On 1991, James shared his findings on the relation between the exploration of new possibilities and the exploitation of old certainties in organisational learning [1]. His main point is that an organisation should do both consecutively: explore new possibilities while exploiting the existing ones.
Twenty years later, on 2011, Eric Ries released the Lean Start book [2] which says that:
An organisation should keep learning and experimenting via a build-measure-learn cycle (Tweet This).
As a consultant, since the release of the Lean StartUp book, I’ve been applying the build-measure-learn cycle on many contexts and organisations. I noticed a variance on the build-measure-learn cycle depending on the organisational interest for a given initiative: exploration or exploitation. The image below shows the build-measure-learn cycle for the Exploration and the Exploitation organisational learning perspectives.
On the Exploration cycle, you should run many experiments. The more experiments, the better. It is all about exploring as many options as possible.
As per the paper, “Compared to the returns from exploitation, returns from exploration are systematically less certain, more remote in time, and organisationally more distant form the locus of action and adaption.” … “The essence of Exploration is experimentation with new alternatives. Its returns are uncertain, distant, and often negative. Thus, the distante in time and space between the locus of learning and the locus for the realisation of returns is generally greater in case of of exploration, than in case of exploitation, as is the uncertainty.”
On the Exploitation cycle, it is less about experimenting and more about validating. The idea is already proved, the data already shows some positive for moving forward. You already know the best options. Now its time to exercise them, to exploit it!
But you still need to build something small. Something for validating your exploitation results. This is the MVP. And, for deciding and aligning the MVP you should run a lean Inception workshop [3].
References
[1] Exploration and Exploitation in Organizational Learning; Organization Science, Vol. 2, No. 1, Special Issue: Organizational Learning: Papers in Honor of (and by) James G. March. (1991), pp. 71-87.
[2] RIES, Eric. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Crown Publishing, 2011.
[3] CAROLI, Paulo. Lean Inception: How to Align People and Build the Right Product. Editora Caroli, 2019.
