Today, we’re surrounded by massive, disruptive changes. Large corporations are now being obliterated by a new breed of companies–companies like Instagram, Youtube and Airbnb, which can achieve exponential growth at a fraction of the time and cost. To survive and thrive in times of exponential change, we need to build Exponential Organizations (ExOs), i.e. organizations whose impact or output are ≥10x larger than their peers due to how they leverage accelerating technologies. In this free Exponential Organizations summary, we’ll briefly introduce ExOs and their key attributes, and explain how to successfully build ExOs.
Understanding Exponential Organizations (ExOs)
From Linear to Exponential Growth
Moore’s Law says that the power of computation doubles every 18 months. Kurzweil’s Law of Accelerating Returns goes further to say that:
- Moore’s Law can be found in any information technology;
- The accelerated growth is triggered once something (a technology, industry etc.) becomes powered by information;
- Once the doubling starts, it doesn’t stop (because the new tech is used to build even better tech); and
- More and more technologies are now undergoing accelerated growth, including medicine, biotech, robotics, artificial intelligence (AI), etc. This means higher chance of them intersecting to create even more explosive growth.
For example, the introduction of digital cameras brought the marginal cost of photo-taking down to zero. Concurrently, there were exponential changes in social media, smartphone technology, network speed, etc. When combined, these allowed digital photos to be taken, edited, stored, shared and used in countless ways that weren’t even conceivable in the analog age.
Exponential Organizations can grow so rapidly because they rely on information technologies, not physical resources. This allows them to halve their prices and/or double their performance every 1-2 years. In our full Exponential Organizations summary, we’ll share more examples to explain why linear thinking is obsolete in a world of exponential change.
Exponential Organizations (ExO) Characteristics & Attributes
The authors studied 100 fastest growing startups globally over 6 years, focusing on Exponential Organizations that grew their outputs by at least 10x in 4-5 years. These included: Airbnb, GitHub, Local Motors, Quirky, Google Ventures, Valve, Tesla, and Tangerine. Each of these ExOs reached billions in valuation in <6 years. For example, Quirky can bring a product from concept to retail shelves in just 29 days (vs 253 days for an average Consumer Packaged Goods company). Airbnb reached almost $10 bil in valuation—more than Hyatt Hotels—within 6 years of its startup, even though it had no physical assets.
In particular, each ExO fulfills at least 4 of 11 key attributes including:
- A Massive Transformative Purpose (MTP) or a higher, aspirational purpose; and
- ≥3 of 10 key internal/external attributes that accelerated their growth.
Do get more definitions, details, examples and tips about MTP, SCALE and IDEAS from our full book summary. Specifically, the 5 External SCALE Attributes are: Staff on demand, Community & crowd, Algorithms, Leveraged assets and Engagement. The 5 Internal IDEALS Attributes are: Interfaces, Dashboards, Experimentation, Autonomy and Social technologies. These are akin to the 2 two hemispheres of the brain—the right brain focuses on creativity and growth while the left brain focuses on control and stability.
9 Dynamics Of An ExO Ecosystem
Ultimately, Exponential Organizations internalize certain philosophies that shape how they think and act. The 10+1 attributes are a manifestation of those philosophies and explain how ExOs exploit 9 key dynamics or trends in their ecosystem:
- Info-enabled acceleration.
- Disruption as the new norm.
- Beware of Experts.
- Thrash the 5-Year Plans.
- Small triumphs big. Rent, not own.
- Trust and openness.
- Anything is measurable and knowable.
Do get our complete Exponential Organizations summary for more details and insights into each of the 9 dynamics above.
Building Exponential Organizations (EXOS)
Starting An Exponential Organization
Any startup—be it a brand new startup or a “startup” within an existing organization—must address 3 key startup risks:
- Technology risk. Costs for servers, cloud-computing, coding etc. have plummeted in the last decade. You can also plug in to many third party software using API functions. Thus, tech risks are now negligible for info-based or info-enabled businesses.
- Market risk is also negligible given the range of options for A/B testing, digital marketing and even crowdfunding. Now, you can validate an idea and even sell something before you produce it.
- Execution risk is the only real risk, and the authors focus on how to set up your team/organization to minimize this risk.
In our complete summary bundle, you’ll learn (i) the 12 steps (with specific tips) for building an ExO, and (ii) the additional things to look out for if you’re trying to nurture a startup within an existing enterprise.
Transforming Mid-Market Companies
To transform an established company, you must use what you already have. This means that the approach varies with each case and there’s no fixed formula. Generally, there’re 2 prerequisites: (i) a highly adaptable culture and (ii) a visionary leader who’s fully supported by the board and senior management. Get more examples/case studies from our full book summary.
ExOs for Large Organizations
In most cases, large organizations fail to transform themselves due to 3 inherent obstacles: they (i) focus inward (not outward), (ii) focus on technologies that can be leveraged with existing expertise (not converging/adjacent tech), and (iii) rely on internal (not external) innovation.
Get our complete Exponential Organizations summary for a breakdown of 4 strategies and sub-strategies that large organizations can use to move toward ExO thinking while retaining their core businesses.
Getting the Most from Exponential Organizations
In this article, we’ve briefly outlined some of the key insights and strategies you can use to achieve desired change. For more examples, details, and actionable tips to apply these strategies, do get our complete book summary bundle which includes an infographic, 18-page text summary, and a 30-minute audio summary.
The book is packed with examples and case studies about accelerating technologies, market disruptions, Exponential Organizations and how incumbents are responding to these developments. It also includes a test for diagnosing your existing organization, and a list of trends and considerations for C-level executives (e.g. CEO, CMO, CTO, CFO).
This is a useful resource for any business leader or executive who wants to understand how build organizations that’ll thrive in face of exponential change. You can purchase the book here for the full details, get more resources from exo.works or the author’s website salimismail.com.
About the Author of Exponential Organizations
Exponential Organizations: Why New Organizations are Ten Times Better, Faster, Cheaper than Yours is written by Salim Ismail–a Canadian serial entrepreneur, angel investor, author, speaker, and technology strategist. He co-founded several tech companies including Confabb, PubSub Concepts and Ångströ (which was acquired by Google). He is the Founding Executive Director of Singularity University, the founder of ExO Works and OpenExO, and a board member of the XPRIZE Foundation.
Exponential Organizations Quotes
“The era of traditional, hierarchical market domination by dinosaur companies is coming to an end. The world now belongs to smarter, smaller and faster-moving enterprises.”
“Traditional linear thinking doesn’t work in an exponential world. Simply put, it cannot compete.”
“Almost all the business insights and decisions of tomorrow will be data-driven.”
“As technology brings us a world of abundance, access will triumph over ownership.”
“You now must assume that someone will disrupt you, and often from a direction you least expect.”
“Both now and in the coming years, adaptability and agility will increasingly eclipse size and scale.”
“In a fast-scaling organization, culture…is the glue that keeps a team together.”