Building a business requires both of these two activities. Whilst they are not mutually exclusive activities they often appeal to different personality types. This is one of the key reasons why you need a balanced team around you. Most of us have a natural preference to one of these, yet without a strong counter-balance, success will prove elusive. Let me explain.
Exploration appeals to those of us that are natural ‘change junkies’. We love new shiny things and experiences. It makes us bold, risk takers always scanning for new opportunities. To put this in a context, I would almost always rather go to a new restaurant rather than one I know is good. It’s ‘adventure, risk and new experiences that float my boat.’ In a business context that tends to mean, I spot new opportunities and want to move on them right away. I know we need to keep changing and reinventing ourselves to stay ahead of the competition. The next move is more interesting than the present.
Exploitation in many ways is the opposite in this context. It means that when you find a profitable opportunity, you stay around long enough to maximize your profit from it. The focus is on minor improvements to offerings and processes, reform rather than revolution. Invariably it involves a brain that is strong on detail rather than concept. If you are this type of person, when you find an excellent dining experience, you will keep going back there with just a modicum of experimentation. You aim to reap the benefits of your previous work and research; it makes sense.
In an age of shortening product lifecyles, rapid change in many industries and intense competition, a business needs the Explorer. Without those skills, you can easily not notice dramatic changes in the market until it is too late. Most companies with any kind of longevity have to reinvent themselves to stay in business. However, it it the Exploiter that generates the profit from the insights gained by the Explorer and this in turn generates the resources to move into new markets and to experiment.
In practice, we all embody these two characteristics, in different balances. I find the Exploration vs. Exploitation concepts provide a useful perspective to apply to business decisions. Understanding team members preferences also helps me value their input into decision-making more. A successful management team needs to have both but depending on the strategic needs of the business one might have a dominating influence for a period of time. As an entrepreneur, I know I sometimes have to listen to the Exploiters I have around me. Boring!