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Nov 10, 2017 @ 10:11 by Martina Sudmann

Digitalization X.0 – ExO as the key success factor for companies

The hardest competition will no longer be coming from China or India. Your worst nightmare will take the form of a new type of organization where neither heritage, nor reputation, nor current sales indicate your market survival. We’re talking about the ‘Exponential Organization (ExO).’

Ownership is king – right?

Ownership has always been a central tenant for western civilization. It enabled people to manage scarce resources and ensures a relatively predictable, stable environment. With it came status, equity and legacy. We built our society, government, companies and hierarchies to support, manage or protect our assets. This behaviour makes sense in a world of scarcity, but times are changing, and we are now entering a world of abundance.

After thousands and thousands of years of this behavior, old habits die hard. Companies continue to own their most precious assets and enforce hierarchies to manage them. Output is measured in terms of labour and capital inputs. This is what we call a linear organization.  Linear organizations are characterized as top-down and hierarchical, they are driven by financial outcomes, they are risk intolerant and are convinced that innovation comes from within the company. They control their own assets, have a large number of employees and heavily invest in their Status Quo. The most successful traditional companies can only achieve as much as arithmetic outputs per input.

Contrary to this is the Exponential Organization (ExO). An ExO achieves geometric outputs per input. How you ask? By riding the doubling-exponential pattern of information based technology. They turn the traditional organization inside out. They do not own assets or workforces. They leverage external resources to achieve their main objectives. The less, the merrier – so to say. 

Linear vs. Exponential Organizations

Sneak Peek into the Exponential Organization

The question arises how a linear organization can transform to an organization driven by exponential growth. Let us take a look at the key characteristics and attributes that drive an ExO.

As a first step start defining a “Massive Transformative Purpose” (MTP), which gives the organization a mission and goal. A MTP aims to generate a cultural movement through inspiration. Ultimately resulting in a community, tribe and culture around the Exponential Organization. A MTP:

-       Is huge and aspirational

-       Is unique to the company

-       Has a significant transformative potential for an industry, community or the planet

-       Unites and inspires action

-       Enables agility and learning

The MTP is supported and executed by ten attributes that can be found either internally (IDEAS) or externally (SCALE).

SCALE:

1.     Staff on Demand

Tap into the vast worldwide network of talent and expertise when needed instead of owning and organizing a large workforce.

2.     Community & Crowd

Build a community with shared interests to create loyalty to ExO and leverage the crowd for idea generation, funding, design, distribution, marketing and sales.

3.     Algorithms

Turn big data into smart data to mitigate and compensate for human bias in decision making. Drive machine and deep learning and bolster automation.

4.     Leveraged Assets

Try to own only scarce resources and assets. All other resources are borrowed, leased or shared.

5.     Engagement

Use elements of gamification to increase loyalty and amplify ideation. Will also help to convert your crowd to a community due to higher engagement levels.


IDEAS:

1.     Interfaces

Interfaces are the bridge between external growth drivers and internal stabilizing factors. Algorithms will help to filter external abundance into internal value and automation allow for scalability.

2.     Dashboards

Transparent, real-time tracking of critical growth metrics to provide continuous, critical feedback. Minimize the exposure from errors because of short feedback loops.

3.     Experimentation

Find success through low-cost, rapid trial-and-error methods of innovation. ExOs pursue a lean startup methodology of testing assumptions and constantly experimenting with controlled risk.

4.     Autonomy

Avoid hierarchy and centralized structured to enhance speed and bolster innovation. Give your employees their space and freedom to perform at their best.

5.     Social Technologies

Shorten time from information to decision-making by using social networks that enable quick and efficient collaboration.

Research indicates that implementing a minimum of four of the above-mentioned attributes will make you an ExO – congratulations! But keep in mind – every companies’ journey to ExO is different.

ExO Attributes (Source: Exponential Organizations, Salim Ismail)

Open your next chapter – now!

Overwhelmed? No worries, we are here to help and provide further insights on how you can become a company driven by exponential growth. If you want to learn more about this topic please do get in touch.

So, up next: first glimpse of how to become an Exponential Organization yourself. 

Martina Sudmann is Analyst at dgroup. Her specialization lies within agile ways of working, executing new organizational structures and frameworks and venture development.  

 
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