How do organisations grow both their sales and their profits? Can they pursue both exploitation and exploration at the same time? If so, how?

Surveying ‘sustained profitable growers’ among European companies between 1995 and 2004, the author looks at the stories of six – including BMW Group, Nestlé and Deutsche Bank – that managed to defy the conventional wisdom to achieve balanced structures that can both exploit their current capabilities and explore new ground. He notes three ways in which these supposedly mutual exclusives can be followed up: temporal separation (where the objectives are pursued turn and turn about); structural separation (where they are pursued by establishing separate businesses); and parallel structures (where existing products are upgraded or recombined to target new customer groups, with employees moving between the different structures).

The author explores why specific structural solutions were adopted, how they were executed and what was learnt in the process. Among other lessons, he shows how the inherent costs of major structural change mean that it must not be undertaken too often, nor must it undermine the stability of customer-facing functions – but also that learning was strongest during radical change.

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