We often look at large organizations with the belief that their slow and steady growth is what everyone should aim for. That’s what makes them successful, right? However, in today’s business world, a new approach has emerged. Exponential organisations or ExOs are organizations that aim to achieve exponential growth in short periods of time. This exponential growth can be, at minimum, ten times more than regular organizations.
So, how do exponential organizations achieve this exponential growth? Well, in short, they are flexible, can easily adapt and are able to use new technologies to their advantage. It is because of these characteristics that it no longer matters how big or established your organization is or how many employees you have. Exponential organizations are reshaping business and it’s time to learn how you can make your organization an exponential one.
In this summary readers will discover:
- What sets ExOs apart
- The road to becoming an ExO
- The five external and internal characteristics of an ExO
- Tips for the young and old
Key lesson one: What sets ExOs apart
Firstly, ExOs know that technology is the key to exponential growth. Traditional organizations believe in linear growth meaning that the company will grow consistently year after year. However, with technology developing at the rate that it does, this linear growth model is slowly becoming archaic. This is clearly demonstrated by the fact that an S&P 500 company’s lifespan has dropped from 67 years to just 15 years.
In addition, in terms of technology, the popular Moore’s Law states that the number of transistors on a microchip doubles every two years though the cost of computers is halved. This means the capability and speed of computers will increase and consumers will be paying less for it. This has huge implications for countries and organizations whose income is largely based on mechanical production that can be easily pushed aside.
ExOs can do more than traditional companies despite being smaller and having fewer resources at their disposal. They are also usually small and can, therefore, easily adapt. This ability to adapt is a crucial characteristic of ExOs and means they can react to changes in the business world quickly whilst traditional companies are still assessing the situation. Needless to say, this makes them formidable competitors and allies them achieve exponential growth easily no matter of small the organization may be. Examples of successful ExOs are Uber, AirBnB and Google. They are found in all industries, and the concept even works well for NGOs.
Key lesson two: The road to becoming an ExO
If you want your company to be an ExO, you have to do more than understand advancing technology. You have to change the way you think. We have already established that ExOs have a leg up on traditional companies by remaining smaller and more flexible. Small teams are capable of taking more risks and can be more specialized even without having qualified experts. In fact, a fresh perspective from non-experts results in the development of innovative ideas and solutions.
Planning too far ahead as well, it a traditional concept that ExOs have learned to move away from. You can’t plan too far ahead as you cannot predict what will change between now and then. Instead of working on a plan, ExOs instead follow the directive of their massive transformative purpose or MTP. The MTP will show what an organization stands for and will inspire consumers. If an MTP is not something you can come up with now, you can instead try to plan your corporate social responsibility or CSR. As with all companies, a clear CSR strategy offers something meaningful to both your customers and employees.
ExOs also have the ability to use resources they don’t own. Consider an ExO Uber, the cars that are used are a resource that does not belong to the company. But they lack resources, the most valuable asset an ExO possesses is information. Even minimal staff, even the smallest ExO collects and analyzes customer and market data. This is further enhanced by the improvements made in information storage and processing technologies in recent years. Easy tasks can even be automated.
The road to becoming an ExO is paved with trust amongst your employees and the knowledge that everything can be measured. The former is necessary for maintaining a small and flexible organization because you know that your employees can use their creativity to adapt to different situations. The latter is the foundation of your exponential growth.
Key lesson three: The five external and internal characteristics of an ExO
There are five important external characteristics that ExOs share. These are staff on demand, community and crowd, algorithms, leveraged assets and engagement. This can be remembered as SCALE.
Staff on Demand
ExOs need to have the right staff on demand. The few employees that make up an ExO have diversity, flexibility and creativity. But ExOs must look to hire contractors when necessary.
Community and Crowd
If you maintain a community and a crowd, an ExO can do business with lesser risk and costs. How? Well, by maintaining your community, your users, customers, vendors, partners and fans are kept happy. Your crowd maintenance involves the people you use for validation, crowdsourcing and crowdfunding. By maintaining these relationships properly and continuously, an ExO will be able to achieve more in shorter periods.
