Sustained exploitation eventually starves the exploratory process needed for renewal.

Evidence

Both processes compete for limited resources and companies necessarily make tradeoffs between them. Intel’s induced strategy process during Andy Grove’s tenure as CEO was maximally concerned with exploitation. While Grove successfully transformed Intel’s internal ecology of strategy-making into the rational actor approach to strategy-making, toward the end of his tenure it had become clear that Intel’s future as a growth company would also depend on autonomous new business development and that the strategies for new businesses might have to be defined by general managers closer to the frontline. Yet, the extreme emphasis on the induced strategy process during Grove’s tenure had reduced the effectiveness of the company’s autonomous strategy process. — Georg Schreyögg and Jörg Sydow, The Hidden Dynamics of Path Dependence, 1143

Categorization

• XREF: Directly instantiates March’s exploitation/exploration tradeoff — here at the firm’s strategy-making level.