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The success trap (and some ideas how to get out of it)
reinvent the wheel every time we see a similar problem, but can
build on our experience. Thus, forming mental models is how we
learn; they enable us to make quick decisions without the need
for complete information. This is a powerful thing to have for
every organization. You don’t want everyone thinking outside
the box all the time; a coherent group of like-minded people with
lots of common experience can be a very useful asset indeed.
The negative effects of common mental models – blindness to
changes and viewpoints that don’t t the model, something
known as “groupthink” – you can possibly overcome through
smart organizational design. For example, I’ve seen large
organizations that created multiple similar
sub-units: each of them coherent, but also
very different from each other. They attempt
to get the best of both worlds: coherence
within units, diversity between them.
Hence, groupthink can be a good thing, as
long as you have multiple groups . . .
A creosote bush: how “exploitation” drives out
“exploration”
The tension between creating an organization that is highly
focused, reaping the prots of what it is good at, and one
which steps outside the box and creates new sources of growth
and revenue is one that many companies struggle with. It is
probably also the one thing that pretty much every CEO that I
talk to recognizes, regards as a pivotal issue, and a genuine and
continuing struggle. That is because established, very protable
companies almost invariably nd it difcult to remain innovative
(which may get them into trouble in the long run). In contrast,
entrepreneurial, innovative companies often nd it difcult to
start producing efciently and make a healthy prot out of their
inventions. That is because the type of organization required to
be creative and innovative is quite different from an organization
that is suited for efcient, mass-scale production.
‘‘
groupthink
can be a good
thing, as long as
you have multiple
groups . . .
’’
Business Exposed38
Professor Jim March from the Stanford Business School eloquently
put it like this: he said there is a fundamental tension between
“exploitation and exploration”. Exploration involves innovation
and creativity, which often requires a high level of autonomy for
people in the organization and a at organizational structure.
Exploitation is associated with words such as productivity,
efciency, and control, which require hierarchy and clear rules
and procedures.
If a company is nancially successful, exploitation often starts
to crowd out exploration. This relates to the idea of the “success
trap”: organizations start to focus more and more on what they
do well, the thing that brings them success and prosperity. Yet
this comes at the expense of other things, which may not be so
protable now but which could (have) become important for the
rm in the long run.
Even the famous Intel fell into this trap. In the 1980s and
1990s, Intel had become hugely successful in the microproc-
essor business by being extremely innovative and running many
experiments in semiconductors. Yet, once they had developed an
enormous advantage in microprocessors, they gradually stopped
doing anything else. In 1996, CEO Andy Grove recognized the
long-term dangers of this and remarked, “There is a hidden
danger of Intel becoming very good at this. It is that we become
good at one thing.” Yet he also found himself unable to revive
Intel’s entrepreneurial creativity.
In 1993 microprocessors made up 75 percent of Intel’s revenues
and 85 percent of its prots. By 1998, this had increased to 80
percent of its revenues but 100 percent of its prots! This mega-
company basically had only one product, on which they relied to
bring in all the dosh. If you think that sounds a bit risky, I agree
with you. The company’s COO Craig Barrett remarked about this
that Intel’s core microprocessor business “had begun to resemble
a creosote bush”. In case you’re not a botanist (and, like me, only
appreciate plants when they come on a dinner plate), a creosote
bush is a desert plant that survives by poisoning the ground
around it, so that nothing else can grow in its vicinity . . . Quite a
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