Key Messages
How To Turn Your Business Into An Exponential Organization And Take Advantage Of The New Rules Of Successful Business
Do you want to take your business to the next level? Are you looking for a way to achieve rapid growth and success? If so, then understanding what an exponential organization is and how to create one may be just the ticket.
Exponential organizations (ExOs) are businesses that achieve exponential growth—growth that skyrockets in a very short period of time.
We’re talking about 5 percent or more growth that doubles with each period!
These companies don’t wait around for years of slow, steady growth—they harvest success quickly.
Companies like Uber and AirBnB have shown us how it can be done.
If you want to turn your firm into one of these revolutionary ExOs, then understanding what they are and how they work is imperative.
You’ll learn why Blockbuster couldn’t compete with Netflix as well as why taking no risks at all is often times the biggest risk for any company.
Whatever it takes, by transforming your firm into an ExO you’ll maximize your chances of success much faster than ever before!
Exponential Organizations: The New Paradigm Of Business Excellence
It’s clear that exponential organizations are becoming increasingly popular and more accepted in the business world.
Companies like Uber and AirBnB, as well as others, have proven how this new way of running a business can be both successful and efficient.
With the ExO model, these companies can experience massive rates of growth with few resources.
They have also mastered the art of adaptation, meaning that even smaller start-ups in your own backyard could become competition for international firms.
Furthermore, this type of organization is not limited to businesses – it works equally well for organizations such as NGOs or governmental bodies.
These organizations have been gaining so much traction that even scientific publications have taken notice.
Services such as Researchgate and Figshare have gone open source to reach an even wider audience.
Looking ahead, there’s no doubt that exponential organizations are set to revolutionize how businesses are run in many industries and sectors.
With their efficiency and unparalleled success rate compared to regular organizations, they will pave the way for a much faster-paced future!
Traditional Companies Are At Risk Of Falling Behind Due To Linear Thinking And Growth
Old-school organizations rely heavily on linear thinking, believing that consistent percentage points of growth or the same processes will guarantee success.
But exponential growth can happen too quickly and disrupt their plans, making such reliance obsolete.
Take the S&P 500 companies as an example–due to exponential growth, their life span fell from 67 years to just 15 years.
With advances in technology like Moore’s Law, information technology-based businesses are especially vulnerable to being overtaken by greater processing capabilities at lower costs.
The waterfall method of software development is another traditional approach where you’re basically counting on a smooth flow in order to get results.
But if any problem arises even briefly, it can totally upend your progress and waste time and money.
We’ve seen this with projects like Iridium, which had noble goals but suffered from slow planning processes and rigid organization rules.
Why Adopt The Exponential Organization Structure?
Becoming an Exponential Organization (ExO) is more than just understanding technology – it’s a whole new way of thinking.
ExOs operate differently than traditional linear organizations, which rely heavily on assets and employees for their business operations.
In comparison, ExOs focus on having fewer employees and utilizing resources that they do not necessarily own – such as data.
AirBnB is a perfect example of this type of organization; with only a small team of personnel, they offer access to thousands of houses and apartments online.
With information being the most important asset for any given organization, creating an ExO means embracing experimentation, analysis and automation when it comes to data collecting and analyzing.
In order to become an Exponential Organization, businesses must have their own Massive Transformative Purpose (MTP) in place.
This MTP acts as an outline for the higher ambitions the company stands for.
It also allows them to stand out from their competitors, so customers feel good about their product or service usage – Red Bull’s energy drink has adopted this strategy well by “giving wings” to those who consume their beverage.
The Rise Of Exos: How Technology Changes Business Practices And Leads To Disruptive Innovation
ExOs thrive on disruption, unpredictability, risk taking and short-term planning.
It’s this agility that enables them to sail through a rapidly changing landscape with speed and grace.
Thanks to huge improvements in information storage and processing technologies, product cycles are shorter and new forms of competition have emerged – such as Google dominating the search engine field and Amazon transforming online retail.
And let’s not forget demonetization either.
Now businesses can function without sales or marketing costs, while AirBnB is proving it can be advantageous for a company to be small.
Small teams are more flexible, so they’re willing to take risks and offer unique perspectives without falling into traditional dogmas.
In fact, the winners of a 2012 Hewlett Foundation competition for automated scoring algorithms had no prior experience in natural language processing – showing us that inexperience might just be an advantage!
The Five Characteristics Of Exos: Staff On Demand, Community And Crowdsourcing, Algorithms, Leveraged Assets, And Engagement
The SCALE framework consists of five external characteristics that every Exponential Organization (ExO) has in common.
These five characteristics – staff on demand, community and crowd, algorithms, leveraged assets and engagement – when combined make up the acronym SCALE.
Staff on demand is key for ExOs — you need a creative and diverse permanent workforce with the ability to hire contractors as needed.
An example of this is AMP Australia’s insurance company that uses contractors for almost half of its IT department.
The C in SCALE stands for Community and Crowd.
