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Anatomy of a Winner: Introducing the ExO, the Exponential Organization

Learn about the Exponential Organization and how to turn yours into one.
by Caitlin Schiller | Mar 4 2015
Linear growth won’t do any more.

founders

We already know that some of today’s biggest companies – Uber, Airbnb, and Google, to name just a few – do things is a little differently. But is there a single special sauce that bathes them in that pool of success? Salim Ismail, Yahoo’s former vice president, tech writer Michael S. Malone, and Yuri van Geest, a consultant for Google, Heineken, and ING Bank set out to unearth the recipe. What they found was a novel business structure called the ExO, or “Exponential Organization.”

In their book, Exponential Organizations, the tech power trio does a thorough examination of what makes these businesses tick.

Following, your quickie anatomy lesson:

IDing the ExO

An ExO is a company that can leverage new technologies and claim production, output or overall impact that is at least 10 times greater than the production, output, or overall impact of a regular organization in the same field. Because they’re also nimble, light on staff, and really know how to use data, ExOs are masters of risk-taking, short-term planning, and the unpredictable.

The anatomy of the ExO

Each ExO is unique, but in their research, Ismail, Malone, and van Geest found that they do share a number of notable external characteristics. These five – staff on demand, community and crowd, algorithms, leveraged assets, and engagement – when combined, make the acronym SCALE. Here’s the breakdown:

Staff on demand is crucial for an ExO, so they maintain a small, permanent workforce that’s diverse, creative and flexible, while hiring contractors as needed. For example, AMP, Australia’s largest insurance company, uses contractors for nearly half of its IT department.

Community and Crowd are key in that they lower the costs and risks of doing business. Your community is your core team, users, customers, company alumni, company vendors, partners, and fans. The crowd is everyone outside your staff, or people you use for validation, crowdsourcing or even crowdfunding.

Algorithms aren’t as scary as they sound. Search algorithms (a set of automated operations) made Google the world’s leading search engine. For ExOs, whose greatest strength is information, algorithms are important components of business.

Leveraged assets. It isn’t necessary to own assets anymore – you just need access to them. Take Airbnb for example. It doesn’t own the millions of apartments it rents worldwide, but it, along with the homeowner, profits.

Finally, Engagement is crucial for an ExO. Networks, games, competitions, and positive feedback loops are all ways of engaging people. Engagement helps inject your company with new ideas, paving the way for innovation.

Getting started with ExO-dom:

Any ExO organization, startup to NGO, needs to have a massive transformative purpose, or MTP – and the first step is figuring out what yours is.

An MTP declares an ExO’s aspiration by outlining its higher purpose. Google, for example, boldly pledges to organize all the world’s information. A good MTP also makes consumers feel good about using a product. Red Bull, for example, is more than just an energy drink – when you drink it, you’re part of the community that “grows wings.”

Not ready to develop an MTP yourself? You can aim first to achieve a clear plan for corporate social responsibility. This means offering something more meaningful to both your customers and employees aside from a great product or a comfortable working environment.

Read more about what make ExOs the wave of the future and what makes them tick in Salim Ismail, Michael S. Malone, and Yuri van Geest’s Exponential Organizations. You can 10x your reading speed, too, by reading the key insight summary of Exponential Organizations over on Blinkist.

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