you try, and you try, but you never really know if what you do works, or if it makes sense in the greater scheme of things (because without a vision, there is no ‘greater scheme of things’). Therefore, we need validation and exploitation.
End notes: life as a continuous cycle of exploration
It, therefore, begs the question if life is not a continuous cycle of exploration. Because the next phase, exploitation, can be seen as a way of validating the experiments from the exploration phase. Only to return to the exploration phase after you’ve finished your test/exploitation. And I quite like that idea to be honest. Because most things in life are better to be looked at as exploration. As play. This is where we usually are most honest, and most intuitive, have the most child-like wonder, and consequently also the most joy. But to develop our play (and not get stuck in the swamp of mindless distractions), it is imperative to have a vision of where we would like our play to take us. And we need cycles of exploitation to validate and to help us thrive.