Knut Haanaes: Two reasons companies fail — and how to avoid them

Why companies fails? This is a hard question to answer. In this TED video Knut Haanaes explain two critical concepts, exploration and explotation, to avoid companies to fail.

Exploration: coming up with what’s new, search, discover, new products, changing our frontiers. Exploration is risky. Long term perspective for companies.

On the other hand, Explotation: taking the knowledge we have and making good, better. Explotation /= risky. Short term perspective.

Only around 2% of firm mix exploitation and exploration.



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How to applied these two concepts? Follow:

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Mr. Haanaes has write a book about strategy. Amazon – Your Strategy Needs a Strategy: How to Choose and Execute the Right Approach.


Always learner.

The purpose of this blog for me is to translate my thoughs about investing and business. Nowadays we live in a world with too noisy information. Another reason for this blog is to build up my own principles.

I will use my Twitter account to publish short thoughs about companies/market and this blog I will develop my own investment ideas.

I love to read but I need I place to write down my ideas about investing, finance, accounting, valuation and companies. The process will be difficult until I develop a good and reasonable mental model to invest.

The value of Principles. As in life, every investor need to have Principles. For example, in the book “Valuation”, written by three Mckinsey employees, they have a few principles about invest in any project or “Foundations of Value” as they called it.

“Companies create value by investing capital to generate future cash flows at rates of return that exceed their cost of capital.”

“A corollary of this principle is the conservation of value: any action that doesn’t increase cash flows doesn’t create value.”

In the next posts I will talk more about this great book called “Valuation”.