Top Management Team Approaches to Simultaneously Managing Exploration and Exploitation.

Long term performance depends on organizations simultaneously exploring and exploiting -- incrementally improving existing products while experimenting with innovations. Yet we know little about how executives actually deal with these contradictory agendas. Using qualitative data, this paper compares how four strategic business unit top management teams in a Fortune 500 company managed this challenge. These executives used three approaches -- sustaining the existing product, changing to the innovation, or balancing both products. An investigation of the balancing groups suggests that processes that involve vigilantly monitoring both products and constantly making changes. Balancing groups also use two different team structures. Team-centric groups involved the entire group in managing the tradeoffs between existing products and innovation whereas in leader-centric groups the leaders make these tradeoffs. In contrast to prior research, these data suggest that top management teams can successfully balance existing products and innovation and offers ideas about how.