We all know that technology is rapidly transforming our world and we need to adapt to these changes. But how can you transform your organization to leverage this technology and grow exponentially?
Here’s where Salim Ismail’s expertise with Exponential Organizations (ExOs) becomes really powerful. It’s impossible for an organization that is operating with a linear structure to keep up with the exponential growth of technology.
That’s why Salim emphasizes the psychology of the organization. This fundamental approach has been a key shift for many organizations, including our operations at Growth Institute.
Over years of research, Salim Ismail developed the ExO methodology to outline today's companies can leverage evolving technologies to amass exceptional growth.
Here are the highlights of that research.
Successful Companies Recognize That Technology Grows Exponentially, Not Linearly
We are now at a unique point in history where we see dozens of technologies on an accelerated path of growth. If you don’t spot these doubling patterns, they can disrupt your organization and even put you out of business.
Let’s look at the photography industry. Photography used to be limited by the amount of film you had. When technology pushed the world towards digitization, cameras could now take hundreds of photos without being limited by the amount of film.
The old business models that leveraged around the scarcity element of film photography had to evolve, and organizations within the photography industry that didn’t recognize and adapt to the change eventually faced a decline.
The problem is, most companies will fight change because they have an immune system. Larger organizations tend to have a larger immune system that attempts to heavily dilute any innovations or completely reject technology disruptions, leaving them to miss out on opportunities when the cost of new technologies drop.
As Technology Doubles, Costs Halve And Opens Up New Markets Of Opportunity
Here is the cost of various technologies as they evolve over time. Observe the shape of the curve.
The pattern you see is called “Moore’s Law”. This law observes that as technology doubles, its costs are halved. Companies with immune systems that are fixated on linear growth fail to see this pattern and it can have a devastating effect.
Here’s an example. When the Google car first came out ten years ago, the Lidar technology behind the GPS sensors cost up to about $200,000. To other car companies, this was just a “cute” research project that had no commercial value given the cost.
However, two years later that cost dropped by 50% and then dropped again by half after another two years. Resistant car companies still argued that nobody would pay $50,000 for those sensors. However, the price continued to halve, and today, those sensors cost below $1,000.
Back then, if you had told car companies that the Lidar unit will cost less than $1000 in seven years' time, they would have laughed at you. That’s the immune system of these companies and it caused them to miss out on a huge opportunity.
The Opportunity for Exponential Business Growth
When you combine the doubling pattern of technological growth with Moore’s Law, you can cause massive disruption in your industry. This is the secret behind Elon Musk’s success as an entrepreneur.
Musk simply looks at a technology that's accelerating on an exponential curve. He asks himself, “Where will that technology be in 10 years' time?” Then he aims to build a company to intercept that curve in 10 years.
That's it. Observe the growth of exponential technology, pick a point that you want to aim for, then find a business model to get you there.
Today, many entrepreneurs are starting to do this and the smaller companies have a huge advantage over the bigger ones because the large organizations are shackled by their own immune systems. This has disrupted pretty much every industry, from music to media.
So how can you implement these insights into your company to lead your organization’s growth from acceptable to exceptional?
The ExO Methodology to Accelerate Business Growth
“Any company designed for success in the 20th century is doomed for failure in the 21st” ~ David S. Rose, serial entrepreneur and angel investor.
A totally new breed of organizations which we call “Exponential Organizations”, or ExOs, have learned how to leverage these technology trends. If you can transform your company into an ExO, you will have incredible flexibility and scalability.
There are three main components encompassing 11 attributes of an Exponential Organization:
- Massive Transformational Purpose — The driving force of an organization
- SCALE — The external attributes of an ExO
➤ Staff on Demand
➤ Community & Crowd
➤ Leveraged Assets
- IDEAS — The internal attributes of an ExO
We have actually developed an ExO scoring mechanism, called the ExQ, that ranks companies based on these characteristics of an ExO.
If you had invested in the 10 most flexible organizations in the Fortune 100, according to our index you would have outperformed the S&P by about three times over the last 2-3 years.
What this shows is that as the external world becomes more volatile, your ability to adapt to changing market conditions is going to drive your market performance.
Adapting to Market Conditions by Transforming into an Exponential Organization
If you're a startup, you should be implementing all 11 attributes of an ExO.
If you're a mid-market company, you should implement as many as possible. Our advice to mid-market companies is:
If you’re the founder, make sure you're not the immune system in your organization.
Be open to testing innovative ideas from your leadership teams.
Review innovative projects that similar companies or your competitors are implementing, both on a local and global level.
Prioritize implementing dashboards for your business metrics. Instinct and gut feelings may have helped you a lot during the start-up phase but during the growth phase, you must begin to rely on data.
If you're a big company, you are likely to battle a large immune system. However, if you can fully Implement
4 out of 10 of these, you can get a 10x performance improvement in your organization.
- First, update your leadership.
- Do not do disruptive innovation in the core organization.
- Invest/Partner with adjacent ExOs.
- Leverage or expose data.
- Hire a “Black Ops” team.
- Set up a Google [X] equivalent.
A great example of an ExO doing this successfully is Apple. They form a small team that's really disruptive and put that team at the edge of the organization. They keep the team totally secret and stealthy, and the team’s core objective is to go disrupt another industry. They create a team for every industry that they think is ready for disruption, and in effect have a portfolio of teams primed to create disruption across multiple industries.
In an ideal world, the ExO that you spin-off from your current organization becomes much bigger than the original organization, and we actually have started to see this happen.
When Proctor & Gamble began operating in this new way, they launched 25 initiatives in four years on a tiny budget which delivered over $50 million in value and raised customer satisfaction by 10 times.
INTERprotección, a family-owned insurance company in Mexico, also adopted the ExO model. When an earthquake devastated Mexico, INTERprotección had the agility to quickly adapt with an offer for earthquake insurance before any of their competition could, leading them to double their revenue and triple their profits.
Start Growing Your Business 10x Faster, Cheaper, and More Efficient Than Your Competition
In summary, by adopting the 10 attributes and an MTP, your organization can develop the agility and scalability to adapt to market changes, embrace rapid advances in technology, and take advantage of emerging market opportunities before your competition.
Having this advantage can transform your business into an Exponential Organization that grows ten times faster, cheaper, and more efficient than your competition. For the best path to fully implement the ExO methodology, join our Exponential Organization Master Business Course led under the guidance of Salim Ismail, Kent Langley, & ExO Coaches.