A Paradigm Shift to the New Breed Called Exponential Organizations – 10x Faster, Better & Cheaper

By: | Lakshmi Nanduri

Publish Date: January 16, 2018

Disruptive Innovation, instead, Disruption is the norm of the day with the famous quote, ‘Disrupt or be Disrupted’; ‘You can either do it, or it is going to be done to you.’
Gartner’s Top Trends in the Gartner Hype Cycle for Emerging Technologies, 2017 focuses on three emerging technology mega-trends: Artificial intelligence (AI) Everywhere, Transparently Immersive Experiences and Digital Platforms [3]

Figure 1
Figure 2

Forrester Research in one of their 2011 reports, about the speed of change that has been transforming the digitization, indicates a multiplicity of 10 on Innovation, reduction of a tenth in costs and 100x multiplicity in power as referenced in Figure 3.

Figure 3

What has and is enabling this tremendous speed of change is our environment prone to changes on an exponential scale. Exponential technologies and globalization mainly drive this. As a result of this, the world is now increasingly open and transparent, and the business world is moving from scarcity to abundance.
This is here Salim Ismail’s work as Lead Author of, ‘Exponential Organizations’ serves as a guide to navigating the shifting business environment due to the introduction and proliferation of exponential technologies. Co-authored by Yuri Van Geest, it talks about how linearization exists in today’s world and how Exponential Organizations can leverage the exponential technologies and the paradigm shift in business for the transformation.
In words of Salim Ismail [5] –

“Today’s organizations are built for a linear world: hierarchical, centralized, closed, top-down and focused on ownership due to the scarcity of people, resources, assets, and platforms. They evolved one hundred years ago for an era of economies of scale and relative stability and predictability. Our environment is changing exponentially, mainly driven by exponential technologies and globalization. As a result, the world is becoming increasingly open and transparent, and we are slowly moving from a world of scarcity to a world of abundance. Exponential Organizations lays the framework for organizations to adapt and thrive in a world of abundance by diving into new organizational structures that leverage exponential technologies and a shifting global business mindset. ”

In today’s’ business world, “agility” seems to be the determining factor for market competitiveness, and “leanness,” as the motivation behind it. Till a few decades ago, the most successful organizations were those resting on the largest and most sprawling networks & infrastructure. The growth rate of these organizations was restricted or governed by people & material assets, and they operated under the assumption that the resources available to them were fixed and expensive, thus causing them to maintain extensive stocks of the same.
The lifespan of organizations might become even shorter, as giant corporations are now forced to compete, all of a sudden, with a new breed of companies that are harnessing the power of exponential technologies, from groupware to data mining to synthetic biology and robotics. This is where the concept of EXO evolved involving a Paradigm Shift in Mindset to the way Businesses are done.
EXOs are disruptive and involve a paradigm shift in Mindset on ten attributes, 5 External (abbreviated SCALE) & 5 Internal (abbreviated IDEAS). It is for the intending Organizations to identify the MTP (Massive Transformative Purpose).
Here are the Best EXOs as implemented and the results they’ve achieved [6] –

Figure 4
Figure 5

Every organization may find that they have limitations on what can be devised, implemented and measured as OCM (Organizational Change Management) is key to success. Where organizations establish a basic measurement and monitoring capability, some caution should be exercised regarding the quality of this data: be aware of limitations of new data, carefully look to a consideration of the proposed tools for the purpose.
What are these Exponential Organizations?
Exponential Organizations (EX0) are a new breed of organizations whose impact (or output) is disproportionally large, nearly 10x times larger when compared to their peers, because of their use of new organizational techniques that leverage accelerating technologies. Rather than using a massive infrastructure of people or offices, they are built upon information technologies. These technologies include artificial intelligence (AI), robotics, biotech, bioinformatics, medicine, neuroscience, data science, nanotechnology and even energy. As these technologies interact and intersect, the pace of innovation speeds even further and that too with a minimum of resources and time.
The new age of EXO is an era where neither size, age, sales nor reputation guarantees an existence tomorrow. It is an era, where if you build an organization that is sufficiently scalable, fast-moving and smart, then exponential success is possible at a never before rate. Rather than owning assets or workforces and incrementally seeing a return on those assets, EXOs leverage external resources to achieve their objectives. They also maintain a tiny core of employees and facilities, allowing enormous flexibility as margins soar. They enlist their customers and leverage offline & online communities in everything from product design to application development. Evolving as an Exponential Organizations now has become as much a necessity as it is a choice.
Here’s a listing of characteristics of Linear Organizations Vs. Exponential & examples of Performance Improvement as obtained by few implemented EXOs [6] –

Figure 6
Figure 7

Why Make the Exponential Choice?

