Draw Near to Go Far: The Role of Convergence in Capitalizing on Exploration
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Description: Organizations are often advised to engage heavily in exploration in order to succeed – to cast a wide net for diverse solutions that are superior to what they currently exploit. However, what is the organization to do when the fruits of its exploration are inconsistent with one another? Specifically, if all solutions appear beneficial, but each recommends different decisions for the same organizational choice, how should an organization aggregate lessons across them? Unfortunately, such a mixed bag of learning opportunities is likely to arise in the presence of complementarities, where solutions succeed not because of specific individual choices, but due to valuable interdependencies between these choices. By applying the learning mechanisms in March (1991) on a rugged NK landscape, this paper is able to show that such a challenge is surprisingly surmountable. Firms can benefit by aggregating lessons across explorations, regardless of the extent of interdependence. Even if such efforts may initially stymie the organization, the mutual learning that occurs between explorations enables them to grow progressively similar, so as to converge upon a smooth locality on the problem landscape. On this smoothed locality, valuable explorations then become salient enough to learn from. The counterintuitive takeaway is thus that in order to capitalize on diverse explorations, an organization must first engage in convergence.