I recently heard a way of thinking I hadn’t heard of before.
Explore versus Exploit.
In this blog I will workshop scenarios around whether we ‘explore’ an activity or whether we ‘exploit’ an activity.
Exploring
Exploring is where we choose to spend time, money or resources on seeking to achieve a new goal or initiative.
Personal examples might include a new skill set such as further education, passion projects or pursuing new hobbies and interests.
Business examples might be researching buying a business, starting a new business or creating a new division in your existing business.
Exploring involves time, cost and risk with no guaranteed outcome.
Exploiting
Exploiting is where we capitalize or expand on a pre-existing proven asset, skill or initiative.
Personal examples might include expanding your investment portfolio in shares or property. It might include doing more of what you already do such as golf, tennis, running or wine appreciation.
In business it could be updating existing products or services. Or it might include growing your already successful business further through more staff or upgraded facilities.
Exploiting involves taking a pre-existing successful or proven attribute or asset and leveraging it.
Decision-making around Explore versus Exploit
The decision to explore or exploit requires a case-by-case analysis.
The risk profile in determining whether to explore or exploit must always be assessed.
As exploring involves time, cost, risk and uncertainty you must always attempt to assess up-front how much you want to expend on the exercise. For example, if you are young and have time on your side, you may be willing to explore on the basis that you have time and energy ahead of you to pivot if your exploration proves fruitless.
Whereas, if you are older and time is not on your side, you may wish to exploit your proven successes to leverage outcomes in the short-term.
In business, start-ups are in explore mode as they find their markets and navigate a path forward through exploration. Whereas mature businesses, while perhaps still innovating, are generally exploiting their proven markets and maximizing their returns from a proven suite of products and services.
The decision to explore or exploit must be evaluated considering the many factors surrounding time, money and risk.
And of course, you should both explore and exploit.
It is not a binary exercise.
The explore versus exploit paradigm is a fascinating one and I suggest you consider in assessing all your personal and business strategies.
Having assessed the time, cost and risk involved in your exertion on an activity, ask yourself if you want to explore this accepting this risk?
Or having considered time, cost and risk – do you want to exploit your proven success in an area and capitalize on the upside now?
This framework is insightful and powerful.
Its application will help you assess critical thinking and decision making before you commit.
To explore or exploit?
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