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Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours
Frost & Sullivan’s 2014 Growth, Innovation, and Leadership Book of the Year
"EXPONENTIAL ORGANIZATIONS should be required reading for anyone interested in the ways exponential technologies are reinventing best practices in business.”—Ray Kurwzeil, Director of Engineering at Google
In business, performance is key. In performance, how you organize can be the key to growth.
In the past five years, the business world has seen the birth of a new breed of company—the Exponential Organization—that has revolutionized how a company can accelerate its growth by using technology. An ExO can eliminate the incremental, linear way traditional companies get bigger, leveraging assets like community, big data, algorithms, and new technology into achieving performance benchmarks ten times better than its peers.
Three luminaries of the business world—Salim Ismail, Yuri van Geest, and Mike Malone—have researched this phenomenon and documented ten characteristics of Exponential Organizations. Here, in EXPONENTIAL ORGANIZATIONS, they walk the reader through how any company, from a startup to a multi-national, can become an ExO, streamline its performance, and grow to the next level.
“EXPONENTIAL ORGANIZATIONS is the most pivotal book in its class. Salim examines the future of organizations and offers readers his insights on the concept of Exponential Organizations, because he himself embodies the strategy, structure, culture, processes, and systems of this new breed of company.”—John Hagel, The Center for the Edge
"EXPONENTIAL ORGANIZATIONS should be required reading for anyone interested in the ways exponential technologies are reinventing best practices in business.”—Ray Kurwzeil, Director of Engineering at Google
In business, performance is key. In performance, how you organize can be the key to growth.
In the past five years, the business world has seen the birth of a new breed of company—the Exponential Organization—that has revolutionized how a company can accelerate its growth by using technology. An ExO can eliminate the incremental, linear way traditional companies get bigger, leveraging assets like community, big data, algorithms, and new technology into achieving performance benchmarks ten times better than its peers.
Three luminaries of the business world—Salim Ismail, Yuri van Geest, and Mike Malone—have researched this phenomenon and documented ten characteristics of Exponential Organizations. Here, in EXPONENTIAL ORGANIZATIONS, they walk the reader through how any company, from a startup to a multi-national, can become an ExO, streamline its performance, and grow to the next level.
“EXPONENTIAL ORGANIZATIONS is the most pivotal book in its class. Salim examines the future of organizations and offers readers his insights on the concept of Exponential Organizations, because he himself embodies the strategy, structure, culture, processes, and systems of this new breed of company.”—John Hagel, The Center for the Edge
326 pages, Kindle Edition
First published October 14, 2014
1521 people are currently reading
10284 people want to read
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Displaying 1 - 30 of 299 reviews
December 21, 2016
Overall this book was not very great. It had a bunch of tidbits of useful observations and facts, but nothing groundbreaking. My biggest complaint is the lack of rigor, substance, and depth of examples in the book. I knew I was in for trouble when they gave their definition of an "Exponential Organization":
You don't need a degree in Math to know that nothing in that definition is exponential. Personally, I found it hard to take this book seriously when the authors decided to use exponential as a buzzword instead of using it properly.
An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large-at least 10x larger-compared to its peers because of the use of new organizational techniques that leverage accelerating technologies.
You don't need a degree in Math to know that nothing in that definition is exponential. Personally, I found it hard to take this book seriously when the authors decided to use exponential as a buzzword instead of using it properly.
October 22, 2014
The most important tip: do yourself a favor and read this book not only once, but many times!
This is really a tour de force on what are the characteristics of exponential organizations (companies who can grow 10 times in an exponential way without the need to grow their assets in a linear way. Different from traditional companies growing X% per year).
The book also explains how to build a startup with these characteristics and even has chapters focused on existing organizations (mid-sized and big ones) giving ideas on how they also can change their linear ways to become exponential.
This is really a tour de force on what are the characteristics of exponential organizations (companies who can grow 10 times in an exponential way without the need to grow their assets in a linear way. Different from traditional companies growing X% per year).
The book also explains how to build a startup with these characteristics and even has chapters focused on existing organizations (mid-sized and big ones) giving ideas on how they also can change their linear ways to become exponential.
August 4, 2017
I am currently reading this book but thought I would add my comments as I read it
The first chapter is largely introductory and speaks about the paradigm shift that is taking place among enterprises. Companies and some of their traits are compared to illustrate the differences. Failed initiatives are pointed out and the author gives his argument for the cause of those failures. The author goes on to contrast an exponential organization with a linear organization. I have a math background and at times become uncomfortable with how clearly defined mathematical terms are hijacked in order to lend gravitas to the author's arguments. The book is rife with name dropping, superficial comparisons, statement of ideas as facts which are not substantiated, and other shortcomings that make this feel like a sales pitch and undermine the author's credibility.The author introduces new terminology needlessly when there are perfectly acceptable common terms that could be used. I feel like he does this as a way to make some of these ideas sound fresh, when in reality they have been around a long time. One such instance is the coining of the phrase MTP (massively transformative purpose) which sounds very similar to a mission statement. The author tries to draw distinctions between the two terms. He does not convince.
The subsequent chapter the author introduces two acrostics, IDEA and SCALE. IDEA is Interfaces, Dashboards, Experimentation, Autonomy, and Social. SCALE is Staff on demand, Community and Crowd, Algorithms, Leveraged assets , and Engagement. The author explains how each of these are attributes that an ExO displays, and why it is necessary for an ExO to demonstrate these attributes. He stages an analogy where IDEA is the left brain hemisphere and SCALE is the right brain hemisphere, one side responsible for creativity, the other for order. In my opinion the analogy is weak and unnecessary.
more to be added as i keep reading....
Update. I abandoned reading this book, which I usually don't do, but I just felt I was not getting anything of substance from it.
The first chapter is largely introductory and speaks about the paradigm shift that is taking place among enterprises. Companies and some of their traits are compared to illustrate the differences. Failed initiatives are pointed out and the author gives his argument for the cause of those failures. The author goes on to contrast an exponential organization with a linear organization. I have a math background and at times become uncomfortable with how clearly defined mathematical terms are hijacked in order to lend gravitas to the author's arguments. The book is rife with name dropping, superficial comparisons, statement of ideas as facts which are not substantiated, and other shortcomings that make this feel like a sales pitch and undermine the author's credibility.The author introduces new terminology needlessly when there are perfectly acceptable common terms that could be used. I feel like he does this as a way to make some of these ideas sound fresh, when in reality they have been around a long time. One such instance is the coining of the phrase MTP (massively transformative purpose) which sounds very similar to a mission statement. The author tries to draw distinctions between the two terms. He does not convince.
The subsequent chapter the author introduces two acrostics, IDEA and SCALE. IDEA is Interfaces, Dashboards, Experimentation, Autonomy, and Social. SCALE is Staff on demand, Community and Crowd, Algorithms, Leveraged assets , and Engagement. The author explains how each of these are attributes that an ExO displays, and why it is necessary for an ExO to demonstrate these attributes. He stages an analogy where IDEA is the left brain hemisphere and SCALE is the right brain hemisphere, one side responsible for creativity, the other for order. In my opinion the analogy is weak and unnecessary.
more to be added as i keep reading....
Update. I abandoned reading this book, which I usually don't do, but I just felt I was not getting anything of substance from it.
June 18, 2016
I really wanted to like this book. The first few chapters began with explosive promise as I hung on every word to hear what was next. I told everyone I came in contact about this book and how amazing it was. It had ah-ha moments sprinkled with mind blowing concepts that had me saying, YES.
Personally, I think chapter 2 was the most impact full chapter that I read and I would highly recommend. unfortunately by chapter 7 I wanted to blow my brains out. Perhaps due to the fact that I was listening to this book via audio book, I just couldn't handle the narrators voice anymore.
I have never read a book that began so well and then fell so far in terms of my enjoyment while reading. Ultimately I just couldn't handle the excessive use of buzzwords and endless examples that became mind numbing. Not to mention the lists. The author made lists for everything and I constantly found myself halfway in a list realizing I spaced out and had no idea what he was talking about anymore. Maybe this book would have been easier to read instead of listening to it.
Quite disappointing. This book could have been so amazing and would have been vastly improved with 1/4 the buzzwords, more SUBSTANCE rather than endless examples that quickly become out of date and are dry to listen to, and could easily have been reduced and condensed in content overall.
Personally, I think chapter 2 was the most impact full chapter that I read and I would highly recommend. unfortunately by chapter 7 I wanted to blow my brains out. Perhaps due to the fact that I was listening to this book via audio book, I just couldn't handle the narrators voice anymore.
I have never read a book that began so well and then fell so far in terms of my enjoyment while reading. Ultimately I just couldn't handle the excessive use of buzzwords and endless examples that became mind numbing. Not to mention the lists. The author made lists for everything and I constantly found myself halfway in a list realizing I spaced out and had no idea what he was talking about anymore. Maybe this book would have been easier to read instead of listening to it.
