Get to know what exactly exponential organization is as well as how it can change your business. Do you really expect a standard business model will help you make millions? If so, think again.
Large and slow organizations don’t lead the business industry anymore. Now, newer businesses are quick and flexible so they are growing so much faster than those of the past. How do they do it? Exponential organizations grow exponentially. In other words, growth happens quickly and in a short amount of time. Five-percent-a-year kind of growth happened in the past. We need to focus on exponential growth beginning with 5 percent, but doubling each period.
Exponential organizations such as Uber and AirBnB are helping mold what the businesses of the future will look like. If you aren’t sure of how to transform your business into an ExO, then this text will explain!
While still a new concept, exponential organizations are the future of business organizations.
Are you aware of businesses such as Uber or AirBnB? If so, then you have witnessed exponential organization before.
An exponential organization, also known as ExO, is an organization that is able to take advantage of new technologies and as a result, can assert production, output, or the general influence that is ten times bigger than a typical organization from the same industry.
To summarize, an ExO is capable of doing more, producing more, and conquering their market niche with a smaller number of staff or resources in comparison to a company that is not an ExO.
ExOs are masters of adaptation. These businesses are the new business examples where competition isn’t the equivalent to a heavy hitter from China or India. Competing businesses could be identical to a startup that has its headquarters in your neighbor’s garage!
The time that your business has been running or the amount of staff members that you have doesn’t secure your success today. Kodak, for instance, was once a celebrated and big organization whose world turned upside down in virtually one night.
This new, meticulous business environment has other advantages as well. Today, a business is able to experience exceptional growth rates as well as success with the least amount of resources possible. Exponential growth is an idea that is not truly understood. For instance, the Human Genome Project’s goal was to arrange the human genome. During the first seven years, researchers could only arrange one percent of our genome. However, in the next seven years, researchers finished the other 99 percent! That kind of quick growth is what differentiates ExOs. Businesses such as Uber, AirBnB and Google are just a few models of a successful ExO business.
The ExO model, generally small and flexible, isn’t only beneficial to companies, but also it helps NGOs and governmental bodies.
The scientific industry has also adopted ExO ideas. Publications like Researchgate as well as Figshare are open source now so their ideas can get to a larger number of people.
The founding thoughts of exponential organizations have remolded most of what we know about business now. That’s only the start.
Old-school organizations are too linear in their thinking. ExOs are agile, flexible and fast.
Long-established businesses such as Coca-Cola and GE are, to this day, the leaders in their industries. However, if they end up changing, they won’t see themselves at the top for much longer.
Let’s take a look at why.
For starters, businesses aren’t limited to the typical growth restrictions. Linear growth is the idea that a business will expand gradually by a specific percentage every year. That is no longer relevant today, though. This is especially true for when it comes to technology. Moore’s Law says that calculating price-to-performance ratio is multiplied by two from either 18 months to a couple of years. This shows that as a shopper, you’ll pay a Let’s take a look at why smaller and smaller amount for technology that gets better and better.
The notable futurist, Ray Kurzweil, believes that this idea is valid for any company that is in the information technology industry. As a result, traditional businesses that are founded on linear thinking and growth are in jeopardy.
The age of an S&P business, for instance, has decreased from 67 years to 15 years. Moore’s Law heavily impacts countries such as China in a negative way. Despite China’s economy being mostly based on making inexpensive plastic pieces mechanically, this cycle could possibly be broken by advances in 3D printing in the next couple of years.
In summary, we really need new ways to think because traditional organizations have stayed with linear approaches to thinking and linear production methods.
Think about the waterfall approach that is used in software development. It starts with developers elaborating on what is needed in a project. Then you go into design, the implementation, verification, and finally maintenance. However, that line could be easily broken or dented by the littlest of issues.
As we are looking at various ways that we can spread ideas and create projects, that kind of narrow minded thinking will disappear. The developers at Iridium realized that, but unfortunately the hard way. Their project to make a satellite net for mobile phones to connect to global communications is a great idea, but their planning was too slow so the company got tied up and in the end, fell. However, if you actively work and stay away from physical infrastructure expenses, ExOs can stay away from those types of unsuccesses.
