EXPLORATION versus EXPLOITATION MINDSETS in DESIGN-DRIVEN ORGANIZATIONS
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Transcript of EXPLORATION versus EXPLOITATION MINDSETS in DESIGN-DRIVEN ORGANIZATIONS
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EXPLORATION versus EXPLOITATION MINDSETS
in design-driven enterprises
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WILL EVANS \ PRAXISFLOW \ @SEMANTICWILL
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
- Adam Smith
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“Doubt is not a pleasant condition, but certainty is fucked.” - Drunk Voltaire
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DEFINITION OF DESIGN
“The intentional formation of a purposeful system” - Jabe
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EXPLOITATION & EXPLORATION
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DISRUPTION
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“If you become wildly successful because everything you do is right, you’re doomed”,
- Clayton Christenson
FRAGILITY
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DEC PDP-11
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TRIUMPH OF THE BEAN COUNTERS
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MEASURING THE WRONG THING
Many organizations follow the traditional product paradigm in which success of a project is determined by whether we delivered the agreed scope on time and budget. Not whether is actually created value for our customers or business. Usually Not. Mostly Not.
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A DELICATE BALANCE
A DELICATE BALANCE
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MINDSETS “There is nothing quite so useless, as doing with great efficiency, something that should not be done at all.” - Peter F. Drucker
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Compared to returns from exploitation, returns from exploration are systemically less certain, more remote in time, and organizationally more distant
from the locus of action and adaptation.
This is why we often struggle, organizationally, with the balance.
THE PRIVILEDGE OF PROXIMITY
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DEPRIVILEDGING EXPLORATION
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EXPLOITATION
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EXPLOITATION DEMANDS EFFICIENCY & QUALITY
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THE GOAL OF EXPLOITATION IS DOMAIN DOMINANCE
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CYNEFIN
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DRIVING FROM COMPLEX TO SIMPLE
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PLANNING DOESN’T REMOVE RISK
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“No plan of operations extends with any certainty beyond the first contact with the main
hostile force.” - Moltke the Elder, 1871
“Everyone has a plan, until they get punched in
the face.” - Mike Tyson
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KEYS TO MANAGING RISK
• Define Measurable Outcome (not output) • Create Economic Model of Value • Limit the WIP (Works-in-Progress) across portfolio • Reduce batch size to increase throughput • Reward teams based on reduced cycle-time to
customer value delivery
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EXPLORATION
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EXPLORATION VALUES
A business in exploratory mode values risk-taking, speed, experimentation, gaining validated learning. The constraints, policies, and structures which work best for exploitation, make little sense during exploration.
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SITUATIONAL AWARENESS
Organizations must continually revisit the question, “What business are we in, and where should we be? But also: Who the fuck is our customer and who should our customer be?”
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• Customer Exploration • Problem Exploration • Solution Exploration • Capabilities Exploration • Marketing Exploration • Scaling Exploration
TYPES OF ‘DESIGNED’ EXPLORATION(s)
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IN SEARCH OF UNKNOWN UNKNOWNS
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EXPLORATION IS AN ACT OF SYSTEMATIC SENSEMAKING
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DESIGN SYNTHESIS IS SENSEMAKING
Design synthesis is an abductive sensemaking process of manipulating, organizing, pruning and filtering data in an effort to produce information and knowledge. This same sensemaking process is key to
understanding new market contexts, and new mindsets for exploring & designing new organizational structures.
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ORGANIZATIONAL DEBT
As organizations grow, scale, and mature, they develop structures, policies, rules most appropriate for their maturity, optimizing for exploitation. To shift to explorational mindset, might we need to
‘refactor the code’ of the organization? Does our
Organizational debt decrease our capabilities?
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BERRYPICKING MODEL
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MODELS OF EXPLORATION
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THE VISIONARY
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THE GAMBLER
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The problem with many projects is that you spend months and millions doing research, writing requirements, designing and building software… and fail.
The Daily. A $30 Million Fail THE EPIC FAIL
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THE SKUNKWORKS
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THE INNOVATION LAB
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THE DESIGN THINKING PARTNER
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THE ACQUISITION
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A CRITIQUE
• Risk • Uncertainty • Local Optima & Capability
• Learning & Kaizen • Fragility and Resiliance
• Sustainability • Culture & Cash-out
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BALANCING THE PORTFOLIO
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MODELING HORIZONS
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MODELING HORIZONS
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MODELING HORIZONS
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MODELING HORIZONS
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BALANCING THE PORTFOLIO
• Design resource allocation across all three horizons (there is no magic formula)
• Create different measurements based on which horizon domain you are managing
• Provide a model for visualizing resource allocations
• Ensure senior management has a decision-making framework for choosing the right strategy for maximizing optionality
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LEARNING ORGANIZATIONS
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ORGANIZATIONAL DESIGN
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LEARNING & VALUE STREAMS
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CONTINUOUS IMPROVEMENTS
• Kaizen is strongly connected to learning organizations.
• To become a true learning organization you need to continuously improve.
• Kaizen can be applied to exploitation, but also exploration methods / measurement
• PDSA across the three horizons
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CHARACTERISTICS
• Good management is balancing continuous exploration with exploitation
• Leaders as coaches/mentors who help people grow by facilitating learning
• What are we learning? How can we improve? • How are we structured? How should we be? Is
this coherent?
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OBSTACLES
• Silo thinking (vertical vs horizontal/horizonal thinking) • No time for reflection (the S in PDSA) • No coherent strategic intent • Apathy (a result of Theory X management) • Problem denial (Mystery and Mastery) • Leadership values heroes • Leadership doesn’t value learning • Leadership maximizes organizational resource allocation
based on short-term thinking
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TAKE-AWAYS
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Thanks. Will Evans @semanticwill