Quite disappointing. This book could have been so amazing and would have been vastly improved with 1/4 the buzzwords, more SUBSTANCE rather than endless examples that quickly become out of date and are dry to listen to, and could easily have been reduced and condensed in content overall.
January 24, 2016
The key points from the book are SCALE and IDEAS:
S: staff on demand
C: community & crowd
A: algorithms
L: leveraged assets
E: engagement
I: interfaces
D: dashboards
E: experimentation
A: autonomy
S: social technologies
The book went through most of the elements superficially by referring to some well known examples, such as Netflix's contest for a better recommendation algorithm. While the grand prize money was substantial ($1,000,000), the winner was able to beat Netflix's algorithm by over 10%. There were over 20,000 teams working on this problem. If Netflix spent the money internally trying to improve its algorithm, it probably would not have gotten such impressive results.
If you follow the news on technology, much of the information in the book is not a revelation.
S: staff on demand
C: community & crowd
A: algorithms
L: leveraged assets
E: engagement
I: interfaces
D: dashboards
E: experimentation
A: autonomy
S: social technologies
The book went through most of the elements superficially by referring to some well known examples, such as Netflix's contest for a better recommendation algorithm. While the grand prize money was substantial ($1,000,000), the winner was able to beat Netflix's algorithm by over 10%. There were over 20,000 teams working on this problem. If Netflix spent the money internally trying to improve its algorithm, it probably would not have gotten such impressive results.
If you follow the news on technology, much of the information in the book is not a revelation.
September 12, 2016
Exponential Organizations
by Salim Ismail
Salim Ismail wrote the book Exponential Organizations to teach us how companies whose impact is at least 10x larger than their peers think differently than the rest of us.
As angel investor David S. Rose once said,
“Any company designed for success in the 20th century is doomed to failure in the 21st.”
This is your roadmap for preparing your business for what’s to come.
Understanding Moore’s Law and its Corollary
Moore’s Law basically states that the performance of computation will double about every eighteen months. This has held true for the last six decades.
Ray Kurzweil has noticed an interesting corollary to this law, that this doubling pattern applies to any information technology.
Basically, when you shift to an information-based environment, the pace of development jumps onto an exponential growth curve, much like Moore’s Law.
The challenge in the business environment is that most experts will project growth linearly in times of exponential change. This becomes a problem in an environment where everything is being information enabled, including your industry.
The good news is that information-enabled environments deliver fundamentally disruptive opportunities. There are 2 fundamental drivers of this change:
- Some aspect of the company’s product has been information enabled and thus, can take on the doubling characteristics of information growth;
- Thanks to the fact that information is liquid, business functions can be transferred outside of the organization - to users, fans, partners or the general public.
Let’s now move on to what the authors suggest we do about this transformation.
Have a Massive Transformative Purpose
One of the things that the authors found in each of the Exponential Organizations was presence of a Massive Transformative Purpose - the aspirational purpose of the organization.
They give examples like TED, whose MTP is “Ideas worth spreading”, and Google, whose MTP is “Organize the world’s information.”
The most important thing to keep in mind is that your MTP should be something that creates what John Seely Brown calls the “Power of Pull” - the ability to create a movement around the work that you do.
External Characteristics: SCALE
There are 5 external characteristics of an Exponential Organization, which when you put together create the acronym SCALE.
1. Staff on Demand.
In an information-enabled business, a large internal staff seems increasingly unnecessary, counterproductive and expensive.
Freelancers and contractors used to be difficult to find and manage, but since the cost of finding them and tracking them now falls to zero, no argument can be made against using them. You can get almost anything done in your business through the combination of oDesk, Elance, TaskRabbit and any of the other “on-demand” platforms that exist today.
Consider this - by 2020 the world will have five billion people online who are available to work via smartphones, tablets or at Internet cafes, whenever and only if you need them.
2. Community & Crowd.
Chris Anderson, the former editor of Wired Magazine and now the head of a community called DIY Drones (with 55,000 current members), points out that “If you build communities and you do things in public, you don’t have to find the right people, they find you.”
According to the authors, there are three steps to building a community around an Exponential Organization:
- First, use your MTP to engage early members, all of which will have similar passions.
- Second, nurture the community. Anderson spends three hours every morning attending to the DIY Drones community. This includes listening and giving back.
- Third, create a platform to automate peer-to-peer engagement. Github has users rate and review each other’s code. Uber has drivers and passengers rate each other.
The people you will attract will include employees, customers, vendors, partners, users and fans. If these are the people in your community, the people in the crowd is everybody else.
One of the most obvious use cases for the crowd is to get those people to work for you. As Silicon Valley visionary Bill Joy famously said, “The smartest people in the world don’t work for you.”
This will lead to an organization that is not only much more agile, it will be better at learning and unlearning due to the diversity and volume of the flexible workforce.
3. Algorithms.
Machine learning may sound scary, but it’s the future of business.
Google revenues in 2002 were less than a half-billion dollars. In 2012, they were generating that much every three days. At the core was the PageRank algorithm, which ranks the popularity of web pages.
There are two types of algorithms that are driving the next wave of growth:
Machine Learning: the ability to accurately perform new, unseen tasks, built on known properties learning from training or historic data, and based on prediction.
Deep Learning: a new and exciting subset of Machine Learning based on neural net technology. It allows a machine to discover new patterns without being exposed to any historical or training data. It operates in much the same way that a baby learns first sounds, then words, then sentences, and even languages.
Deep Learning algorithms can even play video games by figuring out the rules of the game and then optimizing performance. What’s coming is the disruption of white collar jobs that will eventually be replaced with machines.
Don’t believe it?
An analysis by the American Psychological Association of seventeen studies on hiring practices found that a simple algorithm beat intuitive hiring practices by more than 25 percent in terms of successful hires.
4. Leveraged Assets.
The main idea here is to own only what’s critical to your business, and outsource the rest.
One of the biggest examples is Amazon Web Services, which allows companies to lease on-demand computing that scales on a variable cost basis. This completely transformed the technology landscape in ways that were previously unimaginable.
Right now there are competitors to your business springing up that previously would have needed hundreds of thousands of dollars just to begin operation that are now able to start for a few dollars charged to a credit card.
The most famous example is Uber, which doesn’t own any of the mission critical assets it employs. All of the cars used to transport millions of riders around the world are owned by the drivers themselves.
Non-ownership is the key to owning the future, except when it comes to scarce resources or assets. When the asset in question is rare or extremely scarce, then ownership is a better option. But if your asset is information-based or commoditized, then accessing it is better than owning it.
5. Engagement.
User engagement techniques like sweepstakes and airline miles have ben around for a long time. But now that these techniques have been information-enabled and socialized, the power of engagement is being multiplied.
The key attributes of any engagement program include:
- Ranking transparency
- Self-efficacy
- Peer pressure
- Eliciting positive rather than negative emotions to drive long-term behaviour change
- Instant feedback
- Clear rules, goals and rewards
- Virtual currencies or points
These types of programs can be used to engage all of your stakeholders - including employees, your community and the crowd.
Internal Characteristics:
There are 5 internal characteristics of an Exponential Organization, which when you put together create the acronym IDEAS.
1. Interfaces.
These are algorithms and automated workflows that route the output of SCALE externalities to the right people at the right time internally.
For example, Uber uses interfaces and automated workflows to manage its army of drivers. Most critically, it’s algorithm matches the best/closest driver to a user location to ensure the best possible customer experience.
The best way to think about Interfaces is that they help to manage abundance. When you have to manage tens of thousands (or even millions) of external partners, you need a way to manage everything so it doesn’t fall apart.
Without these interfaces the Exponential Organization cannot scale.
2. Dashboards.
Now that there is so much information available, you need a new way to measure and manage the organization - a real-time, adaptable dashboard with all essential company and employee metrics, assessable to everyone in the organization.
Scientific studies in neuroscience, gamification and behavioural economics have shown the importance of both specificity and frequent feedback in driving behavioural change and having an impact.
So, tracking the critical growth drivers of your business in real time is critical to your success. This allows you to minimize exposure from error because of short feedback loops.
An example of how shortening feedback loops is so critical comes from Sears/Kmart and Walmart. In the early 1990’s, Sears and Kmart would batch up all point-of-sale transactions on a daily basis, and the results would only find it’s way to the head office after several weeks. Walmart, on the other hand, built a real-time inventory system that it used to crush Sears and Kmart, and they have never fully recovered.
3. Experimentation.
As John Seely Brown notes, all corporate architectures are set up to withstand risk and change. All corporate planning efforts attempt to scale efficiency and predictability, which means they work to create static.
In order to get to ideas that can help shape the future of your organization, you need to fail fast and fail often, while eliminating waste.
Basically, you research the needs of your customers, and the conduct an experiment to see if a proposed product meets those needs.
