Welcome to the era of exponential organizations!

We are living a paradox in the corporate world. While technology and the digital world grow exponentially, the manner in which we operate and organize ourselves in large companies is still based on linear models, hierarchical structures and bureaucratic processes.

On the other hand, in recent years new types of corporations and value creating have emerged. Start-ups have taught us how to quickly scale digital business models - even without large financial resources. Agile methodologies such as Lean Start-up arose to boost the processes of product and solution development for customers. They develop fast. They measure fast. And they learn fast. They fail, but fail fast. And they use error as a source of learning. They were born digital. All are born with the DNA of agility and scale of a "software company."

But the fact is that at some point, your company will also need to become a digital company. In the very near future, every company will be a "software company." Everything will become digital. Even because the big companies don′t have much of a choice when they realize what is already happening: there are already close to 2 trillion dollars in the hands of four digital giants: Apple, Google, Amazon and Facebook. So it's time to think differently. Think about how we accelerate our decision-making processes. About how we scale strategy, structures, processes and systems.

Welcome to the era of exponential organizations!

Exponential organizations (ExOs) are those whose results, impact and ability to scale are at least 10 times higher than their peers - because of the use of new organizational models that leverage the technologies we have today and that grow exponentially.

In the past, the time required for a business to reach a turnover of over USD 1 billion was more than 20 years. Today, Exponential Organizations reach a turnover of $ 1 billion in just 9 months. These exponential organizations are not theories. They exist. Some examples of Exponential Organizations:

And check the huge growth of these organizations. Some of them are super famous. Others you may have never heard of, but are already causing a mega impact on their fields. Look for Haier, Quirky and Valve on Google. You′ll flip with these organizations′ level of impact and disruption.

In Exponential organizations, most revenues and profits in 2018 will come from products and services that don′t yet exist. Take the example of Tesla, now called the "Apple" of the auto industry, which has been revolutionizing the market with its electric cars. Recently, Tesla announced that it will launch its new electric car model - the Tesla 3 - at a cost of U$ 35,000. The result of the announcement was impressive. While the entire auto industry only sees crisis ahead of it, Tesla achieved something rare: in just 3 days, 250,000 people bought a car they have never driven and never seen up close. And remember, the car will only be available in 2017 or 2018. Result: 5 Billion Dollars guaranteed. All this without salespeople. No dealers. And with a very small marketing budget. A phenomenon. Below you can see the very Elon Musk at the launching of Tesla on March 31st:

Below, you can notice the difference in performance when comparing another model of Tesla with its competitors in the same segment:

TED, the global platform of highly inspiring talks, is also an example of an Exponential Organization. With an investment close to zero, they managed to scale a business model that made the company a global media brand. All this in just 5 years.

For this Chris Anderson, the creator of TED, made two highly disruptive moves: the lectures were available for free on the web (in a scenario where NO company did so). It enabled people to translate the lectures into their local language, making them reach over 100 languages. And it created TEDx, which allowed to scale the model to different countries.

The point is our parents, grandparents and great-grandparents had time to adapt to changes. They could analyze everything that was going on. They had a slightly longer time to make their transition, identifying their weaknesses and what they had to learn. But we already know that our time is running at a different speed. And man is not used to this complex and exponential world. We have all been trained and raised in a linear and predictable world. And society isn′t able to move at the same exponential technology growth and speed ...

And what does something "exponential" mean in practice?

Here's a simple example: If you take 30 steps one after the other, you will walk about 30 meters in the direction you choose. But in an exponential scenario, I double the number of steps after performing each step: 2, 4, 6, 8, 16, 32 .... When I get to step number "30", I′ll have been billions of meters! We don′t have the dimension of billions of meters′ distance, but it would be something like walking round our planet. Not just one lap, but 26 laps around the earth. Crazy, right?

It′s similar to the feeling of being in a car that drives itself. And that drives better than the human being. We have no idea of what it means until we live this experience. A disruption that will move people and revolutionize industries. Watch this 2-minute video, and especially observe passengers′ reaction ...

