26 June, 2020
INOVATION VS EXPLOITATION
Obtaining resources for investment in research and innovation can be a complex task given that there is no guarantee of seeing results withing a defined time frame. That being the case, from a company’s standpoint, it may sound easier to go for “reliable” investments with a sense of risk that makes management feel more comfortable.
Doing what already works over and over again sounds more reasonable than betting on something that may or may not give the expected results. However, this is a dangerous mindset, because, in the long run, it could be riskier to keep exploiting what already works than taking on the task of searching new alternatives, even if it implies living with some uncertainty.
Thomas Edison (with his current direct), Blackberry and Blockbuster are just three examples of what can happen when you stop innovating to focus exclusively on exploiting the products and/or services that have already proven to be successful. In fact, said success can drive companies to a comfort zone that keeps them from looking at what their competition is doing.
Thinking that what made us successful in the present will keep us successful in the future is a fatal error if you consider two aspects:
- The market, just like a living organism, constantly changes, evolves, and has new demands.
- Technology offers new and better solutions every single day.
A new agent in the market that decides to make a product today that will compete against your own will have access to fresh market information and the latest technology. Chances are that this agent will end up making a product with a higher quality at a lower price, the worst possible combination against your interests that your competition can offer.
Should you focus only on innovating?
The solution is not becoming a full-time research center or making innovation a law. Many projects have lost themselves following that trend of “innovating just because”. It is more about innovating with clear goals, established based on what the market is expecting and willing to change if the market requires it. Innovating not just to be different but innovating in a practical way, trying to find the answers our clients are looking for, even before they know they are.
So, innovating or exploiting?
The answer is a balance of both. Healthy coexistence in a constant cycle between exploiting the products and services you have developed (which will give you leverage) and innovation which will keep you relevant and allow you to face your competition with better odds and guarantee the continuity of your business.