What Is An Exponential Organization?
Silicon Valley heavyweight Salim Ismail explains how some companies achieve exponential growth.
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Not too long ago, companies like Google, Airbnb, Uber and Facebook started out with a few developers scrapping together code from their garage-turned-office. Now they're defining the way we live our lives. It seems a new business-building model -- one some are deeming a Fourth Industrial Revolution -- has risen, characterized by intense technological innovation and whirlwind growth. And without a doubt, the following statement has echoed through boardrooms across the world: "How are these new companies growing exponentially when we aren't?"
Well, Salim Ismail may have cracked it. The former Head of Innovation at Yahoo and founder of Silicon Valley innovation hub Singularity University lays out what he believes makes an exponential organization (or, as he calls them, an ExOs) in his Amazon best-seller, Exponential Organizations.
The core notion is simple: Rather than increasing human capital or physical assets, the most successful 21st-century companies leverage information and technology to achieve rapid expansion in pursuit of a "Massive Transformational Purpose" (MTP). In doing so, they're able to scale their business strategies, culture, organizational frameworks and purpose at the same rate as the technology, i.e. one that follows an exponential curve.
Ismail now runs OpenExO, a global community of more than 2,000 coaches, investors, consultants and innovation experts, and I recently had the opportunity to speak with him about what makes an organization exponential.
What is an exponential organization as compared to a traditional one?
"An Exponential Organization is one whose impact or output is disproportionately large -- at least 10 times larger -- compared to its peers because of new organizational techniques that leverage accelerating technologies. In other words, it grows faster, bigger and cheaper than its competition because it has a Massive Transformative Purpose and scales as quickly as tech does."
How can you identify and define an MTP?
"The Massive Transformative Purpose is bigger than a mission statement; it's why you do what you do, why you get up in the morning and why your organization exists. It's a higher, aspirational purpose, and it's about thinking big. Radical transformation is its goal. Examples of some great MTPs include Boston Children's Hospital ("Until Every Child is Well"); Best Friends Animal Rescue ("Save them All"); TED ("Ideas Worth Spreading"); and Google ("Organize the World's Information"). These are big, ambitious, grand challenges and the directional north star for their respective organizations."
Why is it important for businesses to be in line with the values of an ExO?
"Today, either you're the disruptor or you're disrupted. It's that simple. Accelerating technologies are changing business and the world at large so quickly that it would almost count as operational malfeasance for executives not to rethink their values and SoPs in favour of becoming more exponential."
How can early-stage startups best position themselves as ExOs?
"Early-stage companies have a massive head start on their legacy counterparts because there's no ingrained culture to fight and no legacy to unlearn. They can aggressively chase their MTP, and they can build themselves nimbly as an ExO from the start and leapfrog big companies. The cost of technology is dropping so fast that the bar to scaling quickly has dropped to near zero. Anyone can innovate and bring something to market quickly and iterate as they get an audience or customer feedback. Tesla leapfrogged the automotive world with technology, and the first 2012 Tesla Model S is still the most advanced car in the world."
After defining an MTP, how does a company begin acting upon it?
"Validation is easy. Ask yourself and those around you if the goal is significantly massive, transformative and purposeful. But take those one at a time. It's a thinking exercise. Also, are the founders impossibly excited about going after that problem? There has to be executive-level buy-in, enthusiasm and commitment.
To start building toward the MTP, develop a community devoted to it. Organizations start with a strike team. First, pick an MTP, then find a community within the organization that supports the initiative. Then, from that community pick a founding team to execute. Most importantly, the organization has to have buy-in from the top-down. Otherwise, no initiative of this size will work."
How can large companies innovate here and keep core operations intact?
"Create disruptive projects and put them at the edge of the organization. Keep them out of the established culture. They won't thrive if they're constantly interrupted with work as usual. Then call on a coaching service designed specifically to jump-start radical transformation. If the company doesn't feel it can do this without the help of an ExO-certified coach, there are more than 2,500 people in 100 countries around the world who can help. Also, ExO Works offers curated sprints for large organizations. Run the ExO Sprint to solve the immune system problem and increase the speed of decision-making. The minute the metabolism of your company is slower than that of the outside world, you're dead. This is true of most large organizations."