As Eric Ries says, “the modern rule of competition is whoever learns fastest, wins.”
For example, Adobe uses a corporate innovation process called the 5x5x5x5 method. Five corporate teams with five complementary team members compete for five weeks (one or two days per week), spending no more than $5,000 to produce one innovation.
After that time, each team presents their product and findings, and the most promising projects move on to get more funding.
4. Autonomy.
Give your employees the room to do their best work.
Teams with Autonomy are self-organizing, multi-disciplinary and operating with decentralized authority.
Valve Software is a great example - they have 330 staff, but no classic management structure, reporting lines, job descriptions or regular meetings.
Instead, the company hires talented, innovative self-starters, who decide which projects they wish to join. They are also encouraged to start new projects, as long as they fit the company’s MTP.
A growing trend in Autonomy is called Holacracy, which is a system of organizational governance where authority and decision making are distributed through self-organizing teams rather than being vested in the top of a hierarchy.
A famous example of this is Zappos.com, which has 4,000 employees and is an online retailer geared towards shoes and clothing. Everybody in the company is encouraged to make decisions on their own, and to always make them with the best interest of their customers in mind.
5. Social Technologies.
J.P. Rangaswami, the chief scientist at Salesforce, views social technology as having three key objectives:
1. Reduce the distance between obtaining information and decision making;
2. Migrate from having to look up information to having it flow through your perception;
3. Leverage community to build out ideas.
The authors view social technologies as having seven key elements: social objects, activity streams, task management, file sharing, telepresence, virtual worlds and emotional sensing.
Figuring out how all of these pieces fit in with your current and future business strategy might be a daunting task. However, the business benefits you can expect from these elements are faster conversations, faster decision cycles, faster learning and the stabilization of your team during rapid growth.
Conclusion
There is an enormous shift occurring right now, and you and your entire industry will be transformed by it. It’s not a matter of “if”, but “when.”
Learn what you can now about how Exponential Organizations are making the change, so that you can end up on the right side of history.
by Salim Ismail
Salim Ismail wrote the book Exponential Organizations to teach us how companies whose impact is at least 10x larger than their peers think differently than the rest of us.
As angel investor David S. Rose once said,
“Any company designed for success in the 20th century is doomed to failure in the 21st.”
This is your roadmap for preparing your business for what’s to come.
Understanding Moore’s Law and its Corollary
Moore’s Law basically states that the performance of computation will double about every eighteen months. This has held true for the last six decades.
Ray Kurzweil has noticed an interesting corollary to this law, that this doubling pattern applies to any information technology.
Basically, when you shift to an information-based environment, the pace of development jumps onto an exponential growth curve, much like Moore’s Law.
The challenge in the business environment is that most experts will project growth linearly in times of exponential change. This becomes a problem in an environment where everything is being information enabled, including your industry.
The good news is that information-enabled environments deliver fundamentally disruptive opportunities. There are 2 fundamental drivers of this change:
- Some aspect of the company’s product has been information enabled and thus, can take on the doubling characteristics of information growth;
- Thanks to the fact that information is liquid, business functions can be transferred outside of the organization - to users, fans, partners or the general public.
Let’s now move on to what the authors suggest we do about this transformation.
Have a Massive Transformative Purpose
One of the things that the authors found in each of the Exponential Organizations was presence of a Massive Transformative Purpose - the aspirational purpose of the organization.
They give examples like TED, whose MTP is “Ideas worth spreading”, and Google, whose MTP is “Organize the world’s information.”
The most important thing to keep in mind is that your MTP should be something that creates what John Seely Brown calls the “Power of Pull” - the ability to create a movement around the work that you do.
External Characteristics: SCALE
There are 5 external characteristics of an Exponential Organization, which when you put together create the acronym SCALE.
1. Staff on Demand.
In an information-enabled business, a large internal staff seems increasingly unnecessary, counterproductive and expensive.
Freelancers and contractors used to be difficult to find and manage, but since the cost of finding them and tracking them now falls to zero, no argument can be made against using them. You can get almost anything done in your business through the combination of oDesk, Elance, TaskRabbit and any of the other “on-demand” platforms that exist today.
Consider this - by 2020 the world will have five billion people online who are available to work via smartphones, tablets or at Internet cafes, whenever and only if you need them.
2. Community & Crowd.
Chris Anderson, the former editor of Wired Magazine and now the head of a community called DIY Drones (with 55,000 current members), points out that “If you build communities and you do things in public, you don’t have to find the right people, they find you.”
According to the authors, there are three steps to building a community around an Exponential Organization:
- First, use your MTP to engage early members, all of which will have similar passions.
- Second, nurture the community. Anderson spends three hours every morning attending to the DIY Drones community. This includes listening and giving back.
- Third, create a platform to automate peer-to-peer engagement. Github has users rate and review each other’s code. Uber has drivers and passengers rate each other.
The people you will attract will include employees, customers, vendors, partners, users and fans. If these are the people in your community, the people in the crowd is everybody else.
One of the most obvious use cases for the crowd is to get those people to work for you. As Silicon Valley visionary Bill Joy famously said, “The smartest people in the world don’t work for you.”
This will lead to an organization that is not only much more agile, it will be better at learning and unlearning due to the diversity and volume of the flexible workforce.
3. Algorithms.
Machine learning may sound scary, but it’s the future of business.
Google revenues in 2002 were less than a half-billion dollars. In 2012, they were generating that much every three days. At the core was the PageRank algorithm, which ranks the popularity of web pages.
There are two types of algorithms that are driving the next wave of growth:
Machine Learning: the ability to accurately perform new, unseen tasks, built on known properties learning from training or historic data, and based on prediction.
Deep Learning: a new and exciting subset of Machine Learning based on neural net technology. It allows a machine to discover new patterns without being exposed to any historical or training data. It operates in much the same way that a baby learns first sounds, then words, then sentences, and even languages.
Deep Learning algorithms can even play video games by figuring out the rules of the game and then optimizing performance. What’s coming is the disruption of white collar jobs that will eventually be replaced with machines.
Don’t believe it?
An analysis by the American Psychological Association of seventeen studies on hiring practices found that a simple algorithm beat intuitive hiring practices by more than 25 percent in terms of successful hires.
4. Leveraged Assets.
The main idea here is to own only what’s critical to your business, and outsource the rest.
One of the biggest examples is Amazon Web Services, which allows companies to lease on-demand computing that scales on a variable cost basis. This completely transformed the technology landscape in ways that were previously unimaginable.
Right now there are competitors to your business springing up that previously would have needed hundreds of thousands of dollars just to begin operation that are now able to start for a few dollars charged to a credit card.
The most famous example is Uber, which doesn’t own any of the mission critical assets it employs. All of the cars used to transport millions of riders around the world are owned by the drivers themselves.
Non-ownership is the key to owning the future, except when it comes to scarce resources or assets. When the asset in question is rare or extremely scarce, then ownership is a better option. But if your asset is information-based or commoditized, then accessing it is better than owning it.
5. Engagement.
User engagement techniques like sweepstakes and airline miles have ben around for a long time. But now that these techniques have been information-enabled and socialized, the power of engagement is being multiplied.
The key attributes of any engagement program include:
- Ranking transparency
- Self-efficacy
- Peer pressure
- Eliciting positive rather than negative emotions to drive long-term behaviour change
- Instant feedback
- Clear rules, goals and rewards
- Virtual currencies or points
These types of programs can be used to engage all of your stakeholders - including employees, your community and the crowd.
Internal Characteristics:
There are 5 internal characteristics of an Exponential Organization, which when you put together create the acronym IDEAS.
1. Interfaces.
These are algorithms and automated workflows that route the output of SCALE externalities to the right people at the right time internally.
For example, Uber uses interfaces and automated workflows to manage its army of drivers. Most critically, it’s algorithm matches the best/closest driver to a user location to ensure the best possible customer experience.
The best way to think about Interfaces is that they help to manage abundance. When you have to manage tens of thousands (or even millions) of external partners, you need a way to manage everything so it doesn’t fall apart.
Without these interfaces the Exponential Organization cannot scale.
2. Dashboards.
Now that there is so much information available, you need a new way to measure and manage the organization - a real-time, adaptable dashboard with all essential company and employee metrics, assessable to everyone in the organization.
Scientific studies in neuroscience, gamification and behavioural economics have shown the importance of both specificity and frequent feedback in driving behavioural change and having an impact.
So, tracking the critical growth drivers of your business in real time is critical to your success. This allows you to minimize exposure from error because of short feedback loops.
An example of how shortening feedback loops is so critical comes from Sears/Kmart and Walmart. In the early 1990’s, Sears and Kmart would batch up all point-of-sale transactions on a daily basis, and the results would only find it’s way to the head office after several weeks. Walmart, on the other hand, built a real-time inventory system that it used to crush Sears and Kmart, and they have never fully recovered.
