Master of Science in

Management, Technology, and Economics

Technology and Innovation

Management
Exploration and Exploitation in individuals

Daniella Laureiro-Martinez
Chair of Technology and Innovation Management
Please go to the Technology and Innovation
Management Moodle page

Technology and Innovation Management 28.10.2024 2

Password:

fMRI
Technology and Innovation Management 28.10.2024 3
Recap: calendar, topics, what’s coming up next

Session Date Topic

1 23.09.2024 Introduction to TIM
2 30.09.2024 Innovation, Science and Technology
3 07.10.2024 Profiting from Innovation
4 14.10.2024 Exploration and Exploitation in Organizations
5 21.10.2024 Serial Innovators - Guest Lecture by Claudio Feser
Exploration and Exploitation in Individuals - Guest Lecture by
6 28.10.2024
Daniella Laureiro-Martinez
7 04.11.2024 Socialization and Spinouts
8 11.11.2024 Digital Innovation Strategies - Guest Lecture by Ulrich Schimpel
9 18.11.2024 Modularity and Integrality
10 25.11.2024 From Products to Platforms
11 02.12.2024 Innovation Ecosystems
12 09.12.2024 Business Models
13 16.12.2024 New Technologies and Patterns

Technology and Innovation Management 30/10/2023 4

Last session – Brief summary

Technology and Innovation Management 28/10/24 5

Required Readings

 Laureiro-Martínez, D., Brusoni, S., Canessa, N., & Zollo, M. (2015).

Understanding the exploration–exploitation dilemma: An fMRI study of attention
control and decision-making performance. Strategic Management Journal.

 Christensen, C. M., & Overdorf, M. (2000). Meeting the challenge of disruptive

change. Harvard Business Review, 78(2), 66-77.

Technology and Innovation Management 28/10/24 6

Agenda

1. Ambidexterity at the individual level:

your own examples

2. Ambidexterity at the individual level:

the abilities required

3. Ambidexterity at the individual level:

how to measure the required abilities

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Learning objectives

Key concepts
1. Understand what is exploration – exploitation at the individual level
2. Know what is attention at the individual level, what are the two main types of
attention, and understand why attention control is important
-

Methods
3. Understand how exploration and exploitation can be measured in a very fine-
grained way, and why it matters -the individual manner

Q&As

4. Connect knowledge on attention to real life topics and examples (e.g. IDEO,
your own decisions)
5. (start to) Gain awareness about your own cognitive processes and the impact
they have on decision-making

Technology and Innovation Management 28/10/24 8

Agenda

1. Ambidexterity at the individual level:

your own examples

2. Ambidexterity at the individual level:

the abilities required

3. Ambidexterity at the individual level:

how to measure the required abilities

Technology and Innovation Management 28/10/24 9

Should I stay or should I go?

• Have you recently been in a “should I stay or go” situation?

Leaving the PhD
· U S
. .

switch
the MBA to
Continuing
·
or

student association
volunteering in
·
a

Quitting job
·
a

• If so, can you describe it?

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Exploitation and Exploration

 Exploitation taking advantage of what

-

already know we

 Refinement,
in
production, efficiency, implementation …
>
-
staying same realm

 Exploration
 Variation, risk taking, experimentation, play, flexibility …

 Returns from exploration are uncertain, more remote in time, and ·

moving to another
country
-

organizationally distant from the locus of action and adaptation

 E.g. the R&D lab!! Other examples?

 Returns from exploitation are reliably linked to the time and place in
which they take place.
 E.g. the manufacturing unit. Other examples?

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Exploration and Exploitation in IDEO
Exploration Exploitation
Intense Brainstorming (Deep Dive) Well defined methodology
Intensive market research (anthropology) Structured with distinct Phases
Build on unusual ideas / Demand unusual ideas Active client management
Relatively flat, little hierarchy / Status comes from ideas /
Clients are “trained” in conference room
few titles
Diverse teams (psychology, biology, engineering, design, Simple rules (on the wall)
MBA)
Failure is accepted
Lead by example
Low key / Informal
Self-motivated / based on trust

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Examples of Exploration and Exploitation in your daily choices
what
You know youget

Technology and Innovation Management 28/10/24 13

Examples of Exploration and Exploitation in your daily choices
do like the taste of chicken ? Gradcoff of flavor)
you
·

·
Possible of tasting ?
siflavor ·

·
Look at the faces (social reference
Price ?

