Sticking to the Options You Already Know

Backyard Exploration

Scroll to Explore

Historical Case

Portugal's Prince Henry the Navigator

Why Didn't Portugal Discover America?

In the 15th century, India was the focal point of European exploration efforts. The Portuguese in particular went to great lengths to find a sea route around Africa. This focus led them to renounce any claim to the space west of the Tordesillas meridian in 1494. But the uncertainty of exploring the globe worked against them, because it was not the trade with India that transformed the global economy but Christopher Columbus’s bold exploration of the uncharted space to the west.

“Concentrate your energy, thought and capital exclusively upon the business in which you are engaged.”

— Andrew Carnegie

Business Case

In Its Own Backyard: U.S. Automobile Manufacturers

The prolonged period of stability in the 1980s and 1990s reduced the scope of exploration in the automobile industry. Faced with the steady rise in gasoline prices that peaked in 2008, growing environmental concerns, and the phenomenon of “conspicuous conservation,” most players were unable to decode and exploit the shifts in the environment. One prominent exception is Toyota: the hybrid Prius was launched in 1997 and became the world’s top-selling hybrid electric vehicle, surpassing the 3 million–unit milestone in June 2013.

Exploring Fewer Options in an Uncertain Environment Decreases Profits

Sirens

Warning Signs to Heed

  • A narrow, unchanging option space that is well understood but increasingly unattractive
  • A focus on incremental improvements with limited tolerance for failure in particularly exploratory efforts
  • A tendency to increase investment in the existing core business amid market turbulence or competitive pressure

Lighthouses

Beacons to Navigate By

  • T-shaped exploration for both depth and breadth, leveraging low-cost “scouting” and supported by a culture of curiosity
  • Collaborative ventures, open innovation, and other activities that broaden the option space beyond the precedented and familiar
  • Preemptive responses to the first signs of the exhaustion of the core business