3. Experimentation.
As John Seely Brown notes, all corporate architectures are set up to withstand risk and change. All corporate planning efforts attempt to scale efficiency and predictability, which means they work to create static.
In order to get to ideas that can help shape the future of your organization, you need to fail fast and fail often, while eliminating waste.
Basically, you research the needs of your customers, and the conduct an experiment to see if a proposed product meets those needs.
As Eric Ries says, “the modern rule of competition is whoever learns fastest, wins.”
For example, Adobe uses a corporate innovation process called the 5x5x5x5 method. Five corporate teams with five complementary team members compete for five weeks (one or two days per week), spending no more than $5,000 to produce one innovation.
After that time, each team presents their product and findings, and the most promising projects move on to get more funding.
4. Autonomy.
Give your employees the room to do their best work.
Teams with Autonomy are self-organizing, multi-disciplinary and operating with decentralized authority.
Valve Software is a great example - they have 330 staff, but no classic management structure, reporting lines, job descriptions or regular meetings.
Instead, the company hires talented, innovative self-starters, who decide which projects they wish to join. They are also encouraged to start new projects, as long as they fit the company’s MTP.
A growing trend in Autonomy is called Holacracy, which is a system of organizational governance where authority and decision making are distributed through self-organizing teams rather than being vested in the top of a hierarchy.
A famous example of this is Zappos.com, which has 4,000 employees and is an online retailer geared towards shoes and clothing. Everybody in the company is encouraged to make decisions on their own, and to always make them with the best interest of their customers in mind.
5. Social Technologies.
J.P. Rangaswami, the chief scientist at Salesforce, views social technology as having three key objectives:
1. Reduce the distance between obtaining information and decision making;
2. Migrate from having to look up information to having it flow through your perception;
3. Leverage community to build out ideas.
The authors view social technologies as having seven key elements: social objects, activity streams, task management, file sharing, telepresence, virtual worlds and emotional sensing.
Figuring out how all of these pieces fit in with your current and future business strategy might be a daunting task. However, the business benefits you can expect from these elements are faster conversations, faster decision cycles, faster learning and the stabilization of your team during rapid growth.
Conclusion
There is an enormous shift occurring right now, and you and your entire industry will be transformed by it. It’s not a matter of “if”, but “when.”
Learn what you can now about how Exponential Organizations are making the change, so that you can end up on the right side of history.
December 16, 2018
Believe it or not, I've read it kinda ... by mistake :) Instead of "Reinventing Organizations" I've grabbed "Exponential Organizations". In the end, it was NOT a time wasted - actually, the book starts in a very promising way & truly captures the essence of companies that have managed to achieve exponential growth by smart business model, understanding of marketing conditions, identifying a proper product niche, etc.
Why not 5 stars then?
My rating is 3.5-4 stars because of 2 reasons:
- the further, the more book is aimed towards "big enterprises" & their executives with their past-era way of thinking and modus operandi - the book content in this section feels (sometimes) like taken from some C-level crappy PPTX presentation, there are some high-profile consulting company "experts" quotes (seriously? they are authorities in this topic? LOL), etc.
- I've got really irritated with the "message" being sold in the final section - where authors claim that they've just presented a "framework for ExO" and now "all the tools are in your hands" - seriously? it's that easy? now we can all start Ubers & Airbnbs of 2020? Yea, sure ...
Apart of these 2 (VERY ANNOYING) drawbacks ... it's really a decent book. 3.5-4 stars.
Why not 5 stars then?
My rating is 3.5-4 stars because of 2 reasons:
- the further, the more book is aimed towards "big enterprises" & their executives with their past-era way of thinking and modus operandi - the book content in this section feels (sometimes) like taken from some C-level crappy PPTX presentation, there are some high-profile consulting company "experts" quotes (seriously? they are authorities in this topic? LOL), etc.
- I've got really irritated with the "message" being sold in the final section - where authors claim that they've just presented a "framework for ExO" and now "all the tools are in your hands" - seriously? it's that easy? now we can all start Ubers & Airbnbs of 2020? Yea, sure ...
Apart of these 2 (VERY ANNOYING) drawbacks ... it's really a decent book. 3.5-4 stars.
March 24, 2016
Starts off well but is actually not as smart as originally anticipated in my opinion. Basically it says stay lean and use consultants and rented space and stuff and make sure to prototype. Not entirely convinced by the message of this book to be honest, as it doesn't seem to really go in depth about many of the ideas it is advocating. Could be useful for people with less experience in different types of organizations and also if you haven't read a lot of management books. But ultimately it's a bit of a flimsy read from my point of view. Style is also a bit uncohesive and tends to repeat the same ideas over and over without much fundament.
June 18, 2018
I learned more from the podcast by my work amigo Scott Engler (check out podcast #9 here: https://itunes.apple.com/us/podcast/c...) than I did the book.
But the main gist of the book goes, matrixed, huge organizations built to dominate the 20th century are being outmaneuvered by smaller organizations that the author dubs "EO" Exponential Organizations. EOs are defined by many characteristics and cool infographs, but if I had to sum them up some of the interesting points they include.
Part-time staff. Great, eventually we'll all be freelancers with shitty health insurance.
Platforms that contain, acquire and amass data. Yes, a very good point. And once there's an incumbent (which there is in several sectors) the first mover advantage takes place.
Contests to spur innovation. This is a cool point, I'm actually borrowing it for my nonprofit.
It's a good book, but I don't think EOs are going to take over the world. Once they become successful enough, a giant buys them. Case in point, Github, the author's favorite company was recently acquired by Microsoft. Anyway, I recommend listening to the podcast and reading a few summaries and waiting for the book update.
Quotes
[Here's an explanation of why things are changing rapidly, brought to you by Ray Kurzweil] First, the doubling pattern identified by Gordon Moore [Moore's Law] in integrated circuits applies to any information technology. Kurzweil calls this the Law of Accelerating Returns (LOAR) and shows that doubling patterns in computation extend all the way back to 1900, far earlier than Moore's original pronouncement. Second, the driver fueling this phenomenon is information. Once any domain, disciple, technology, or industry becomes information enabled, its price / performance begins doubling approximately annually. Third, once that doubling patter starts, it doesn't stop...Finally, several key technologies today are now information-enabled…Never in human history have we seen so many technologies moving at such a pace. 19
We are rapidly changing the filter through which we deal with the world from a physical, materially-based perspective to an information - and knowledge - based one…The internet is now the world's nervous system, with our mobile devices serving as edge points and nodes on that network. 31
Most organizations use a matrix structure. Product management, marketing, and sales are often aligned vertically, and support functions such as legal, HR, finance and IT are usually horizontal…That is great for command and control, but it's terrible for accountability, speed and risk tolerance. 42
[Massive Transformative Purpose (MTP) one of his key ideas. Think of it as putting the purpose of Simon Sinek's why and a Big Hairy Audacious Goal (BHAG) into a blender.] None states what the organization does, but rather what it aspires to accomplish…This cultural shift inspired by the MTP has its own secondary effects. For one thing, it moves the focal point of a team from the internal politics to external impact. 54
[This is proof there are very few new ideas because this is a direct rip off of Kierkegaard's three phases of life] Martin Seligman, a leading expert on positive psychology, differentiates between three states of happiness: the pleasurable life (hedonistic, superficial), the good life (family and friends) and the meaningful life (finding purpose, transcending ego, working towards a higher good). [Kierkegaard's three flavors of life are pleasure. Then ideals. Then the divine. The downsides are, for pleasure eventually you become numb to it. For ideas, eventually you realize you can't save every kid or stray dog out there. For the divine, opening your heart to suffering is not pleasant, and, frankly, you might be wrong. So perhaps the statue of limitations has passed and its ok to plagiarize of an Enlightenment era philosopher, if not, tisk tisk. ] 57
Psychologist Gerd Gigerenzer cautions that in uncertain markets, it is better to simplify, use heuristics and rely on fewer variables. In stable and predictive markets, on the other hand, he recommends organizations "complexify" and use algorithms with more variables. 72
Gamification [here's an example most people are familiar with, the … that appears when someone is typing a text, that's gamification in your phone. The goal is to make the product more addictive, I mean, stickier. Other examples are "badges" you can earn on social website if you're a heavy user.], as game designer and author Jane McGonigal sees it, "human beings are wired to compete…gamification should empower people, not exploit them. It should feel good at the end of the day because you made progress towards something that mattered to you." To be successful, every gamification initiative should leverage the following game techniques: Dynamics. Mechanics. Components.
This process is unique to Apple, as are most interfaces at ExOs. They are not taught at business schools, and there are no pundits talking about how to go about building them. 87
But the main gist of the book goes, matrixed, huge organizations built to dominate the 20th century are being outmaneuvered by smaller organizations that the author dubs "EO" Exponential Organizations. EOs are defined by many characteristics and cool infographs, but if I had to sum them up some of the interesting points they include.