In traditional vertically integrated organizations, technology innovation was applied to reduce labor demands and increase profit margins. But the pace and scope of technology innovations today, has rendered these organizations almost obsolete. The abundance of cheaper, advanced technology enables smaller teams that have the right approach to succeed and that too much faster & more effectively against the more prominent competitors. From crowdfunding to big data analytics, the tools available to businesses have been diversifying and amplifying exponentially for years now. Exponential Organizations are just not being only competitive; they are also in many cases, the only types of organizations prepared for long-term survival. Also, EXOs are structured in such a way that allows them to realize the full potential of the digitized business economy.

Evolving as an Exponential Organizations. What does it involve?

EXOs use crowdsourcing, crowdfunding, and cloud solutions to scale rather very quickly. They comprise an army of entrepreneurs with an appetite to take on significant risks, posing fierce compétition to established organizations. At the same time, they also provide newer opportunities for market partnerships and alliances. Most of the key drivers of this new breed of EXOs revolve around two acronyms: SCALE and IDEAS. MTP is the Massive Transformative Purpose for the intending organization towards an EXO.
Figure 8

SCALE explains the external mechanisms that EXOs use to fuel their growth:

  1. Staff on Demand: EXOs leverage external resources instead of maintaining large employee bases.
  2. Community & Crowd: EXOs build and join communities to achieve rapid growth.
  3. Algorithms: EXOs excel in the use of algorithms and machine learning as the world turns to big data.
  4. Leased Assets: EXOs access or rent assets to stay flexible.
  5. Engagement: Techniques such as gamification & incentive prizes are core to EXOs’ ability to quickly engage markets.
IDEAS explain the internal control mechanisms that EXOs use to increase their organizational velocity:

  1. Interfaces: EXOs configure their interfaces for their external constituents.
  2. Dashboards: To track & monitor performance, EXOs use real-time metrics & performance tracking techniques.
  3. Experimentation: EXOs use approaches for rapid experimentation and process improvements through fast feedback loops.
  4. Autonomy: EXOs are extremely flat organizations, sometimes with no management layers.
  5. Social: File sharing and activity streams drive real-time, zero-latency conversations across the organization.

Exponential Organizations: Key Dynamics at Play

  1. Information accelerates everything
  2. Low-cost access to the necessary technology and tools
  3. Internet reduces the marginal cost of marketing & sales to nearly zero. The web has made it possible to promote an online product worldwide for a tiny fraction of what it would have cost two decades ago.
  4. Customer acquisition costs can also be cut to what was once deemed impossible – zero.
  5. Without legacy systems to worry about, as well as the ability to enjoy low overhead, take advantage of the natural availability of information & technology, EXOs can move quickly and that too with minimum expense.
  6. The success of EXOs key lies with those who offer a fresh perspective.
  7. In an exponential world, future planning is not only unworkable, but it is also seriously counter-productive. Any forward look is likely to produce false scenarios in this quickly changing future.
  8. Smaller Beats Bigger: Today, the unparalleled and unprecedented ability lies with a smaller team to do big things. A small group is also the one that will be more willing to take on much more significant risks than large ones.
  9. Rent, Don’t Own: The concept of renting facilities, equipment, computing or people rather than owning is a significant factor contributing to an EXO’s agility and flexibility.
  10. Autonomy can be a powerful motivator in the age of the Exponential Organizations. The present generation is naturally independent, digitally native and resistant to top-down control and hierarchies.
  11. Everything is Measurable, and Anything is Knowable, and this new reality is the one that determines the chance at long-term success.

Exponential Organizations that are now on a rapid growth path will continue to change the landscape for many industries in the next decade. Perpetuity exists across industry sectors and geographies. It presents an unprecedented opportunity for innovation and growth on one end, as work is getting reshaped, customers are getting engaged in different technologies, and competition is being reimagined. On the other lies the existential threat of disruption. These are the present conditions in which start-ups and entrepreneurial market makers are thriving. Large organizations that have been dominating their industries can also thrive in these conditions if the opportunities at hand are recognized, deliberate action taken, and they evolve themselves into Exponential Organizations.
Contact us today to know more about how YASH can help you tackle the challenges that arise during a digital transformation.
Lakshmi Nanduri – Program manger @YASH Technologies
Lakshmi Nanduri


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