 Is there a dilemma?
 What is the dilemma?

 What would be exploration? >

-
trying a new
flavor
always
 Exploitation? the youtake >
- one
not the one
you always
takel
 Ambidexterity?

 What would lead to the highest

protein “utility” or “payoff”?
what
you looking for
? are

being satisfied
maximize the
with taste goal
 Can you think of “abilities” that
would help you maximize the
utility in this situation?
common sense past experiences
reference point
the beands
knowing
drive for curiosity
Technology and Innovation Management 28/10/24 14
Think of the «gelato decision-making case»

• Can you think of one example of EXPLORATION in this situation?

• What choices will lead to the highest «utility» for the decision-
maker?

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At the Essence of Exploration and Exploitation: your own cognitive
processes and the impact they have on decision-making

Let’s make some decisions!

• You click on the following link

• Read very carefully the instructions (make sure to have a keyboard)
• You play on your own
• and write down the scores you get!

When we are all ready go to:

https://mtec-timgroup-laureirolab.ethz.ch/frontend/6352a410e17bd490a2b1fbf3

Technology and Innovation Management 28/10/24 16

Technology and Innovation Management 28/10/24 17
At the Essence of Exploration and Exploitation

 Is there a dilemma?
 What is the dilemma?

 What would be exploration?

 Exploitation?
 Ambidexterity?

 What would lead to the highest

“utility” or “payoff”?

 Can you think of “abilities” that

would help you maximize the
utility in this situation?

Technology and Innovation Management 28/10/24 18

At the Essence of Exploration and Exploitation

Check slots colors see if bl

better (like red he

Technology and Innovation Management 28/10/24 19

Agenda

1. Ambidexterity at the individual level:

your own examples

2. Ambidexterity at the individual level:

the abilities required

3. Ambidexterity at the individual level:

how to measure the required abilities

Technology and Innovation Management 28/10/24 20

 Source: internet images

Technology and Innovation Management 28/10/24 21

Technology and Innovation Management 28/10/24 22
What is attention?

father
Founding n
page

Attention … “is the taking possession by the mind, in

clear and vivid form, of one out of what seem several
simultaneously possible objects or trains of thought,
focalization, concentration, of consciousness are of its
essence. It implies withdrawal from some things in order
to deal effectively with others, and is a condition which
has a real opposite in the confused, dazed, scatter
brained state which in French is called distraction, and
Zerstreutheit in German.”

Source: William James, 1890 p.403-404

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What are the main types of attention? anything ing

Moticingarsenic

“One of the most extraordinary facts about our life is that,

although we are besieged at every moment by
impressions from our whole sensory surface, we notice
so very small a part of them.”

Source: William James, Writings, 1878-1879

Technology and Innovation Management 28/10/24 24

Technology and Innovation Management 28/10/24 25
 e
carton

bluet
et en
the natie

Technology and Innovation Management 28/10/24 26

Two main types of attention that
(
else

et en
Attention
-
stimulidiven

>
-
have
t
a
goal
makes
nfocus
have control
the goal driver
we

over this

Attention control
switching between exploration and exploitation
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Technology and Innovation Management 28/10/24 28
Technology and Innovation Management 28/10/24 29
Attention Control
(can't be tired)

thefrontalorbet
takes energy

 Also called «Cognitive control

capabilities» or “Executive functions”

 Attention control is responsible for:

 initiating appropriate actions
 inhibiting inappropriate and impulsive
behaviors
 selecting sensory information and storing
relevant information
 thinking abstractly and drawing analogies
 planning future actions

Technology and Innovation Management 28/10/24 30

Technology and Innovation Management 28/10/24 31
An example of: Attention control

Attention control

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An example of: Attention control

Technology and Innovation Management 28/10/24 33

Technology and Innovation Management 28/10/24 34
 attention control in action

Technology and Innovation Management 28/10/24 35

Agenda

1. Ambidexterity at the individual level:

your own examples

2. Ambidexterity at the individual level:

the abilities required

3. Ambidexterity at the individual level:

how to measure the required abilities

Technology and Innovation Management 28/10/24 36

Objective of the study

 Exploitation - exploration trade off

(March 1991)
 Punctuated equilibrium vs.
ambidexterity vs. continuum
 Organizational level