Part-time staff. Great, eventually we'll all be freelancers with shitty health insurance.
Platforms that contain, acquire and amass data. Yes, a very good point. And once there's an incumbent (which there is in several sectors) the first mover advantage takes place.
Contests to spur innovation. This is a cool point, I'm actually borrowing it for my nonprofit.
It's a good book, but I don't think EOs are going to take over the world. Once they become successful enough, a giant buys them. Case in point, Github, the author's favorite company was recently acquired by Microsoft. Anyway, I recommend listening to the podcast and reading a few summaries and waiting for the book update.
Quotes
[Here's an explanation of why things are changing rapidly, brought to you by Ray Kurzweil] First, the doubling pattern identified by Gordon Moore [Moore's Law] in integrated circuits applies to any information technology. Kurzweil calls this the Law of Accelerating Returns (LOAR) and shows that doubling patterns in computation extend all the way back to 1900, far earlier than Moore's original pronouncement. Second, the driver fueling this phenomenon is information. Once any domain, disciple, technology, or industry becomes information enabled, its price / performance begins doubling approximately annually. Third, once that doubling patter starts, it doesn't stop...Finally, several key technologies today are now information-enabled…Never in human history have we seen so many technologies moving at such a pace. 19
We are rapidly changing the filter through which we deal with the world from a physical, materially-based perspective to an information - and knowledge - based one…The internet is now the world's nervous system, with our mobile devices serving as edge points and nodes on that network. 31
Most organizations use a matrix structure. Product management, marketing, and sales are often aligned vertically, and support functions such as legal, HR, finance and IT are usually horizontal…That is great for command and control, but it's terrible for accountability, speed and risk tolerance. 42
[Massive Transformative Purpose (MTP) one of his key ideas. Think of it as putting the purpose of Simon Sinek's why and a Big Hairy Audacious Goal (BHAG) into a blender.] None states what the organization does, but rather what it aspires to accomplish…This cultural shift inspired by the MTP has its own secondary effects. For one thing, it moves the focal point of a team from the internal politics to external impact. 54
[This is proof there are very few new ideas because this is a direct rip off of Kierkegaard's three phases of life] Martin Seligman, a leading expert on positive psychology, differentiates between three states of happiness: the pleasurable life (hedonistic, superficial), the good life (family and friends) and the meaningful life (finding purpose, transcending ego, working towards a higher good). [Kierkegaard's three flavors of life are pleasure. Then ideals. Then the divine. The downsides are, for pleasure eventually you become numb to it. For ideas, eventually you realize you can't save every kid or stray dog out there. For the divine, opening your heart to suffering is not pleasant, and, frankly, you might be wrong. So perhaps the statue of limitations has passed and its ok to plagiarize of an Enlightenment era philosopher, if not, tisk tisk. ] 57
Psychologist Gerd Gigerenzer cautions that in uncertain markets, it is better to simplify, use heuristics and rely on fewer variables. In stable and predictive markets, on the other hand, he recommends organizations "complexify" and use algorithms with more variables. 72
Gamification [here's an example most people are familiar with, the … that appears when someone is typing a text, that's gamification in your phone. The goal is to make the product more addictive, I mean, stickier. Other examples are "badges" you can earn on social website if you're a heavy user.], as game designer and author Jane McGonigal sees it, "human beings are wired to compete…gamification should empower people, not exploit them. It should feel good at the end of the day because you made progress towards something that mattered to you." To be successful, every gamification initiative should leverage the following game techniques: Dynamics. Mechanics. Components.
This process is unique to Apple, as are most interfaces at ExOs. They are not taught at business schools, and there are no pundits talking about how to go about building them. 87
March 12, 2017
This is a pretty good book that captures and explains a lot about these new exponential organizations like Uber, AirB&B, Twitter, GitHub, Local Motors, SnapChat, FaceBook. It explains well how they are structured, why they work that way, and even gives suggestions on the qualities that you might look for to identify an up and coming one. The book really does have a lot of good, useful information in it.
The most important point is the Massive Transformative Purpose (MTP). This core idea must be stated clearly in few words, but it has to be compelling enough to inspire the initial people, smart enough to nurture a community as it grows, and audacious enough to give plenty of room for growth.
The book has a cleaver brain diagram with ten key points around it: The five external attributes are:
Staff on Demand - in most of these organizations have no fixed, long term relationship with most of the people who work on it. Uber drivers start and stop work whenever they want. They come and go. This means when the demand is right you can "flash employ" lots of people, but when times are tight you have no fixed costs.
Community and Crowd - The customers of the organization generally take a more participative role. They have their own desires, and they provide a pull. Part of the job of the exponential organization is to network the customers together into a self supporting community that works together as much as they work with the organization.
Algorithms -- My take is that this is about automation. Information technology is playing a hugely transformative role. The Uber app automates a number of things so that the drivers just drive, and the riders just ride. Everything else, hopefully, is automated. Machine learning is going to be a component of this in the future.
Leveraged Assets - the exponential organization does not expect to purchase and own everything that it uses. Uber drivers bring their own car. AirB&B does not own the rooms being rented.
Engagement - strongly related to the community, this keeps people interested by involving them in the organization at a number of different levels.
Then there were five internal attributes:
Interfaces - the problem that an exponential organization has is dealing with a huge volume of information due to rapid scaling. So don't try to design as a closed system, but rather an open system that others can hook into. This hooking in helps you grow, and prevents you from being the bottleneck to growth by controlling everything.
Dashboards - Data is easy, so large volumes of data are collected, the dashboard gives people a view into what is happening. Lots of view of lots of aspects helps support the community to do their own thing to help the organization grow.
Experimentation - This is the idea that nobody gets it right from the start. You have to be agile, and that means experimentation. It also mean failure and having a culture that is OK with failures, and gets over them quickly and on to the next.
Autonomy - Like lean principles, don't centralize. Distribute as much as possible. Of course, the big massive pile of data can be centralized. Since it is easy to monitor, the organization can afford to let branches run their own way. This comes back to experimentation.
Social Technologies - big surprise, social media practice is a part of gaining success.
This is all laid out in the beginning, and then they work through a bunch of business case examples, and explore how all these principles map to the actual cases. Like I said, the book is fairly packed with useful information about these new forms of organization. If you are involved in a startup of any kind today, you really should read this book, because either you or your competitors will be employing these ideas, and we can be pretty sure the one who does will do better.
The most important point is the Massive Transformative Purpose (MTP). This core idea must be stated clearly in few words, but it has to be compelling enough to inspire the initial people, smart enough to nurture a community as it grows, and audacious enough to give plenty of room for growth.
The book has a cleaver brain diagram with ten key points around it: The five external attributes are:
Staff on Demand - in most of these organizations have no fixed, long term relationship with most of the people who work on it. Uber drivers start and stop work whenever they want. They come and go. This means when the demand is right you can "flash employ" lots of people, but when times are tight you have no fixed costs.
Community and Crowd - The customers of the organization generally take a more participative role. They have their own desires, and they provide a pull. Part of the job of the exponential organization is to network the customers together into a self supporting community that works together as much as they work with the organization.
Algorithms -- My take is that this is about automation. Information technology is playing a hugely transformative role. The Uber app automates a number of things so that the drivers just drive, and the riders just ride. Everything else, hopefully, is automated. Machine learning is going to be a component of this in the future.
Leveraged Assets - the exponential organization does not expect to purchase and own everything that it uses. Uber drivers bring their own car. AirB&B does not own the rooms being rented.
Engagement - strongly related to the community, this keeps people interested by involving them in the organization at a number of different levels.
Then there were five internal attributes:
Interfaces - the problem that an exponential organization has is dealing with a huge volume of information due to rapid scaling. So don't try to design as a closed system, but rather an open system that others can hook into. This hooking in helps you grow, and prevents you from being the bottleneck to growth by controlling everything.
Dashboards - Data is easy, so large volumes of data are collected, the dashboard gives people a view into what is happening. Lots of view of lots of aspects helps support the community to do their own thing to help the organization grow.
Experimentation - This is the idea that nobody gets it right from the start. You have to be agile, and that means experimentation. It also mean failure and having a culture that is OK with failures, and gets over them quickly and on to the next.
Autonomy - Like lean principles, don't centralize. Distribute as much as possible. Of course, the big massive pile of data can be centralized. Since it is easy to monitor, the organization can afford to let branches run their own way. This comes back to experimentation.
Social Technologies - big surprise, social media practice is a part of gaining success.
This is all laid out in the beginning, and then they work through a bunch of business case examples, and explore how all these principles map to the actual cases. Like I said, the book is fairly packed with useful information about these new forms of organization. If you are involved in a startup of any kind today, you really should read this book, because either you or your competitors will be employing these ideas, and we can be pretty sure the one who does will do better.