By definition, an algorithm is ‘a process or set of rules to be followed calculations or other problem-solving operations’. If you consider this definition, it makes algorithms sound less daunting and more like something that can be used in sticky situations – which it is. For example, algorithms can be used during the recruitment process to prevent biases when hiring.
As an ExO, you don’t need to own assets, you just need to be able to access them when needed. This is what is meant by leveraged assets. To put this in an example, ExO Techshop has actually leveraged its assets. It owns and manages machinery which can be accessed by other companies via a subscription.
As with any organization, engagement is an important part of business. For ExOs, however, engagement is a powerful tool for innovation and new ideas. If ExOs remained engaged, they will know exactly when they need to adapt.
Along with external characteristics, there are internal characteristics that ExOs share. These are interfaces, dashboards, experiments, autonomy and social technologies – better known as IDEAS.
Interfaces are what connects the SCALE characteristics with the organization’s internal processes. In a way, interfaces are what ExOs use to manage their work and share it with the world. An example of an interface is Apple’s App Store which forms an integral part of Apple and all its products.
Dashboards allow for the access of information by an organization in real-time. It’s a place for ExOs to access easily.
If an ExO wanted to succeed, they need to experiment. Traditional organizations do not like to experiment because it brings with it risks and change. There is also no need to experiment if they already have tried and tested methods. ExOs, on the other hand, cannot afford to not experiment. How else would they come up with innovative ways to grow?
Autonomy is something that most employees crave and in an ExO, employees have it. Once again, as employees of an ExO are diverse, flexible and creative, they will be able to deal with growing customer expectations. For this to happen, autonomy is key.
Social technologies within an organization allow open and transparent communication. With strong communication, the employees of an ExO form a strong team that remains connected to the organization’s MTP at all times.
Collectively, these ten characteristics embody and ExO and form the foundation for exponential growth.
Key lesson five: Tips for the young and old
Whether you are a start-up or a well established, traditional organization, it is possible to become an ExO. Firstly, managers and CEOs need to become exponential executives. To be an exponential executive, you need to be able to spot meta-trends. Trends are an important part of an executive’s job because the ability to accurately identify trends is what is needed to lead an ExO to success. Exponential executives also need to be good at identifying new competition in terms of new startups and technologies. Keeping up to date with this information is integral to the organization.
Once you have what it takes to lead an ExO, for small startups, there are certain steps that you need to follow to become an ExO.
Firstly, you need to determine your MTP which will clearly define your path and guide the organization in everything that it does. Secondly, you need to build your community. This entails both your employees, staff on demand and customers. Thirdly, get working on a great and innovative idea that will set your organization apart from others. Lastly, you should develop your platforms properly as this becomes the foundation for future ideas.
For traditional companies wanting to make a change, the process is a bit harder and requires hard work. This is mostly because they are quite set in their traditions and internal processes. Think of companies like Kodak and Blockbuster that failed to adapt when newer technologies came along. If you are ready to become an ExO though, traditional organizations can choose between four paths.
First, you have the option to transform your leadership. This can be achieved by training managers and CEOs and by hiring diverse, new C-level staff.
Secondly, you can choose to partner or buy an ExO. This path requires timing as you need to buy or partner with the ExO just as it begins to succeed. In doing so, you will be able to learn more about the process and how to make adaptations.
Thirdly, your organization can develop new technologies by yourselves but keep them separate from the original company. This way, you can become an ExO by using your own disruptive technology.
Lastly, if you can’t find a way to change your traditional company into an ExO completely, you can instead just adopt some ExO characteristics which will help your company grow stronger and faster.
The key takeaway from Exponential Organisations is:
Exponential Organisations are taking the business world by storm. Between their quick growth and use of new technology, they have become serious competitors to larger, traditional companies who are content with small increases in growth year after year. The advantage of being an ExO not only lies in your ability to compete but in the ability to adapt quickly when needed. It is for this reason that it is worth understanding how you, too, can turn your organization into an ExO and fast become an industry and market leader.
How can I implement the lessons learned in Exponential Organizations?
Even if you are not looking to change your entire organization, it might be worth considering the external and internal characteristics of an ExO. These can be followed to allow your organization to run more efficiently.