From a firm perspective, technological progress makes it hard to grasp high-skilled technical work such as innovation activities. Due to the difficulty in understanding, incentive structures motivating innovation need to incorporate the knowledge gap concern. This paper shows that rewarding early failure could not be a marked property for incentive structure implementing exploration if we consider the knowledge gap issue. However, the optimal incentive scheme inducing exploration does not reward unsuccessful long-term results. In addition, we find that pursuing exploring innovation becomes a more attractive option as the knowledge gap increases.