January 28, 2016
Interessante leitura sobre uma definição de Organizações que são a tendência do futuro: o autor faz uso de diferentes acrônimos e cases para ilustrar a ideia de que a tecnologia veio não só para ficar, mas para mostrar que os gigantes vão cair por causa dela ao ignorar seu poder: Nokia com Navteq e Waze foram um caso de grande força para essa metáfora, não menos que Kodak e Instagram.
É um pouco assustador para mim (que fiz parte de organizações mais tradicionais no passado) ler sobre a construção coletiva e sem posses como a solução mais óbvia para tantos problemas, sobre o aluguel e não a posse, não só do conhecimento mas de propriedades de fato, e sobre como tantos especialistas erram exatamente por serem pessoas olhando um único ângulo.
É um pouco assustador para mim (que fiz parte de organizações mais tradicionais no passado) ler sobre a construção coletiva e sem posses como a solução mais óbvia para tantos problemas, sobre o aluguel e não a posse, não só do conhecimento mas de propriedades de fato, e sobre como tantos especialistas erram exatamente por serem pessoas olhando um único ângulo.
May 16, 2016
Disruption by smaller companies/start ups is bound to happen and these companies show exponential growth. The book presents examples proofs and presents this to reader in an academic format. Must read for all.
September 16, 2017
Excelent book for those feeling "outdated" with current economy/business fast pace, or for those living a "digital transformation", so they'd understand what's happening to the world now.
Great for executives or who's thinking about starting a business.
Great for executives or who's thinking about starting a business.
March 21, 2018
Positives: Book full of knowledge in regards to future fast changing and how to cop, build and sustain your exponential organization.
Negatives: since the book is full of knowlege it can be organized more thoroughly.
Negatives: since the book is full of knowlege it can be organized more thoroughly.
December 6, 2015
5 star experience for most of dinosaur companies but if you are a startup and reading a lot, it is just boring staff.
March 20, 2016
The book is just a mind-blowing experience on building 10x companies. I really enjoyed reading it. There are lot of insights with a lot of meaningful ideas. Highly recommended reading!
July 12, 2018
Executive Summary
Exponential Organizations is not a must read for all cybersecurity professionals. You do not need the information in this book to do your day-to-day cybersecurity job today and I am not recommending it as a Cybersecurity Canon candidate. But it is a must read for business leaders as a roadmap for what we all might be facing in the next 10-15 years. The authors describe how some future-thinking companies are taking advantage of an information-processing-capability phenomena where the number of calculations per second per $1,000 has been doubling since the early 1900s. This phenomena of doubling compute power has manifested exponentially in research areas like artificial intelligence, robotics, biotech, nanotech, medicine, neuroscience, energy, and computing. All of these technologies have been doubling in price-performance every couple of years. These kinds of rapid growths are changing the standard business problem of managing and selling scarcity, like oil, to managing and selling abundance, like energy. The implications are staggering both in terms of how the world will change but also in terms of what future businesses will look like. This book is about how organizations are already taking advantage of this notion, exponential organizations, and about how you might evolve your current organization into this new framework.
In 2014, Jeremiah Owyang, a Founding Partner at Kaleido Insights, noticed that a number of companies emerged across multiple verticals that were completely disrupting the market place. These companies, like Airbnb and Uber, were outperforming the competition by a factor of four or more by staying small and flat but by leveraging the information provided by their customer base. In other words, they were destroying their competition by operating counter to what every other business in the world was doing. Owyang coined this phenomena the "collaborative economy.” [1] In that same year, Ismail, Malone, and Geest published this book, Exponential Organizations, that characterizes the kinds of companies who have had success with this new way of thinking. [2]
In Exponential Organizations, the authors describe how some future-thinking companies are taking advantage of an information-processing-capability phenomena that have been noticed by the likes of Gordon Moore, Intel’s founder, and Ray Kurzweil, famous futurist. Moore predicted in 1965 that the number of components on integrated circuits would double every year. [3] Kurzweil went further back and noticed the same doubling pattern as far back as the early 1900s. [4] Kurzweil came up with an interesting metric to track the behavior: what is the number of calculations per second per $1,000. In 1900, with Charles Babbage’s mechanical Analytical Engine, the number of calculations was extremely small: 0.000005821. [4] But every five to ten years, that numbered doubled. By 1949, the number was 1.837 and we were off to the races. By 1977, the number was 26,870. By 1998, the last year in the study, the number was 133,300,000. [4]
This phenomena of doubling compute power has manifested exponentially in research areas like artificial intelligence, robotics, biotech, nanotech, medicine, neuroscience, energy, and computing. All of these technologies have been doubling in price-performance every couple of years. What the Exponential Organizations’ authors say is that these kinds of rapid growths are changing the standard business problem of managing and selling scarcity, like oil, to managing and selling abundance, like energy. [5] For example, they predict that within 10 years, because of this exponential doubling just in the renewable energy space, there will be enough solar power available to produce five times what is needed in the world today. Energy will become essentially free and entrepreneurs in those markets will have to figure out how to profit in a new environment where the value of the “thing” is essentially zero.
The implications are staggering both in terms of how the world will change but also in terms of what future businesses will look like. This book is about how organizations are already taking advantage of this notion, exponential organizations, and about how you might evolve your current organization into this new framework.
The authors define the key attribute of an Exponential Organizaiton as “a minimum 10x improvement in output over four to five years.” [2] That is a metric that is easy to detect and the authors describe how the organizations that attain those metrics are different than the traditional business. One of the authors, Salim Ismail, is the founding Executive Director of Singularity University whose mission is to train visionary entrepreneurs to use these exponential ideas to solve some of the world’s intractable problems. [6] He believes that if you don’t transform your own organization into an Exponential Organization in the very near future, your competition will start to sprint away from you by leaps and bounds. [2] I have said similar things about the DevOps movement and I believe that most Exponential Organizations in the future will have embraced DevOps as the key development strategy to attain their goals. [7]
As the authors point out, most traditional organizations fail to see the doubling effect in their own industries. They project linearly as to what the future will hold. “That is: x amount of work takes y amount of resources, 2x needs 2y, and so on of ever-greater arithmetic magnitude.” [2] But Exponential Organizations work by reducing staff and hierarchy and informationally enabling their company. They enlist their customer base and their communities for every aspect of the business. “They float atop the existing infrastructure rather than try to own it.” [2] x amount of work takes less than y resources but the impact on growth is 2n (exponential). And these are just some of the recognizable companies that have managed to pull this off:
* AirBnb: 90x more listings per employee
* GitHub: 109x more repositories per employee
* Valve: 30x more market cap per employee
* Tesla: 30x more market cap per employee
Source: [2]
The authors note that successful Exponential Organizations tend to have three key components: a Massive Transformative Purpose statement, some key external attributes of SCALE (Staff on Demand, Community & Crowd, Algorithms, Leveraged Assets, and Engagement), and some key internal attributes of IDEAS (Interfaces, Dashboards, Experimentation, Autonomy, and Social).
An MTP is kind of a vision statement but it has more definition and is way more aspirational. It is not like a mission statement that states what an organization does. The MTP is more about what the organization desires to accomplish. It should be so well crafted that it starts a cultural movement within the community. Here are some example MTPs of Exponential Organizations [8]:
* TED: “Ideas worth spreading.”
* Google: “Organize the world’s information.”
* X Prize Foundation: “Bring about radical breakthroughs for the benefit of humanity.”
* Tesla: “Accelerate the transition to sustainable transportation.”
* Palo Alto Networks: “ To protect our way of life in the digital age by preventing successful cyberattacks.
* Unit 42 – Palo Alto Networks Intelligence Team: “Stop Bad Guys from winning.”
There is one thing to note. Transforming into an Exponential Organization is radical change for most organizations. As the authors points out, change from the status quo is almost immediately attacked by the organization’s immune system; an immune system that will fight any change that deviates from the current path. Organizations that have had success here build black ops teams that operate on the fringe of the organization and who report to the CEO only. This gives the black ops team some breathing room to make things happen without the constant pressure from the organization’s immune system.
That is what happened when Palo Alto Networks helped build the Cyber Threat Alliance; an alliance of security vendors dedicated to sharing adversary playbook intelligence with each other so that our common customers do not have to develop the intelligence themselves. When we began, there were many people within the Palo Alto Networks’ organization who thought it was nuts to give away our intelligence for free and complete insanity to share it with our greatest competitors. But the CEO gave the mission to a team on the fringe who could operate freely and gave them resources to accomplish the task. Today, the Cyber Threat Alliance is a non-profit company that consists of security vendors who share threat intelligence with each other every day as a best practice.
Conclusion
Exponential Organizations is not a must read for all cybersecurity professionals. You do not need the information in this book to do your day-to-day cybersecurity job today. I am not recommending it as a Cybersecurity Canon candidate. But it is an important book for business leaders as a roadmap for what we all might be facing in the near future; say 10-15 years. In other words, how we flip our business away from a scarcity mindset and towards an abundance mindset might very well determine if our organizations survive. How we information enable our organizations so that we break free of the traditional shackles of linear thinking towards exponential thinking will determine if we remain competitive in the marketplace.
