The Yin & Yang of Decision Making
It's the age-old conundrum that has plagued humanity since the dawn of time:
Do we try something new and potentially reap the rewards, or do we stick with what we know and maximize our gains?
This is known as the Explore vs. Exploit problem.
On one hand, exploration involves taking risks and diving into novelty, which can lead to great discoveries we’ll benefit from in the future: Trying out new restaurants, hiring new people, deploying a different sales strategy, taking a different route home from work.
On the other hand, exploitation means sticking with what we already know and maximizing the rewards from those choices: Ordering your favorite dish, promoting from within the company, doing more of what has worked in the past, taking the same path to and from work every day.
We explore in the hopes to find something better and exploit to get more of what we already know.
Neither of the two is inherently better than the other.
As always, it depends.
While there isn’t a blueprint for when to focus on exploration or exploitation, there exist three rules of thumb that can help us decide:
- The lower the opportunity cost of exploration, that is the lower the value of exploiting what you already have, the more you should explore. That’s the “what do you have to lose if you try?”-argument.
- The higher the risk of exploration leading to disastrous outcomes, the more you should exploit what you’re already familiar with. If you’re allergic to some kinds of shellfish, you better not make experiments in a seafood restaurant.
- The more time you have to exploit any particular solution in the future, the more it pays off to spend some time exploring. That’s the “be wild and try different things while you’re young”-argument.
Exploring and exploiting is a difficult balancing act yet one that can have profound results for your personal development and career success.
Be aware of the trade-off and make decisions accordingly.