- James March, âExploration and Exploitation in Organizational Learning,â Organization Science 2 (1991): 71â87.
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If our organizations are inhuman, itâs because we designed them to be soâwhether consciously or not. Every institution is an assemblage of choices about how best to organize human beings in light of some particular goal. The premise of this book is that most of these choices can and must be revisited.
To paraphrase the Nobel acceptance speech of Austrian economist Friedrich Hayek:
If managers are to do more good than harm in improving organizational performance, they must learn that in a complex environment, they canât acquire sufficient knowledge to orchestrate the desired outcomes. Instead, they must use whatever knowledge they have not to shape results as a craftsman shapes a piece of handiwork, but to cultivate growth by providing a proper environment, much as a gardener does for plants.
Decades ago, James March, the organizational theorist and Noble Prize winner, argued that the most basic problem for any organization was to âengage in sufficient exploitation to ensure its current viability and, at the same time, devote enough energy to exploration to ensure its future viability.
Even when an organization is led by a pioneering CEO like Jan Wallander or Zhang Ruimin, crafting a new management model is more about âdiscover and testâ than âengineer and impose.
A study from Harvard Business School shows that we learn more when we couple our experiences with periodic reflections. Even though people prefer to learn by doing, âparticipants who chose to reflect outperformed those who chose additional experience.