Salim Ismail, from the already famous Singularity University, developed the concept of Exponential Organizations in his book (I super recommend it to anyone who wants to learn more about the subject). Ismail describes the Exponential Organizations are the result of a formula:

Exponential Organizations = MTP + Ideas + Scale

MTP stands for "Massive Transformative Purpose". We already know that the human being engages and is motivated to do something if connected to larger purposes. There is a famous presentation by Daniel Pink talking about it. But it seems that most organizations have not yet learned what it means. Their missions and visions are words hanging on the wall. Words that do not create a connection with people working in the company. Most employees of large companies are unaware of their company′s missions, but all Google employees know their mission is to "Organize the World's information".

What features a "MTP" (Massive Transformative Purpose) is the fact that it is:

- A unique super message, quite aspirational and inspirational,

- A single message that identifies and distinguishes one organization from the others,

- A message that reaches the hearts and minds of people and,

- Primarily, that it be something declared with great honesty, sincerity and trust.

To get an idea of what an MTP means, check these visions and missions of some Exponential Organizations:

"Organize the world's information" (Google)

"Make inventions accessible" (Quircky)

"Accelerate the world's transition to sustainable energy" (Tesla)

"Ideas worth spreading" (TED)

"Positively impact one billion people" (Singularity University)

In most companies, because they are not engaged in something bigger, inspiring and aspirational, the employees cannot connect their work to what matters most: customers and society as a whole. By the way, do customers and society agree with the missions and visions of big businesses?

But it is quite obvious that a message alone is not enough to characterize an Exponential Organization.

There are other elements in the formula: Exponential Organizations = MTP + Ideas + Scale

There are 10 other important attributes of an exponential organization. 5 external elements and 5 other attributes related to internal organizational strategies. Check:

The good news is that your company does not need to count exactly on the 10 attributes above to become one of them. It takes 4 or 5 to have your organization feel the impact. I will not go into details of each attribute in the text, but observe Google′s case. They do not have the 10 attributes, but its performance and scale growth are directly related to the focus in these areas.

If you want to know more about each of the attributes, I recommend that you browse the slides below. There are excellent examples. And make sure you read the book. It's fantastic and opens the mind to new possibilities of organization management and professions for the future.

Powerful technologies such as quantum computing, artificial intelligence, robotics and biotechnology will introduce new business opportunities and present risks to companies that have enjoyed dominant positions in their industries.

Transformations with such magnitude will require a drastic cultural change in the way large companies have come to work in recent years. This is a completely new identity. It requires a massive transformation in the leadership mental model. And in our own mental model.

In this new scenario, large organizations will need to develop the awareness that competition will not necessarily be with other large companies. It will come from small start-ups and entrepreneurs who will produce disruptive innovations. Most large companies will not be able to compete with these agile organisms and will need to develop their innovation processes looking far beyond its traditional areas of Research and Development. In this new scenario, innovation will come from the outside. From partnerships with incubators, business accelerators and start-ups. Innovation will come from customers. From its employees. Its suppliers. Innovation, to happen at the speed required for this new scenario, will have to come from the outside to the inside. And from a lot of experimenting.

I'm talking about being able to prototype and fail. But failing fast. This is not something that large organizations are used to. This is where danger lies. After all, how is it to abandon the chicken that lays golden eggs and bet on uncertainty?

Why risk if the company already has a stable position in its market? Risk is a word directly associated to innovation and change. It comes from typical entrepreneurial thinking. Something that most large and well-established organizations have forgotten. But this was the thought that made large organizations lose opportunities and when they realized, they were out of their markets in few years. Examples abound. Kodak, Nokia, Sony, Barnes & Nobles, Motorola, etc. ...

We know that this transformation will not be easy for traditional organizations. When you try to develop or implement any disruptive innovation in any large organization, its "immune system" will attack the "virus" of innovation with all its strength. Disruptive innovation is an "intruder" who will try to break the existing system, bringing new ideas and breaking paradigms ...

Truth is this is a path of no return. Those who fit the best and especially anticipate changes will survive.

But is your company an exponential organization?

The book authors have created a test so you can calculate your "Exponential Quotient". You can access it clicking here.

After checking the test results, how about comparing those of your organization with the Top 100 Exponential Organizations′ ones?

You can also compare the results of your company with the Exponential Quotient of the 100 ones listed in Fortune 100.

Welcome to the era of Exponential Organizations!

See you soon!

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