Exponential organizations are dominating the competition. Here’s how you create one.

By Jacob Morgan Author and futurist@JacobM

In the future of work, you’re either the one causing change or you’re the one being changed. The most successful companies are the ones that are at the forefront of innovation and disruption, and they are seeing wild growth. How would you like to see 10 times performance improvement of your organization in a year? All you need to do is become exponential.

Salim Ismail is an innovator and thinker who has worked with some of the best organizations around the world. He’s also the Founding Executive Director of Singularity University, which looks at the fastest-growing companies in the fastest-growing industries. His view is so large that he challenges his clients and students to positively impact 1 billion people by leveraging new technology–no easy task, right? But Salim says it’s possible for exponential organizations.

So what does it mean to be exponential? Salim first noticed these companies about five years ago–they were the organizations that used a small footprint to leverage accelerating technologies to scale outside their traditional boundaries. As opposed to the larger companies that had a hard time innovating because of their size, exponential companies kept things compact and agile so they could adapt as needed. There are about 70 exponential companies on Salim’s watch list, and they’ve all had incredibly success that their competitors can’t even touch. To be considered “exponential” in Salim’s eyes, an organization must have a minimum of 10 times performance increase over its industry peers.

What does it take to be exponential? Salim has identified 10 characteristics of exponential organizations–five external and five internal. Most exponential organizations only do a handful of these characteristics, so you can choose what works best for your company. According to Salim, an organization can reach 10 times performance improvement by adopting just four of the characteristics.

The five external characteristics spell our SCALE:

S: staff on demand. Just like Uber doesn’t actually employ its own workers, we’re moving to a model where companies outsource most of their major work, which gives them more flexibility to adapt to market changes quickly.

C: community and crowd. Exponential organizations use collaborative means to build community and scale their work.

A: algorithms. UPS is a good example of a company using an algorithm to maximize its efficiency–in this case, finding the best routes for its trucks.

L: leased assets. Similar to having staff on demand, exponential companies have assets on demand and don’t own much of what they use.

E: engagement. To create connectedness between the organization and the community, exponential organizations use things like digital feedback, incentives, and gamification.

The five internal characteristics show how to navigate an exponential organization’s internal structure. They spell our IDEAS.

I: interfaces. These organizations have very customized processes for how they interface with customers and other organizations. An example of this is Apple’s strict rules on what reaches its app store.

D: dashboards. To manage employees with a light weight and high touch, exponential organizations use real-time management systems and dashboards to measure business metrics.

E: experimentation. Exponential organizations operate like lean start-ups–they are constantly adapting, tweaking, and tuning their efforts to match external factors.

A: autonomy. Many exponential organizations streamline with a decentralized authority structure, which means no reporting structure or job titles.

S: social. Using collaborative technologies, these organizations manage real-time communication to keep all employees up to date.

Becoming exponential doesn’t happen overnight, but by adopting a few of the characteristics that best match your structure, you could put your company on the path to rapid change and growth.

Comments

This article looks at exponential organizations and provides useful tips on how to create this type of company. One of the main characteristics of these companies is extremely fast rates of growth.

This is achieved through use of existing assets, extensive use of technology and collaborative alliances with partners, which reduces the cost of directly employed labor.

Vocabulary

Forefront: leading position.

Leveraging: the use of credit to enhance one’s speculative capacity.

Footprint: the mark left by a foot; here means presence in the market.

Agile: able to move quickly.

Handful: a small number of something; few.

Gamification: the application of game playing to other areas of activity.

Dashboards: instrument board in a car.

Tweaking: improve a mechanism or system by making fine adjustments to it.

Tuning: adjust to the correct or uniform pitch.

Streamline: make an organization or system more efficient and effective.

Tips

Salim Ismail has worked with some of the best organizations around the world. This is an example of the present perfect tense which is used extensively in English. Although the action may have begun in the past, there is always a connection with the present. The form is: subject +auxiliary verb have + past participle. E.g. I have done the washing.

He worked for Boeing for 5 years. (He does not anymore)

He has worked for Boeing for 5 years. (He still works there now)

The other important aspect is that the present perfect cannot be used with definite time; yesterday, 2012, last week, ago, last year, yesterday etc.

Only adverbs of indefinite time can be used with the present perfect; recently, already, yet, just, or for periods of unfinished time; today, this week/month/year.

With the present perfect we are more interested in the action than when it took place.