Becoming an ExO is more than just understanding technology. It’s a whole new way of thinking.
Why would you want to alter your business to follow both the ideas and structure that of an ExO?
For one, think about all of the important benefits of ExO businesses. Linear companies depend on having resources and a giant team. ExOs, on the contrary, don’t have that many staff members so they’re a lot more flexible and they can take advantage of resources that aren’t theirs.
For instance, the online rental business, AirBnB, has a fairly small team, However, they look after a massive number of flats and homes.
Information is the most crucial resource for an ExO. Both client and market data must be saved and analyzed. It doesn’t take too many people to do the job. You just need to be open to experiment and remain open-minded. A lot of ExOs automatically look after data with technological innovations.
Although ExOs don’t have the exact same characteristics, a company that is striving to become an ExO has to have a huge transformative purpose, also known as MTP. A MTP jots down what inspires an ExO. It traces a company’s goal, elaborating on what it truly stands for. It also gives you that competitive edge. Google, though, really is the only company that has the courage to strive towards arranging the world’s information. On top of that, MTP makes shoppers feel good about using an item. For instance, Red Bull isn’t just an energy drink. If you drink it, you become a part of the group that “grows wings”.
If you don’t think that you are ready to create a MTP, you can start by trying to make a simple plan for corporate social accountability. That suggests giving something that is more significant to your clients and your staff members. You can’t just offer them a really nice item or work space. For a lot of ExOs, you must be socially accountable.
Disruption, unpredictability, risk taking and short-term planning: ExOs love it all.
ExOs play a big role in society’s ever changing environment. Today’s businesses have come from a variety of active alterations from the way they now operate.
Drastic advances in information depository and processing technologies have increased how quickly businesses now do business. The item cycle isn’t as long anymore and newer types of competition have formed. Also, today, Google is the only search engine that leads in its industry and Amazon is the only e-commerce site that has transformed online retail.
Demonetization is also increasing. In fact, it’s now achievable for businesses to work with basically little to no marketing or sales costs. Also, it’s becoming more popular to rent things instead of own them. That’s how the little business that is AirBnB is beating the giant hotel chain, Hyatt, and they do so without owning one hotel!
Another difference is that it’s now more beneficial for a business to be smaller in size. A smaller company is more flexible, so they have the opportunity to take more risks and be specialized. We don’t need specialists with Ph. Ds. Those with not as much experience can provide a new outlook without being stopped by traditional principles.
The Hewlett Foundation, in 2012, financed a contest where you had to create an automated algorithm that grades essays written by students. Surprisingly, the three that had one didn’t have previous experience with natural language processing. With the help of their lack of experience, they made more innovative solutions.
Disturbance as well as uncertainty are now what is expected. It’s not helpful anymore to plan too much in advance since it’s just impossible to make a viable prediction of the future. So, instead of following a plan, ExOs stick to their massive transformative purpose (MTP). They don’t plan more than a year later. As a result, an ExO is ready to adjust their plans to changes that happen unexpectedly.
Today, trust is also key. You need to trust your team to take care of themselves if you want them to utilize their creativity to the maximum. Basic work can be automated and micromanaging isn’t effective. It wasn’t ever really, but this is now prevalent more than ever.
The final improvement is an essential one. You can measure and learn about anything. This is the foundation of ExO mentality.
Every ExO shares five external characteristics. Incorporate this SCALE into your own organization.
What does an ExO look like? Every business has its own distinction, but they also have some similar external characteristics. Those five characteristics are staff on demand, the community and crowd, algorithms, as well as leveraged assets and engagement. When you put them together, you’ll get the acronym SCALE.
