Time for New Discoveries? Or Optimizations?

Discovering something new can seem like an exciting challenge, while optimizing existing products, services or processes might sound like more of the same. Yet successful companies need to do both.

Being an explorer requires the courage to set out into the unknown without being sure where the journey will take you. It means delving into unfamiliar territory ready to tackle new, unexpected challenges. And once you've gained a foothold, you have to secure and develop your discoveries and then continue to press ever onward. As part of a corporate strategy, this two-pronged approach is referred to as “exploration and exploitation.” Not only does a company research, develop or invent something new, but it also works on enhancing and optimizing what already exists.

Both parts of this strategy present certain risks and opportunities. This comes with the territory: anyone interested in exploring something new and unknown must accept far-from-certain outcomes. You never really know when you start what the end result will be. The risk of failure is relatively high. Yet there's also the chance of finding the proverbial goldmine and generating exceptionally high profits. By way of contrast, fully leveraging existing products, services or processes looks like a sure thing: you have something you want to better utilize, market or further enhance. Since you're already familiar with the business, it's possible to create reliable sales and profit forecasts. However, it's becoming increasingly difficult to generate profits from existing products because you generally come up against competitors.

Companies that aren't just starting out but have a long history behind them like ZEISS must pursue both of these approaches simultaneously if they want to continue to be successful in the future. Concentrating on just one has already plunged successful companies into a crisis or even forced them to close their doors. Here's an example: for decades, the German mail order company Quelle was extremely successful and optimized its business. However, the company missed a crucial new sales channel, namely online shopping. This enabled a newcomer, which Quelle didn't see as a competitor, to establish its platform and ultimately become the leading online marketplace: Amazon. Quelle has since disappeared from the market. Xerox is another example. The company never fully understood just how to create successful products from its inventions, many of which were truly groundbreaking. So others did it instead, including 3Com with ethernet networking technology.

The challenge for successful companies is to find the right balance. On the one hand, this means being prepared to take risks, setting out into untrodden territory, setting up small teams focused on making discoveries, investing time and money in research and development without knowing when starting just how things will turn out – to achieve a true innovation like High-NA EUV. Or exploring new areas through targeted acquisitions and thus establishing a successful business model. The intraocular lens (IOL) business, which ZEISS entered by making acquisitions around 15 years ago, is a great example of successful exploration. At the end of the day, it's not just the IOLs that continue to generate revenue: the entire workflow – from diagnosis to treatment – offers additional sales potential for the existing business and with consumables. Moreover, the sales area has more frequent and closer contact with customers as a result.

On the other hand, this also means you have to be meticulous, continually improving the benefit of existing products and services, leveraging innovations to become more competitive and driving marketing to gain market share while increasing productivity and efficiency at the same time.