Sources
[1] “The Exponential Enterprise: Your Most Feared Competitor Now Has A Name,” by Giovanni Rodriguez, Forbes, 31 October 2014, Last Visited 8 May 2018,
https://www.forbes.com/sites/giovanni...
https://www.forbes.com/sites/giovanni...
[2] “Exponential Organizations,” by Salim Ismail, Michael S. Malone, Yuri van Geest, 14 October 2014, Diversion Books
https://www.goodreads.com/book/show/2...
[3] “Cramming more components onto integrated circuits,” By Gordon E. Moore, Electronics, Volume 38, Number 6, 19 April 1965, Last Visited 4 July 2018,
https://drive.google.com/file/d/0By83...
[4] “Exponential Growth in Computing,” by Ray Kurzweil, The Singularity is Near, Last Visited 8 May 2018
http://www.singularity.com/charts/pag...
[5] “Exponential Organizations,” by Salim Ismail, at USI, 9 July 2015, Last Visited 8 May 2018,
https://www.youtube.com/watch?v=FNQSM...
[6] “Hi, We’re Singularity University; We prepare you to seize exponential opportunities,” Singularity University, Last Visited 10 July 2018,
https://su.org/about/
[7] “The Cybersecurity Canon: Site Reliability Engineering: How Google Runs Production Systems,” by Rick Howard 26 September 2017, Last Visited 11 July 2018,
https://researchcenter.paloaltonetwor...
[8] “The Motivating Power of a Massive Transformative Purpose,” By Alison E. Berman, Singularity Hub, 8 November 2008, Last Visited 11 July 2018,
https://singularityhub.com/2016/11/08...
[8] “Analytical Engine: COMPUTER,” by Paul A. Freiberger & Michael R. Swaine, Encyclopedia Britanica, Last Visited 11 July 2018,
https://www.britannica.com/technology...
References
[JOB] “How 20-Year-Old Kylie Jenner Built A $900 Million Fortune In Less Than 3 Years,” by Natalie Robehmed, Forbes, 11 July 2018, Last Visited 11 July 2018,
https://www.forbes.com/sites/forbesdi...
[FOX] “What is Moore's Law?,” By LEE BELL, 28 August 2016, Last Visited 8 May 2018,
http://www.wired.co.uk/article/wired-...
[DOG] “Abundance: The Future Is Better Than You Think,” by Peter H. Diamandis and Steven Kotler, Free Press, 2012, Last Visited 9 May 2018
https://www.goodreads.com/book/show/1...
Exponential Organizations by Salim Ismail,” by SHELDON NESDALE, 21 DECEMBER 2015, Last Visited , 8 May 2018,
https://www.marketingfirst.co.nz/2015...
“Organizations of the Future,” by Mark Looi, Medium, 9 May 2017, Last Visited 8 May 2018,
https://medium.com/@marklooi/organiza...
“SALIM ISMAIL - EXPONENTIAL ORGANIZATIONS,” USI Blog, 8 DECEMBER 2015, Last Visited 8 May 2018,
https://blog.usievents.com/salim-isma...
“THE SINGULARITY IS NEAR: When Humans Transcend Biology,” by Ray Kurzweil, Penguin, 2006, Last Visited 9 May 2018,
https://www.goodreads.com/book/show/8...
Exponential Organizations is not a must read for all cybersecurity professionals. You do not need the information in this book to do your day-to-day cybersecurity job today and I am not recommending it as a Cybersecurity Canon candidate. But it is a must read for business leaders as a roadmap for what we all might be facing in the next 10-15 years. The authors describe how some future-thinking companies are taking advantage of an information-processing-capability phenomena where the number of calculations per second per $1,000 has been doubling since the early 1900s. This phenomena of doubling compute power has manifested exponentially in research areas like artificial intelligence, robotics, biotech, nanotech, medicine, neuroscience, energy, and computing. All of these technologies have been doubling in price-performance every couple of years. These kinds of rapid growths are changing the standard business problem of managing and selling scarcity, like oil, to managing and selling abundance, like energy. The implications are staggering both in terms of how the world will change but also in terms of what future businesses will look like. This book is about how organizations are already taking advantage of this notion, exponential organizations, and about how you might evolve your current organization into this new framework.
In 2014, Jeremiah Owyang, a Founding Partner at Kaleido Insights, noticed that a number of companies emerged across multiple verticals that were completely disrupting the market place. These companies, like Airbnb and Uber, were outperforming the competition by a factor of four or more by staying small and flat but by leveraging the information provided by their customer base. In other words, they were destroying their competition by operating counter to what every other business in the world was doing. Owyang coined this phenomena the "collaborative economy.” [1] In that same year, Ismail, Malone, and Geest published this book, Exponential Organizations, that characterizes the kinds of companies who have had success with this new way of thinking. [2]
In Exponential Organizations, the authors describe how some future-thinking companies are taking advantage of an information-processing-capability phenomena that have been noticed by the likes of Gordon Moore, Intel’s founder, and Ray Kurzweil, famous futurist. Moore predicted in 1965 that the number of components on integrated circuits would double every year. [3] Kurzweil went further back and noticed the same doubling pattern as far back as the early 1900s. [4] Kurzweil came up with an interesting metric to track the behavior: what is the number of calculations per second per $1,000. In 1900, with Charles Babbage’s mechanical Analytical Engine, the number of calculations was extremely small: 0.000005821. [4] But every five to ten years, that numbered doubled. By 1949, the number was 1.837 and we were off to the races. By 1977, the number was 26,870. By 1998, the last year in the study, the number was 133,300,000. [4]
This phenomena of doubling compute power has manifested exponentially in research areas like artificial intelligence, robotics, biotech, nanotech, medicine, neuroscience, energy, and computing. All of these technologies have been doubling in price-performance every couple of years. What the Exponential Organizations’ authors say is that these kinds of rapid growths are changing the standard business problem of managing and selling scarcity, like oil, to managing and selling abundance, like energy. [5] For example, they predict that within 10 years, because of this exponential doubling just in the renewable energy space, there will be enough solar power available to produce five times what is needed in the world today. Energy will become essentially free and entrepreneurs in those markets will have to figure out how to profit in a new environment where the value of the “thing” is essentially zero.
The implications are staggering both in terms of how the world will change but also in terms of what future businesses will look like. This book is about how organizations are already taking advantage of this notion, exponential organizations, and about how you might evolve your current organization into this new framework.
The authors define the key attribute of an Exponential Organizaiton as “a minimum 10x improvement in output over four to five years.” [2] That is a metric that is easy to detect and the authors describe how the organizations that attain those metrics are different than the traditional business. One of the authors, Salim Ismail, is the founding Executive Director of Singularity University whose mission is to train visionary entrepreneurs to use these exponential ideas to solve some of the world’s intractable problems. [6] He believes that if you don’t transform your own organization into an Exponential Organization in the very near future, your competition will start to sprint away from you by leaps and bounds. [2] I have said similar things about the DevOps movement and I believe that most Exponential Organizations in the future will have embraced DevOps as the key development strategy to attain their goals. [7]
As the authors point out, most traditional organizations fail to see the doubling effect in their own industries. They project linearly as to what the future will hold. “That is: x amount of work takes y amount of resources, 2x needs 2y, and so on of ever-greater arithmetic magnitude.” [2] But Exponential Organizations work by reducing staff and hierarchy and informationally enabling their company. They enlist their customer base and their communities for every aspect of the business. “They float atop the existing infrastructure rather than try to own it.” [2] x amount of work takes less than y resources but the impact on growth is 2n (exponential). And these are just some of the recognizable companies that have managed to pull this off:
* AirBnb: 90x more listings per employee
* GitHub: 109x more repositories per employee
* Valve: 30x more market cap per employee
* Tesla: 30x more market cap per employee
Source: [2]
The authors note that successful Exponential Organizations tend to have three key components: a Massive Transformative Purpose statement, some key external attributes of SCALE (Staff on Demand, Community & Crowd, Algorithms, Leveraged Assets, and Engagement), and some key internal attributes of IDEAS (Interfaces, Dashboards, Experimentation, Autonomy, and Social).
An MTP is kind of a vision statement but it has more definition and is way more aspirational. It is not like a mission statement that states what an organization does. The MTP is more about what the organization desires to accomplish. It should be so well crafted that it starts a cultural movement within the community. Here are some example MTPs of Exponential Organizations [8]:
* TED: “Ideas worth spreading.”
* Google: “Organize the world’s information.”
* X Prize Foundation: “Bring about radical breakthroughs for the benefit of humanity.”
* Tesla: “Accelerate the transition to sustainable transportation.”
* Palo Alto Networks: “ To protect our way of life in the digital age by preventing successful cyberattacks.