It’s key for ExOs to have the right team available to them. Typically, ExOs look after a little, but reliable team that is varied, creative, and flexible. You only get contractors when their help is needed. For instance, AMP, which is Australia’s biggest insurance company, contract almost half of its IT department. Keeping up with a community and a crowd decrease the costs and risks of business. Your community consists of your main team, which includes your users, customers, the company’s alumni, their vendors, partners, as well as fans. The crowd, on the other hand, are the people that are outside of your active staff. These are the people that bring you validation, crowdsource, or crowdfunding.
Algorithms are truly not as difficult as they may seem. Search algorithms, which is a set of automated operations, is what made Google the top search engine. A few human resource departments utilize algorithms to stop partiality from taking vacancies.
The L in scale signifies leveraged assets. You no longer need to own them, though. You just have to get to them and also be flexible about it. Although a few businesses have to have some of their own assets, such as Amazon owning warehouses), if your business is just based on information, then that may not be necessary.
TechShop, an ExO located in Silicon Valley, has leveraged assets, too. They deal with costly machines and give businesses access to it via a subscription service. Businesses like GE and Ford use it!
Communication is very important for an ExO. Networks, games, competitions, as well as good feedback cycles are just a few ways to interact with people. It helps put new ideas into your business, which opens the road for innovation.
Each ExO has lots of IDEAS, including a dynamic interface and dashboard and an autonomous staff
Additionally, ExOs have a few similar internal characteristics that help hold up their external characteristics. They can be divided into IDEAS, or interfaces, dashboards, experiments, autonomy, as well as social technologies.
Interfaces link the SCALE surfaces like your, for example, community, with your internal mechanism. ExOs have to have interfaces in order to deal with their tasks and projects as well as put them out into the world.
Take a look at Apple’s App Store. This is one instance of a completely developed interface since it lets consumers take a look at every app out there. It’s an essential part of Apple along with all of its items.
On the contrary, dashboards let people within a company get information in actual time. A dashboard is like a multiplayer game. Like, for instance, World of Warcraft, you always understand where you are supposed to go, how you can get there, and what you need to do when you’re there.
On top of that, ExOs need to dabble with experimentation. Although traditional companies strived towards minimizing risks, nowadays, the biggest risk that an ExO can take is to not take any. If you want to be successful, it is crucial to experiment.The multinational confectionery business, Mondelez International, utilizes “garages” where staff can try out new ideas. Being able to remove the distractions from the outside, employees can fully focus on creating new answers.
The perfect ExO employee has no trouble with working on their own. Additionally, they need staff who can work alone, are multidisciplinary, and that are dispersed if they want to meet consumer’s expectations. For example, High Fidelity, the technology business incorporates quite an intense type of autonomy within their business code. Each quarter, employees decide whether they want their CEO to stay by voting.
Lastly, social technologies allow communication channels to be accessible. The more communication there is, the more open and connected a company is to its massive transformative purpose (MTP).
ExOs need leaders too, but not any old CEO will do. You need to become a chief exponential officer
Any person that wants to turn a company into an ExO first needs to start with themselves. It should start off with the C-level members since they are the ones that are under the most pressure and that are held responsible for the outcomes, regardless of whether they are positive or negative ones.
ExOs are still a fairly new idea. Both technologies as well as trends are steering the business world in their direction, however managers and CEOs will experience those changes sooner and more distinctly. The actions that they take will conclude whether or not a company will survive. Therefore, you don’t have the time to second guess yourself. You have to turn into an exponential executive.
Exponential executives are in charge of spotting meta-trends, or just trends that include a lot of other trends within them. Trends are key. A lot of the technology from today wasn’t here a decade ago and the newer technology is causing today’s technology to already be considered outdated. 3D printing as well as self-driving vehicles are only two of the many instances of meta-trends.
The CEO of an exponential organization performs a crucial role since they always need to be aware of every new competitive pressure or unruly start-up. Being up-to-date with information is critical. However, figuring out which information is actual important and what is irrelevant is not a simple task. For instance, in Buenos Aires, market researches couldn’t understand why people all of a sudden, ceased to go to car washes. They did eventually figure out that since weather forecasts became better at predicting when it would rain, people had a better understanding of when they could pass up a wash. This surprising lesson teaches us that in some cases, there is information that can help explain a circumstance, you just may not know where to find it.