This helps you not only lower the costs and risks associated with your business but also involves your core team, users, customers, alumni, vendors, partners, and fans.
The Crowd refers to everyone outside your on-demand staff who can help validate or even crowdsource ideas for your organization.
The Essentials Of An Exponential Organization: Interfaces, Dashboards, Experiments, Autonomy And Social Technologies
Every Exponential Organization (ExO) has certain internal characteristics, which help to support their external operations.
These are broken down into the acronym IDEAS: Interfaces, Dashboards, Experiments, Autonomy and Social Technologies.
Interfaces are a connection between the external features of an ExO – such as the community it serves – and its internal workings.
They enable ExOs to manage their work and send it out into the world; think of Apple’s App Store as an example of a fully developed interface that has become indispensable for all its products.
Dashboards enable people to access data in real time.
For instance, World of Warcraft players see their location, how to get there and what needs to be done once they’ve arrived – all on one shared dashboard.
Experimenting is also important in order to improve what ExOs do.
Traditional businesses aimed to reduce risks; however ExOs can only increase success when they are willing to take risks so experimenting is key.
Mondelez International hosts “garages” where employees can explore innovative solutions without distraction.
In terms of staff autonomy is encouraged and this allows businesses to meet customers’ growing expectations with multidisciplinary teams as well as decentralization where necessary; High Fidelity employees even vote on whether or not they want keep their CEO every quarter!
Finally social technologies facilitate communication among members so that ideas can be shared freely and more openly.
By keeping open connection channels, Exponential Organizations can stay true to their massive transformative purpose (MTP).
To Become An Exo, Ceos Must First Transform Themselves Into Chief Exponential Officers
ExOs, as any other type of organization, need strong and savvy leaders to succeed.
However, the rules of leadership are different when operating or transforming into an ExO.
The traditional idea of the CEO is not enough- you must become a chief exponential officer.
This starts with the C-level staff, who will experience the unpredictable changes that come with exponential organizations first hand- so they are solely responsible for determining if the transformation succeeds or fails.
As such, it’s essential that they comprehend and embrace meta-trends (trends made up of many other trends), as well as being aware of new competitive pressures or start-ups in their sector which could pose a threat to established businesses.
It’s also important to be able to distinguish what data is valuable and what can be discarded- in other words, know where to look for information so you don’t miss anything.
After all, what seemed minor before (such as accurate weather forecasts leading people to alter car washing habits) could in fact be more significant than one might think.
So if you want to transform your business into an ExO, then make sure you’re a chief exponential officer!
How To Turn A Start-Up Into An Exponential Organization
For an organization to become an Exponential Organization, it needs to live its Massive Transformative Purpose and be a platform for their ideas.
It’s not enough simply to build a platform; you have to make that platform successful in your particular market niche.
Facebook is a great example of this – they had the idea, and then the right platform to carry it out and grow their customer base and community.
MySpace failed because their platform was weak and unable to compete with the innovation of Facebook.
As such, if you’re looking to create an Exponential Organization, you’ll need a breakthrough idea plus passion and creativity as well as a great team and culture that adheres to your MTP.
Finally, don’t just build a platform – be a platform that lives up to your MTP goals and conquers your market niche!
Don’t Be A Dinosaur – Four Paths To Becoming An Exo And Avoiding Extinction
If you have a traditional organization and want to transform it into an Exponential Organization (ExO), it’s not going to be an easy task but it can be done.
There are four paths you can take: Transform your leadership, Partner or acquire an ExO, Develop disruptive technologies in-house, and Adopt some ExO characteristics.
For the first option, you will need to educate board members about new technology trends and bring in younger executives who can breathe fresh life into your company with new ideas.
The second option is to partner with or acquire an ExO when they’re still emerging on the market so that you can benefit from their growth.
To do this successfully, make sure that both companies are able to remain as separate entities while collaborating when necessary.
An example of this method would be how Google acquired YouTube for $6 billion in 2005.
Thirdly, you could develop disruptive technologies in-house rather than relying on external sources.
Amazon is a great example of this strategy; their Kindle offering did reduce physical book sales but resulted in larger numbers from e-book sales.
Finally, if you decide that transforming your work model isn’t suitable for your organization, then consider adopting some of the characteristics associated with ExOs such as having a massive transformative purpose (MTP).
Coca-Cola did this by working with inventor Dean Kamen to promote clean drinking water initiatives globally.
At the end of the day, transforming a dinosaur company into an ExO is definitely challenging but absolutely possible!
Wrap Up
The Exponential Organizations book serves as a reminder that business practices are no longer static; they need to be adapted and changed to stay afloat.
The overall message of the book is clear – that businesses must shift towards adopting ExO thinking and practices if they hope to remain successful.
This includes setting out a clear massive transformative purpose, assembling an agile team, and relying on creativity rather than linear planning in order to make decisions.
It also advises companies not to plan too far ahead since most successful ExOs don’t do so more than a year in advance.
This update in knowledge will help any organization prepare for the changing world of business and lead them closer toward success.
