Exploitation and Exploration in Organizations - Essay Example

Student’s Name Professor’s Name Course Date Exploitation and exploration in organizations Organizations are very dynamic and in the recent years many organization have been trying to incorporate exploitation and exploration into their strategies in an effort to increase their productivity and profits. The two concepts represent different approaches that need to be applied for them to be successful in presenting the organization with the desired outcomes. The organizations have to make vital decisions on how much they are willing to invest in the different activities necessary got it to achieve its goals. Exploration is a concept used in organizations to define the activities carried out like research, discovery of new ideas and concepts, experimentation on different aspects that can boost the income and productivity, risk taking behaviors and innovation. Exploitation on the other hand simply means the behaviors adapted by a firm like refinement performance, effectiveness, fabrication and selection (Puhan, 8). Organizations that wish to apply both strategies in their organization face many challenges in implementing them because the two adapt different structures and cultures. The two also apply different processes and measures of performance making it difficult to integrate both into the system (Hitt, Ireland and Hoskisson 41). Exploration is all about the organic structures of organizational management where the organization is focused on innovation and improvisation. Exploration is associated with chaos where there the organization operates under lose systems and independence among the employees. It also focuses on emerging markets and new technologies (Johns 29). Exploitation, on the other hand is a complete opposite of the exploration where the system is closely knit with a high level of bureaucracy where the management operates under a stable market. The employees follow a stipulated routine and path where routine is a fundamental aspect in daily operations (Hodgson and Screpanti 31). There is a high level of control in how operations are carried out and there is no autonomy among the employees. All these differences make it difficult for organization to use both strategies in their daily operations. Most of the features of the two contradict and taking one aspect ad leaving the other one out may not lead to the desired outcome. It is evident that exploration returns are variable and takes a long time to achieve because they do not use stable performance to perform their daily activities. Exploitation, on the other hand, guarantees certain and close success because they focus on stable performance (Puhan 45). The management faces many challenges as they try to implement the two because they contradict in so many aspects. The contradictions of the two include the type of management needed to implement them (Arora, Fosfuri and Gambardella 81). Explorative requires flexible management system that can change and adapt to the changes in the environment and the markets. The exploitative strategy on the other hand demands a bureaucratic form of leadership where the employees are under the control of the management where there is a high level of centralization of power (Murray, Markides and Galavan 24). This contradiction is not easy to overcome and poses a great challenge to the management as they try to merge the two strategies into one. The other contradiction is in the timeline of success and the guarantee of the success (Corre 43). The use of exploration means that the organization has a no guarantee of success and the timeline for the achievements is varied. This is because the performance is highly dependent on the environmental factors and changes in the market. This makes it difficult to set a deadline on when to achieve a certain goal (Zedalis 76). Exploitation requires a small timeline and the certainty of success is guaranteed because the performance of the employees is guaranteed by the routine operations and the stable market and technology used in this kind of management (McCannon 73). Exploration and exploitation are important in the evolution of an organization because they provide the knowledge required understanding the supply, demand, and geographic space that the organization operates (Conway 44). The data from the two concepts help in understanding the contingency of the supply, demand, and spatial aspects of an organization. There is a close relationship between the dynamic supply side of an organization and the innovations needed to improve and keep up with competition in environments that are highly dynamic (March 39). The aspect of innovation in a stable environment may be harmful to the supply and demand. Therefore, the management needs to understand the different aspects and implication of exploration and exploitation and how it affects the demand, supply and the spatial environments (Cavusgil, Knight and Riesenberger 73). There is need for organizations to increase their knowledge in products creation in market aspects. This means that an organization cannot function with only one of the strategies (Mangham 48). Exploitation requires information on the changes in the market and this is where the aspect of exploitation comes in. the organization needs to make investments in the market and to do this, they require knowledge on what is happening and the technological innovation that affect and determine the demand of new products. The two concepts therefore, work together as the organization uses the explorative program to perform experiments on new products and search of technological innovation that can help the organization achieve its goals (Nairn 90). The exploitation aspect comes in maintaining the innovation in the human resource systems. The two need to work together as the first steps in establishing a company is to take risks which is highly associated with exploration and the develop a stable operational environment (Mellor 41). Firms can use structural ambidexterity to manage the contradictions of exploitation and exploration. This is possible with the creation of two spatial parts in an organization. The first part will deal with exploitation exclusively. This means that they will focus on stable markets and technology use. This means that the structure of the apart of the organization will be bureaucratic (Kramer and Neale 78). The other part will deal with exploration where they will be studying the changes in the markets, trying new things and identifying new aspects of organizational management an string them before they become a part of the organization. This way the organization can derive benefits from both exploration and exploitation. The organization of the structures will be independent from the middle level managers with only the top-level managers operating in the same environment. The organization may also integrate the two by operating on a two period basis where there is a separate time allocated of exploitation and then the organization switches to exploration (Senior 45). Many factors affect the implementation of the two with the size of the firm being the most important factor. The firm size determines the number of employees, and this means that the choice of using both exploitative and explorative concepts can work well in a small firm because the employees are more manageable as compared to a large organization where coordination of activities is more difficult (Schmitt and Borman 56). The changes in the environment in both the supply and demand aspects also play a role in shaping the organizations decisions on whether to take exploitation or exploration as their main form of operation. A stable environment may demand the use of an exploitative environment and a dynamic one may require the use of both (David 22). Technological change and it effects the organization is another mediating factor that has a major role in shaping the decision of an organization to apply any of the two concepts. An organization that is highly dependent on technological innovation will best perform well in an explorative environment because of the need to keep up with the changes in the environment (Jeffs 37). Works Cited Arora, Ashish, Andrea Fosfuri, and Alfonso Gambardella. Markets for technology: the economics of innovation and corporate strategy. Cambridge, Mass.: MIT Press, 2002. Print. Cavusgil, S. Tamer, Gary A. Knight, and John R. Riesenberger. International business: strategy, management, and the new realities. Upper saddle River, N.J.: Pearson Prentice Hall, 2008. Print. Conway, Steve. Social interaction and organisational change Aston perspectives on innovation networks. London: ICP ;, 2001. Print. Corre, Armelle. The innovation game a new approach to innovation management and R & D. New York, NY: Springer, 2005. Print. David, Fred R.. Strategic management: concepts and cases. 10th ed. Upper Saddle River, N.J.: Pearson Prentice Hall, 2005. Print. Hitt, Michael A., R. 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International energy law: rules governing future exploration, exploitation, and use of renewable resources. Aldershot, Hants, England: Ashgate/Dartmouth, 2000. Print. Read More