In conclusion, if you are a CEO, you need to turn into a chief exponential officer. You must improve your outlook of your leadership position because what was done in the past won’t work in an ExO. However, if you have the right staff with the right attitude, C-level start-ups along with completely developed companies can turn themselves into ExOs.
Don’t just build a platform, be a platform. Live your MTP and conquer your market niche
Little start-ups have to follow specific steps when trying to become an ExO. If you are the leader of a start-up, you have to begin by figuring out what your massive transformative purpose (MTP) is because it is crucial. Choosing a MTP is a personal adventure instead of a business decision just like profit isn’t an MTP.
Therefore, ask yourself what you are supposed to do. Your company’s MTP should be the definition of it and it should trace the road that you will go on.
Then, create a team and a community. However, don’t forget that although a good team is crucial, what’s even more important is the revolutionary idea. There’s no need to work with an idea that is confining or based on old technology. On the contrary, go after something with passion and creativity. That’s the recipe for a great idea.
The most crucial step is building the perfect culture within your ExO. Culture is synonymous to glue. It is what keeps things together when the boss isn’t there. Additionally, it makes sure that you comply with your MTP and that any revolutionary ideas are brought to attention.
Lastly, you not only need to create a solid platform, but your business also needs to become the platform for, essentially, your ideas. For instance, Facebook is a good platform. Its predecessor, MySpace, did not succeed because it was a fragile platform. As a result, it lost its community and clients to Facebook.
So you want to transform your dinosaur company into an Exo? It’s challenging, but can be done
Traditional companies can be compared to dinosaurs since they’ll become extinct if they don’t try to adapt. Although it is possible to turn an existing company into an ExO, it takes a lot more work to do so. Larger, traditional businesses tend to rely a little too much on their internal processes when it comes to innovation. That is the reason why Blockbuster’s market share got destroyed by the online start-up, Netflix. This video rental company didn’t succeed in predicting the opportunity in online movie streaming. Instead, it focused its efforts on making its store better. However, it didn’t attempt to provide streaming services. Blockbuster’s business culture focused on store distribution and most importantly, it didn’t have someone at the head that wanted to take a risk. Therefore, there’s no need to be a dinosaur!
There are four distinct roads that you can travel on to become an ExO. Firstly, you can adjust your leadership by teaching your board members as well as employing new staff that are young and passionate C-level members. In turn, you can either partner with or get an ExO. If you go down this road, then you need to take account the timing because you need to purchase an ExO right when its coming into the market as a leader. However, if you do choose to merge, give the ExO some of its own space since you’ll be learning from it anyways. That’s exactly what Google did when they purchased YouTube for $6 billion in 2005, which was the perfect time. Additionally, you can become an ExO by creating technology that disrupts the industry. However, make sure that your technology is separate from your main business. Only then can you use it. A good example of this strategy is Amazon’s Kindle. Although Kindle technically took some of the profit from their physical books, it brought in even more money from those e-books.
Lastly, if you can’t adjust your business into an ExO, you still have the chance to take up a few ExO characteristics. For instance, Coca-Cola went in the direction of making a massive transformative purpose (MTP) collaborating with the inventor Dean Kamen. The business took the advantage of his water purification device to insist on cleaner drinking water.
The future of business lies in exponential companies. If you want your business to succeed, you have to embrace both ExO thinking as well as practices. Regardless of whether you are creating a start-up or adjusting an existing company, trace an understandable massive transformative purpose, hire flexible staff, and don’t depend on linear planning. Expect the unexpected and depend on your creativity!
There’s no need to plan too far into the future.
Don’t forget that the most successful ExO’s don’t make a plan further than a year into the future. Five to ten year plans that large businesses used to make will only bring you down in the business environment of today. On the contrary, be ready to go up against unexpected hurdles and overcome them creatively and with an open mind.