Name: Exponential Organizations
Rating: 4.5 (96 reviews)
Author: Salim Ismail, Michael S. Malone and Yuri van Geest

What’s in it for me? Learn what an exponential organization is and how you can transform your firm.

Think a standard business model will make you billions? Think again.

Huge, slow-moving organizations are no longer the dominant force in business. Today, new companies are agile and achieving growth rates believed impossible in previous generations.

How do these companies do it? Exponential organizations achieve exponential growth, that is, growth that skyrockets in a short period of time. Five-percent-a-year growth rates are a thing of the past; we’re talking about exponential growth that starts at 5 percent and doubles every period!

Today’s exponential organizations like Uber and AirBnB are defining the shape of tomorrow’s companies. If you don’t know how to turn your firm into an ExO, then these blinks will show you how!

In the following blinks, you’ll learn

how ExOs can teach a government a thing or two;
why video rental company Blockbuster couldn’t defeat Netflix; and
why the biggest risk for a company is to take no risks at all.

While still a new concept, exponential organizations are the future of business organizations.

Have you heard of companies like Uber or AirBnB? If you have, then you’ve also come face to face with an exponential organization.

An exponential organization, or ExO, describes an organization that because of its ability to leverage new technologies can claim production, output or overall impact that is at least ten times larger than a regular organization in the same field.

In short, an ExO can do more, produce more and dominate its market niche with less people or resources when compared to a non-ExO company.

ExOs are experts in adaptation. These companies are part of a new business paradigm, in which competition doesn't necessarily mean heavy hitters based in China or India. In fact, competing firms could come equally from a start-up based in your neighbor’s garage!

How long a company has been around or how many employees it has just doesn’t guarantee success anymore. Kodak, for example, was a historic, large organization that went belly up almost overnight.

This new, finicky nature of the business world has other benefits, too: a company can now experience unprecedented rates of growth and success with a minimum of resources.

Exponential growth as a concept is often not completely understood. Take the Human Genome Project, the goal of which was to sequence the human genome. In the project’s first seven years, researchers were able to only sequence one percent of our genome; yet in the following seven years, researchers were able to complete the remaining 99 percent!

This sort of rapid progress is what sets ExOs apart – companies like Uber, AirBnB and Google are just some examples of successful ExO firms.

Ideally small and flexible, the ExO model doesn’t just apply to businesses, but works also for NGOs and governmental bodies.

Even the scientific field has embraced ExO ideas. Publications such as Researchgate and Figshare are now open source, so their work can reach even more people.

The ideas behind exponential organizations have reshaped much of what we know about business today. And it’s only the beginning...

Old-school organizations are too linear in their thinking. ExOs are agile, flexible and fast.

Traditional companies like Coca-Cola and GE are still at the top of their industries. Yet if they don't change, their reign will soon come to an end.

Let's look at the reasons why.

Becoming an ExO is more than just understanding technology. It’s a whole new way of thinking.

So why would you modify your company to adopt the ideas and structure of an ExO?

First, consider the fundamental advantages of ExO companies. Linear organizations are dependent on having assets and a large number of employees. ExOs have few employees and are thus more flexible, and they can make use of resources that they don't own.

Disruption, unpredictability, risk taking and short-term planning: ExOs love it all.

ExOs are a big part of society's changing landscape. These companies have emerged from several dynamic shifts in the way modern businesses function.

Huge improvements in information storage and processing technologies have accelerated the speed at which companies can do business. Product cycles are shorter, and new forms of competition have arisen. And today, one search engine (Google) dominates its field, while one e-commerce site (Amazon) has revolutionized online retail.

Every ExO shares five external characteristics. Incorporate this SCALE into your own organization.

So what does an ExO actually look like? Each company is different, yet each shares some external characteristics.

These five characteristics – staff on demand, community and crowd, algorithms, leveraged assets and engagement – when combined, make the acronym SCALE.

Each ExO has lots of IDEAS, including a dynamic interface and dashboard and an autonomous staff.

ExOs also share certain internal characteristics, which should support the company’s external ones.

These characteristics can be broken down into IDEAS: interfaces, dashboards, experiments, autonomy and social technologies.

ExOs need leaders too, but not any old CEO will do. You need to become a chief exponential officer.

Anyone wanting to change an organization into an ExO must first change themselves.

This starts with the C-level staff, as these individuals will experience the most pressure and be responsible for the results, good or bad.

Don’t just build a platform, be a platform. Live your MTP and conquer your market niche.

Small, start-up organizations need to follow certain steps in becoming an ExO.

If you’re at the head of a start-up, you should start by determining your massive transformative purpose (MTP). This is fundamental. Selecting a MTP is a personal journey, not business decision, as profit isn't an MTP.

So you want to transform your dinosaur company into an ExO? It’s challenging, but can be done.

Traditional organizations are like dinosaurs; they're going to go extinct if they don't adapt.

While it’s possible to change an existing organization into an ExO, it requires a lot more work.

Exponential Organizations summary