MANAGING THE EXPLORATION/EXPLOITATION PARADOX IN NEW PRODUCT DEVELOPMENT: HOW TOP EXECUTIVES DEFINE THEIR FIRM'S INNOVATION TRAJECTORY
LOUISE A. NEMANICH
ROBERT T. KELLER
Building on structuration theory, we present a conceptual model that illustrates how top executives can guide their firm's new product development (NPD) strategy along a desired innovation trajectory combining different degrees of exploration and exploitation. The model addresses the interplay between executives' actions and the organization's controlling structures in the form of roles, rules, and resources. We describe how transformational leadership behaviors by top executives can be effective in the paradox management needed to shift the exploration or exploitation emphasis of a NPD strategy, whereas transactional leadership can be effective in maintaining a consistent strategic course. In doing this, we propose visual representations of innovation trajectories as wave functions as helpful tools to describe NPD strategies. Illustrative examples of structural changes that support strategic change toward greater exploration or greater exploitation are also offered.
New product development, exploration and exploitation, transformational and transactional leadership, innovation
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