What makes a company an Exponential Organisation?
What do the top companies today have in common? Can we learn these similarities and implement them in our companies?
Welcome to week two of our three-week series looking at Exponential Organisations. Last week we looked at what is causing the rise of exponential organisations, this week we will discuss what makes a company an exponential organisation and we will conclude next week with how to become an exponential organisation.
First a recap
An exponential organisation is a company that grows at an above-average rate — up to ten times faster than comparable companies in the industry — but can make do with considerably fewer resources thanks to new forms of organization and the use of new, especially digital, technologies.
We looked at the three areas that are driving exponential technology increase:
1. Moore’s law — this is based on a doubling principle over a set period which after reaching a critical breakthrough point increases rapidly. Moore’s law can apply to most technology from 3D printing through to Biotech.
2. Peter Diamandis’s 6Ds of technology disruption, namely, digitization, deception, disruption, demonetization, dematerialization, and democratization.
3. The Law of Accelerating Convergence where the exponential technologies merge to multiply their power.
These three are the reasons for the emergence of Exponential Organisations.
The DNA of an Exponential Organisation
We saw above how exponential technologies are developing and changing at an increasingly rapid rate. To take advantage of this, companies need to be incredibly agile to be able to take advantage of these technologies and then rapidly change to accommodate both new technologies and converged solutions.
Here is an overview of similarities that Exponential Organisations have built into their DNA (in no particular order):
· Data: Real-time dashboards and data are infused in everything they do.
· Disruption: They actively invest in new products and services that destroy their legacy revenue streams.
· Open: They move away from holding onto proprietary control of products and services and instead actively share their intellectual property within large communities.
· Flat structure: They have a high trust culture and they give autonomy to business units.
· Small teams: Their organisations consist of small teams that operate within a large vibrant ecosystem.
· Rent not own: They use staff on-demand and also leverage assets that they don’t own.
· Don’t have a five-year plan: They rather have a Massive Transformative Purpose (MTP) that guides the organisation and then they use real-time dashboards to make constant changes.
11 attributes of an Exponential Organisation
Salim Ismail wrote the book “Exponential Organizations” in which he studied exponential companies and identified 11 attributes that shaped these companies. It is important to note that a company doesn’t have to have all 11 operating to make it an Exponential Organisation. They must have at least four including having a Massive Transformative Purpose as a mandatory attribute.
We are going to have a brief look at these 11 attributes as entire blogs can be devoted to examining each individual attribute. I will give you links at the end of this blog where you go to get more information on these attributes.
A mandatory requirement for every Exponential Organisation is to have a Massive Transformative Purpose.
MTP is best described by defining each of the three words:
· Massive: Something audaciously big and aspirational.
· Transformative: Can cause significant transformation to an industry, community or to the planet.
· Purpose: There’s a clear “why” behind the work being done; something that unites and inspires action.
The MTP acts as a company’s “North Star”, which directs all people and activity in the same direction.
Other advantages of having an MTP is that it helps direct a company’s innovation efforts, attracts the best staff and a community of supporters and will help to sell more products and services.
Examples of MTPs are:
• To accelerate the world’s transition to sustainable energy. — Tesla
• To make sustainable living commonplace. — Unilever
• Organize the world’s information. — Google
My own MTP is a work in progress and is currently “Coaching companies to be 10X more profitable and efficient so that they can give more”.
Does your company or division have an MTP? I would love to know what yours is?
This is quite a broad area and consists of:
· Interfaces connecting humans to systems.
· All the tools and disciplines around User Experience Design.
· Application Programming Interfaces (API) to enable applications to connect.
An example of the Interfaces attribute is Uber. They have an “Uber Rider App User Interface” for you and me, an “Uber Driver App User Interface” for the drivers and APIs for real-time vehicle and pick-up data.
This needs to provide a real-time view of the business.
Dashboards provide a company with visibility and transparency, shorter feedback loops, reduces the effort to understand a situation and allows a company to constantly improve and evolve.
Even the best ideas are just a hypothesis until they are tested. A company needs to encourage freedom to test these through controlled experiments.
In practical terms, this means putting together an experimentation workflow that can be followed where ideas can be put through a proper process that is both quick and cheap.
Essentially this means breaking the company down into self-organised multi-disciplinary teams that have authority and accountability to make decisions and choose how to accomplish their goals.
This allows companies to more agile, allows for information to be spread quickly through an organisation and also attracts innovative and self-directed people to your company.
These are tools that allow people in your company to communicate and collaborate quickly and easily. These tools allow for faster conversations, faster decisions and faster learning.
You will see that these five attributes form the acronym IDEAS. The last five form the acronym SCALE.
The underlying principle is that the brightest people aren’t working for you — or any one organisation. Staff On-Demand is the principle of using these people for specific purposes and allowing their expertise to be passed to your permanent workforce.
Of course, it also applies to the Uber model where you use independent workers to either provide the service — in Uber’s case — or act as your salesforce.
Community & Crowd:
These are people that are drawn and aligned to your Massive Transformative Purpose. They can consist of employees, partners and people that are interested in supporting your company.
This to me is one of the most important attributes as the Community & Crowd can be nurtured to grow to millions of individuals. Microsoft, for example, saw the Github* community valuable enough to spend $7,5B buying the company.
*A shared repository for over 300,000 developers
These are a set of instructions that are designed to do a certain task — ideally automated. As a company grows exponentially it assists companies to process ever-increasing amounts of data — in a structured automated manner.
These are assets that a company doesn’t own but instead the company rents, leases, licenses or borrows.
The most used example for this attribute is Airbnb that has millions of leveraged assets — the spare rooms and properties owned by others.
The last attribute is Engagement that is designed to capture, hold and deepen the interest of customers and community members.
Gamification and loyalty schemes are common examples of this where behaviour is rewarded. A good example of this comes from my country South Africa where Discovery, a health insurance company, uses a points system to reward exercise and good health by awarding points on a weekly basis as well as having an annual target to aim for. A customer who reaches his/her Discovery goals is rewarded with free coffees, meals, discounts at stores and cheaper flights.
Links to additional information
As promised here are some links to additional information:
• 11 secrets you need to know for exponential growth — Salim Ismail
• How to Create an Exponential Organization and Why You Should Want To — Jacob Morgan
• Exponential Organizations: How to create them and why they spell success — Menno van Dijk and Saskia Rothuizen
Is your company an Exponential Organisation?
As you have been reading through these attributes, have you been asking how your company rates as an Exponential Organisation?
My company Idea Storm is part of an international consortium of over 1,500 independent consultants that form an organisation called OpenExO. One of the services offered by OpenExO is an online survey that would take you through a set of questions and then provide you with an indication of how exponential your company is. If you would like to take this survey, then please let me know and I will send you a link. The survey takes approximately 30 minutes to complete.
Next week we will reach the conclusion of our three-week series and look at the most important question of all — “How does a company become an Exponential Organisation”?
I hope you have enjoyed and found this blog valuable. If you would like to talk about any of these concepts further, then let’s chat. You can book me online using Calendly at https://calendly.com/ideastorm, contact me through my website at www.ideastorm.co.za or email me directly at firstname.lastname@example.org.
Until then have a fantastic week!