Doing versus seeing: acts of exploitation and perceptions of exploration
Author: Adner, Ron ; Levinthal, DanielINSEAD Area: StrategyIn: Strategic Entrepreneurship Journal, vol. 2, no. 1, March 2008 Language: EnglishDescription: p. 43-52.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: The challenge of organizational adaptation is often presented in terms of the tension between the exploration of new possibilities and the exploitation of existing accomplishments. Whether framed in the language of invention versus refi nement or local search versus long jumps, the spirit of the argument is of an explicit trade-off that resource-constrained organizations must make to secure their survival and success. While we do not dispute the fundamental truth that underlies this tension, we do believe this dominant characterization of the process of exploration may be masking key drivers of this tension and potential paths towards its resolution. We argue that, from the perspective of an actor, all activities are inherently exploitative in their nature, in the sense that they are undertaken with the explicit expectation that they may achieve meaningful progress on some dimension of performance. The key distinction regards the extent to which the dimension of performance is recognized and legitimated from the perspective of the organizational context in which the actor is operating. Acts perceived as exploratory are, thus, more accurately characterized as acts of exploitation directed along new performance dimensions. We consider the organizational challenges that such exploratory action poses and the implications for entrepreneurial initiatives. From the perspective of the focal actor engaged in the exploratory initiative, the challenge is to identify projections of the payoff of the initiative they are pursuing, either onto those dimensions of performance that are of interest to the organization, or onto more concrete measures of product-market acceptance and fi nancial return. Low-dimensional representations of the business landscape are an inevitable by-product of bounded rationality and the need for organizations and their strategies to coordinate and direct collective action. In this regard, the most powerful form of entrepreneurship may be the initiation of the cognitive shifts that offer a different topology of the competitive landscape.| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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The challenge of organizational adaptation is often presented in terms of the tension between the exploration of new possibilities and the exploitation of existing accomplishments. Whether framed in the language of invention versus refi nement or local search versus long jumps, the spirit of the argument is of an explicit trade-off that resource-constrained organizations must make to secure their survival and success. While we do not dispute the fundamental truth that underlies this tension, we do believe this dominant characterization of the process of exploration may be masking key drivers of this tension and potential paths towards its resolution. We argue that, from the perspective of an actor, all activities are inherently exploitative in their nature, in the sense that they are undertaken with the explicit expectation that they may achieve meaningful progress on some dimension of performance. The key distinction regards the extent to which the dimension of performance is recognized and legitimated from the perspective of the organizational context in which the actor is operating. Acts perceived as exploratory are, thus, more accurately characterized as acts of exploitation directed along new performance dimensions. We consider the organizational challenges that such exploratory action poses and the implications for entrepreneurial initiatives. From the perspective of the focal actor engaged in the exploratory initiative, the challenge is to identify projections of the payoff of the initiative they are pursuing, either onto those dimensions of performance that are of interest to the organization, or onto more concrete measures of product-market acceptance and fi nancial return. Low-dimensional representations of the business landscape are an inevitable by-product of bounded rationality and the need for organizations and their strategies to coordinate and direct collective action. In this regard, the most powerful form of entrepreneurship may be the initiation of the cognitive shifts that offer a different topology of the competitive landscape.
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