TedX: Two reasons companies fail -- and how to avoid them (Knut Haanaes)
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Summary
Companies fail by focusing solely on existing strategies (exploitation) or solely on new ventures (exploration). Success requires a balance between these two, achieved by simultaneously developing current offerings and exploring new opportunities. This balance is challenging due to traps like the “perpetual search trap” (constantly seeking new ideas without fully developing any) and the “success trap” (becoming complacent due to past achievements). Overcoming these requires proactive crisis management, a long-term perspective, diverse talent, and a willingness to question success.
Highlights
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📈 Exploration vs. Exploitation: Companies must find the delicate balance between improving existing products/services (exploitation) and innovating new ones (exploration) to ensure long-term success. Failure to do so results in obsolescence, as exemplified by Facit and OncoSearch.
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🔄 The Perpetual Search Trap & The Success Trap: Two major obstacles to achieving this balance. The former involves constantly starting new projects without finishing them. The latter is the inability to adapt and innovate due to past success.
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⏱️ Multiple Time Scales: Short-term thinking prioritizes exploitation, while long-term vision necessitates exploration. The value of innovation increases significantly over a longer timeframe.
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🧑💼 Talent & Challenging: Balancing exploration and exploitation requires diverse teams willing to challenge existing approaches and the status quo. A good corporate board and leadership fosters this environment.
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🤔 Self-Reflection: Individuals and companies should regularly assess where they are falling into the traps of complacency or perpetual searching, and actively seek ways to improve their balance between exploration and exploitation.
