Exponential Organizations

Oculus VR, AirBnb, Uber, WhatsApp, DropBox… there is a growing list of startups commanding multibillion-dollar valuations in just a couple of years. The velocity of wealth creation is exploding.

What’s going on? Why is this happening?

For bigger Fortune 5000 companies, these concepts define a new paradigm that businesses MUST adopt to stay relevant and keep from going extinct.

In this article Peter Diamandis will outline for you the basics of an Exponential Organization (ExO).

If you’re a member of his Abundance 360 Community, you saw a sneak peek last January on this critical subject.

Let’s dive in…

What is an ExO?

Today’s traditional businesses are all about finding an asset (a factory) or a workforce (consultants) and wrapping an organizational boundary around it, and selling access to that scarcity. They are painfully incremental to build and grow.

An ExO instead leverages rapidly scalable exponential assets (big data, community, accelerating technologies) to perform 10x better than their peers in the same space.

For example: It takes a normal CPG company such as P&G 300 days on average to take a product from “new idea” to “on the shelf.” Quirky, an ExO, does it in 29 days.

So what are the Attributes of an ExO?

First of all, an ExO has an MTPa Massively Transformative Purpose – which is a clear, bold declaration of your mission. An MTP is uniquely yours, aspirational, aimed at the heart and the mind, and is declared with sincerity and confidence. Google’s MTP is “Organize the World’s Information.” XPRIZE’s MTP is to “bring about radical breakthroughs for the benefits of humanity.”

Along with an MTP, ExOs leverage five key “External Mechanisms.” These are represented by the acronym S.C.A.L.E.:

  1. Staff on demand. Rather than ‘owning’ employees, ExOs leverage external resources to get work done – even for mission-critical processes.
  2. Community & Crowd. Most ExOs create and leverage communities to scale. TED uses its community to run TEDx events – over 8,000 have been held in just five years.
  3. Algorithms. As the world turns into data and information, ExOs are leveraging algorithms, including machine learning and deep learning to get new insights about their customers and products.
  4. Leased Assets. Rather than trying to own assets, ExOs access or rent assets to stay nimble. Uber doesn’t own its cars, AirBnB doesn’t own hotel rooms.
  5. Engagement. A critical mechanism to scaling their workforces, gamification and incentive prizes are extensively used by ExOs to achieve scale.

Along with an MTP, and SCALE, ExOs leverage five key “Internal Mechanisms.” These are represented by the acronym I.D.E.A.S.:

  • Interfaces. When implementing the above SCALE elements, ExOs use customized processes to interface with these externalities. For example, Quirky has custom processes to manage its community of 600,000 inventors. Uber has unique ways of managing all its drivers.
  • Dashboards. To track and monitor an ExO, real-time metrics are implemented to track performance. Internally, many ExOs track individual and team performance using the technique Objectives & Key Results (OKRs). This discipline is used by Google, Twitter, LinkedIn and many hyper growth organizations.
  • Experimentation. To remain tuned to the external world, ExOs use the Lean methodology or other techniques to constantly experiment with new ideas and processes – they are culturally risk-enabled, and they constantly tweak processes with fast feedback loops.
  • Autonomy. ExOs devolve authority to an extreme level of decentralization. In many cases, a member of the community has full ability to act on the behalf of the core organization (e.g. TEDx organizers). Decision making, even in key mission critical functions, is distributed to the edges of an ExO.
  • Social. All ExOs leverage collaborative tools, file-sharing or activity streams to manage real-time, zero-latency conversations across the enterprise.

How do I implement this?

Salim´s book walks us through exactly how to build and implement ExOs. He answers questions like:

  • How can you build a startup with these principles?
  • How could you apply them to a mid-market company?
  • How can you retrofit these ideas into large organizations?

Again, if you’d like personal consulting on how to build an ExO, check out the Abundance 360 Summit.

At A360, Salim and Peter will be going into this in great detail and to build and implement an MTP, SCALE and IDEAS.

 

Sources: Exponential Organizations Salim Ismail and Peter Diamandis (Singularity University)

1 comment for “Exponential Organizations

  1. June 3, 2015 at 7:07 am

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