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Knut Haanaes: To Perfect or to Explore? Strategy Traps for Businesses

To Explore or Not to Explore

BCG's Strategy Institute developed this atlas to illustrate the ways in which businesses can approach the exploration-versus-exploitation trade-off. We derived five key questions, each leading to a pair of strategy traps. These traps are explained from a business perspective and illustrated by examples of well-known explorers and inventors.

The key takeaway of this guide is that there are no simple solutions. Different environments require different responses, and even stable environments can require different approaches over time. In this atlas, we present successful ways to address these environments.

Feedback Loops

To successfully navigate these changing environments, companies need to adjust three feedback loops.

1. Results loop: Adjust actions based on analysis of immediate outcomes to achieve desired results

2. Analytics loop: Optimize the strategic approach in response to a changing business environment

3. Shaping loop: Calibrate the strategy to shape the environment rather than taking it as given

Additional Resources

Your Strategy Needs a Strategy
by Martin Reeves, Knut Haanaes, and Janmejaya Sinha
The world of strategy is thick with ideas and frameworks; Your Strategy Needs a Strategy will help you cut through he noise and find clarity regarding which approach, or combination of approaches, is your best bet.

The Self-Tuning Enterprise
by Martin Reeves, Ming Zeng, and Amin Venjara
This article explores how self-tuning algorithms are able to learn and adjust so effectively in complex, dynamic environments.