* Unit 42 – Palo Alto Networks Intelligence Team: “Stop Bad Guys from winning.”
There is one thing to note. Transforming into an Exponential Organization is radical change for most organizations. As the authors points out, change from the status quo is almost immediately attacked by the organization’s immune system; an immune system that will fight any change that deviates from the current path. Organizations that have had success here build black ops teams that operate on the fringe of the organization and who report to the CEO only. This gives the black ops team some breathing room to make things happen without the constant pressure from the organization’s immune system.
That is what happened when Palo Alto Networks helped build the Cyber Threat Alliance; an alliance of security vendors dedicated to sharing adversary playbook intelligence with each other so that our common customers do not have to develop the intelligence themselves. When we began, there were many people within the Palo Alto Networks’ organization who thought it was nuts to give away our intelligence for free and complete insanity to share it with our greatest competitors. But the CEO gave the mission to a team on the fringe who could operate freely and gave them resources to accomplish the task. Today, the Cyber Threat Alliance is a non-profit company that consists of security vendors who share threat intelligence with each other every day as a best practice.
Conclusion
Exponential Organizations is not a must read for all cybersecurity professionals. You do not need the information in this book to do your day-to-day cybersecurity job today. I am not recommending it as a Cybersecurity Canon candidate. But it is an important book for business leaders as a roadmap for what we all might be facing in the near future; say 10-15 years. In other words, how we flip our business away from a scarcity mindset and towards an abundance mindset might very well determine if our organizations survive. How we information enable our organizations so that we break free of the traditional shackles of linear thinking towards exponential thinking will determine if we remain competitive in the marketplace.
Sources
[1] “The Exponential Enterprise: Your Most Feared Competitor Now Has A Name,” by Giovanni Rodriguez, Forbes, 31 October 2014, Last Visited 8 May 2018,
https://www.forbes.com/sites/giovanni...
https://www.forbes.com/sites/giovanni...
[2] “Exponential Organizations,” by Salim Ismail, Michael S. Malone, Yuri van Geest, 14 October 2014, Diversion Books
https://www.goodreads.com/book/show/2...
[3] “Cramming more components onto integrated circuits,” By Gordon E. Moore, Electronics, Volume 38, Number 6, 19 April 1965, Last Visited 4 July 2018,
https://drive.google.com/file/d/0By83...
[4] “Exponential Growth in Computing,” by Ray Kurzweil, The Singularity is Near, Last Visited 8 May 2018
http://www.singularity.com/charts/pag...
[5] “Exponential Organizations,” by Salim Ismail, at USI, 9 July 2015, Last Visited 8 May 2018,
https://www.youtube.com/watch?v=FNQSM...
[6] “Hi, We’re Singularity University; We prepare you to seize exponential opportunities,” Singularity University, Last Visited 10 July 2018,
https://su.org/about/
[7] “The Cybersecurity Canon: Site Reliability Engineering: How Google Runs Production Systems,” by Rick Howard 26 September 2017, Last Visited 11 July 2018,
https://researchcenter.paloaltonetwor...
[8] “The Motivating Power of a Massive Transformative Purpose,” By Alison E. Berman, Singularity Hub, 8 November 2008, Last Visited 11 July 2018,
https://singularityhub.com/2016/11/08...
[8] “Analytical Engine: COMPUTER,” by Paul A. Freiberger & Michael R. Swaine, Encyclopedia Britanica, Last Visited 11 July 2018,
https://www.britannica.com/technology...
References
[JOB] “How 20-Year-Old Kylie Jenner Built A $900 Million Fortune In Less Than 3 Years,” by Natalie Robehmed, Forbes, 11 July 2018, Last Visited 11 July 2018,
https://www.forbes.com/sites/forbesdi...
[FOX] “What is Moore's Law?,” By LEE BELL, 28 August 2016, Last Visited 8 May 2018,
http://www.wired.co.uk/article/wired-...
[DOG] “Abundance: The Future Is Better Than You Think,” by Peter H. Diamandis and Steven Kotler, Free Press, 2012, Last Visited 9 May 2018
https://www.goodreads.com/book/show/1...
Exponential Organizations by Salim Ismail,” by SHELDON NESDALE, 21 DECEMBER 2015, Last Visited , 8 May 2018,
https://www.marketingfirst.co.nz/2015...
“Organizations of the Future,” by Mark Looi, Medium, 9 May 2017, Last Visited 8 May 2018,
https://medium.com/@marklooi/organiza...
“SALIM ISMAIL - EXPONENTIAL ORGANIZATIONS,” USI Blog, 8 DECEMBER 2015, Last Visited 8 May 2018,
https://blog.usievents.com/salim-isma...
“THE SINGULARITY IS NEAR: When Humans Transcend Biology,” by Ray Kurzweil, Penguin, 2006, Last Visited 9 May 2018,
https://www.goodreads.com/book/show/8...
June 5, 2019
Детальный анализ быстро растущих глобальных компаний, с итоговыми рекомендациями, что нужно сделать/изменить, чтобы расти также.
Интересно было прочитать критические замечания в отношении Bridgewater Рэя Далио ( у компании нет цели, высокая текучесть кадров вследствие специфической корпоративной культуры и т.д.)
Интересно было прочитать критические замечания в отношении Bridgewater Рэя Далио ( у компании нет цели, высокая текучесть кадров вследствие специфической корпоративной культуры и т.д.)
Read
October 3, 2019It's very interesting and thought-provoking. It challenged me to ask questions about the future. It provided some context and explanation to some events from my past. I plan to give the book more thought and then read it again.
October 4, 2019
It has some interesting ideas about what the author describes as Exponential Organizations (ExO) but overall I think the book is unnecessarily long and repetitive.
November 11, 2019
a great book for everybody (from Tech to Business profiles) to understand how to sophisticate current and emmerging organizations, maybe the term of Exponential feels pretentious but you can assume it as an aspirational more than a sure result of following all the steps.
May 13, 2017
Despite having valuable information, it is a book on the blue unicorn model that relies on some bets, such as the heavily mentioned 3d printer, when it tries to predict some aspects of the future. Mentions on Taleb, Ries and Blank, put it as an average book. Good book for audible.
May 4, 2018
An excellent guide to form or convert a company to an Exponential Organization.
I recommend reading first, Abundance from Peter Deamandis
I recommend reading first, Abundance from Peter Deamandis
October 16, 2017
Excellent primer for knowing what the future of work looks like!
September 13, 2016
The book would probably be useful for corporate execs who don't follow technology trends. Less so for those who do.
December 29, 2015
If you like the Lean Start up approach, this book looks at the same ideas and gives you a blueprint for creating a business that can grow exponentially no matter if you are a 3 person, or 30,000 person organisation. It's less about how to come up with a great idea, and more about how to build the business around it. It has some really interesting insights into how larger organisations can create, invest in, develop businesses that are free to grow and change without the constraints of the larger parent company. Gives great rules/guidelines for how to setup a business that could grow quickly and then get out of the way so it can grow.
October 29, 2015
Eye opening
I really enjoyed reading this book. It was eye opening and enlightening. It makes you change your perspective and look at everything with fresh eyes. It helps us understand that the world is moving at a pace faster than we think, and what are the consequences for our companies and our jobs. I recommend to all professionals who want make a difference and have a positive impact in their companies and especially to CEOs who absolutely need to have this information in mind as they drive their businesses.
I really enjoyed reading this book. It was eye opening and enlightening. It makes you change your perspective and look at everything with fresh eyes. It helps us understand that the world is moving at a pace faster than we think, and what are the consequences for our companies and our jobs. I recommend to all professionals who want make a difference and have a positive impact in their companies and especially to CEOs who absolutely need to have this information in mind as they drive their businesses.
February 8, 2017
It is a fundamental book to get your mindset to shift from achievable targets to moonshots and from linear to exponential thinking. The only issue I find with the book is that it is presenting it as a one and done and as the only solution/approach. I see the potential for disruption being finite, while the possibility for continous improvement and/or innovation infinite, so I don't like the picture it is presenting of a bigger hammer to target the same set of nails, would rather go for it being by far the best option whenever it is available.
April 27, 2017
A very novel perspective on the characteristics of fast growing and disruptive organizations. The author creates a sense of urgency around the need to leverage information by using technology. The book is filled with examples and tips that can be applied to different types of companies. This is a highly recommended read for anyone in the business world wanting to maintain relevance in a fast changing world.
It should be read a few times to really get the most out of the insights it provides.
It should be read a few times to really get the most out of the insights it provides.
May 8, 2016
The SCALE IDEAS concept is interesting but the format of 100+ pages book is way too long. You might want to try finding an excerpt or a TED talk by Ismail instead of enduring the neverending name-dropping and catalogue of quotes and examples that he had to stuff the book format with. Also, the author can't help it but these very examples dated 2011-2012 are becoming rapidly obsolete.
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