 Gap: individual-level (Smith and

Tushman 2005, Gupta et al. 2006,
Mom et al. 2007)

 Motivation: link neuropsychological

research to understand what
explains individuals’ differential
abilities in managing the
exploitation-exploration trade off
Technology and Innovation Management 28/10/24 37
Study design

 53 expert decision makers:

 matched sample of 28 specialists and 25 generalists
 Simulation (Christensen and Shih)
 Four-armed gambling task (Daw et al. 2006)

Exploration-Exploitation
Performance

Sources: www.istockphoto.com, www.dfp-design.de

Sources: internet images

Technology and Innovation Management 28/10/24 38

Four-armed gambling task

Source: owned by D.Laureiro

Source: internet images

Technology and Innovation Management 28/10/24 39

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Setting fMRI study

Source: internet images

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Measures

1. Neural antecedents: all brain

analyses; event-related fMRI
analyses; BOLD signal

2. Behavior: exploitation vs exploration

3. Decision-making performance: total

payoff over 300 trials
Source: Laureiro-Martinez et al. 2015

Technology and Innovation Management 28/10/24 43

 -reward subjecte
art
Exploitation
S

Brau vo
commo
to learning)
Learning, reward perception, memory, (also findamental
persistence
Dopaminergic regions - > reward,
pleasure
Ventro medial pre frontal cortex
Hippocampus (subiculum)

Source: Laureiro-Martinez et al. 2015

Technology and Innovation Management 28/10/24 44
 slot machine
choosing diff
a

Exploitation Exploration

Learning, reward perception, memory, Attention control regions, planning,

&
persistence idea generation
Dopaminergic regions 7
Bilateral fronto-parietal regions
Ventro medial pre frontal cortex Fronto polar cortex >
-
involved heavily when
Hippocampus (subiculum) Anterior cingulate cortex suitching to explore
Locus coeruleus
Thalamus
Anterior insula

Source: Laureiro-Martinez et al. 2015

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Finding on Generalists vs. Specialists between
differences groups

centrepreneurs that have multiple areas

of interest in work
Generalists’ decision-making performance is better
 Higher cumulative payoff (p = 0.084)

No significant differences in
 Number of exploitative vs explorative choices
 Number of switches

Generalists and specialists explore and exploit at different moments

What is the antecedent of such difference?

Technology and Innovation Management 28/10/24 46

Finding on Generalists vs. Specialists

Exploitation Exploration

Specialists

Generalists

Source: Laureiro-Martinez et al. 2015 Frontiers in Human Neuroscience

Technology and Innovation Management 28/10/24 47

Generalists’ brain exploring

better abilities to switch

 Generalists show stronger activations in regions related to attention
control, planning, idea generation, behavioral switching.

Source: Laureiro-Martinez et al. 2015 Frontiers in Human Neuroscience

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How can attention be measured outside the scanner?

Technology and Innovation Management 28/10/24 49

Behavioral replication studies

Attention Control Regions

Sustained attention Decision-making

performance

&
alle
Working memory how n
a information
under short term
your
make
and c est
Planning and memory a

generativity

Reflective capacity
inhibiting behavior 89+43+39 MSc students in
trice before
thinking
in
engaying Management
an
activity
+…multiple other samples
Technology and Innovation Management 28/10/24 50
Attention control is related to performance

Attention control regions

Bilateral FrontoPolar Cortex

Bilateral parietal cortex Exploration-exploitation

Intraparietal sulcus Performance

Locus coeruleus (LC)

Source: Laureiro-Martinez et al. 2015

Technology and Innovation Management 28/10/24 51

Did we make it?

Key concepts
1. Understand what is exploration – exploitation at the individual level
2. Know what is attention at the individual level, what are the two main types of
attention, and understand why attention control is important
Methods
3. Understand how exploration and exploitation can be measured in a very fine-
grained way, and why it matters
Q&As

4. Connect knowledge on attention to real life topics and examples (e.g. IDEO,
your own decisions)
5. (start to) Gain awareness about your own cognitive processes and the impact
they have on decision-making

Technology and Innovation Management 28/10/24 52

Thank you! Merci! Gracias!

For your ATTENTION!