A new business scenario is emerging in the world thanks, among other factors, to technological advances and the digitalization of many of our daily tasks such as shopping, banking services, health, public transportation, and work itself, among many others. This new scenario has undoubtedly benefited companies and customers by offering speed, effectiveness, and security.
The World Economic Forum has called this period we are living through "The Fourth Industrial Revolution," as digital technologies are now changing at a faster pace than ever before due to their exponential nature.
The growth in the number of people connected to the Internet -which is already around 4 billion and shows that we have an abundance of resources in a giant global market- and the access to exponential technologies -to which more and more people have access-, have led to an acceleration of innovation.
In this sense, the technological advances that have been developed as a result of this Fourth Industrial Revolution present a window of opportunity for states and international organizations to address global problems in a much more effective and coordinated manner. New technologies such as Blockchain, Big Data, Quantum Computing, and Artificial Intelligence are among the technologies that bring the greatest expectations, for example, in climate change mitigation.
Climate change was a niche topic associated with “hippies” who recycled and used hemp bags. Today, however, recycling is common practice. Moreover, the same drive toward sustainability is occurring in business on a global scale. This contagion behavior is one of the characteristics of the so-called tipping points that writer Malcolm Gladwell calls “epidemics in action.” It is a behavior where small actions have significant replication effects at the individual, corporate and governmental levels; climate awareness is everywhere and conditions our daily actions.
The Benefits of the Technology
Advances in machine learning and algorithms with higher-than-human capabilities have brought the benefits of exponential technology to the daily lives of all people. Still, its impact, in particular, has been in solving global problems such as biodiversity loss and other threats to the environment. Some examples are as follows:
In recent years, a coral bleaching phenomenon in Australia has already affected 93% of the Great Barrier Reef, stretching 2,300 kilometers.
An algorithm and a series of mapping technologies designed by researchers at Queensland University of Technology (QUT) and the Australian Institute of Marine Science are helping to protect this ecosystem. It involves a team of drones programmed to fly over the Great Barrier Reef at 60 meters to collect and analyze data to classify bleaching levels and compare them with underwater surveys.
"The algorithm makes it possible to compare large databases that can be used to identify other areas at risk," says Felipe González, leader of the project. He aims to identify regions at risk to allocate resources and protection methods more effectively.
Something similar is being done with Amazon, the world's premier ecosystem. Greg Asner, an American ecologist whose global work has focused on ecosystems, conservation, and climate science, uses the Carnegie Institution of Washington's aerial laboratory to fly over the region with a telescope whose images are processed with an algorithm to generate highly detailed maps of tree diversity and design survival strategies for each species.
Thanks to this technique, scientists have not only discovered 36 previously unknown forest clusters but have also found more than six million hectares threatened by mining and logging. Asner's idea is to take this technology to a global scale to map the planet monthly, get the best picture of biodiversity change and develop the necessary protections.
Algorithms and AI are also being used to safeguard protected marine species, such as sharks and turtles, which are often accidentally caught in tuna fisheries.
The Nature Conservancy, a global environmental NGO, is working on different islands in the Pacific Ocean (Palau, Marshall Islands, Solomon Islands, and Micronesia), installing electronic surveillance systems (camera sensors and GPS) on board fishing boats to record all the activity that takes place on them and, through an algorithm, identify what type of fish has been caught.
Usually, the tuna boats return after a two-month trip with 800 hours of video reviewed by observers; the algorithm does this more quickly and makes it easier to locate when and where fishing activities are taking place. "We want to know how many seabirds, sharks, and turtles are caught on those boats and how many are released alive," explains Matt Merrifield, director of technology for the NGO.
The Importance of Data
Having the right databases in place - enabling the efficient collection, classification, and understanding of information - enables analytics that drives innovative decision-making. Jeff Weiner, CEO of LinkedIn, has said that "data drives everything we do," and that applies to all organizations showing exponential growth: Without massive volumes of data used in ways that add value, companies like Facebook and Google would not have become so ubiquitous.
What happened during the pandemic? Local organizations leveraged their data and deep knowledge of their markets to chart new models that helped them survive and put them ahead of their competitors.
Being an exponential enterprise means knowing how to derive value from available data, so you need to know what data you have or where it resides; data systems may need to be modernized and integrated to ensure its free flow throughout the organization.
But it's not just about knowing and controlling the data. It's about laying the groundwork for analysis that delivers real business value. To do this, the first thing will be to align the data strategy with the business strategy and establish a roadmap to get to the desired state, which means overcoming traditional data silos so that organizations can collate, cleanse, avoid duplication and integrate data for practical analysis.
Another important factor about data is the quality of the data, as this determines the quality of the system analysis. Good decisions cannot be made with insufficient data. Therefore, data quality has to be an ongoing priority.
Once the foundation of analytics is in place, advanced analytics and dashboards need to be implemented to remove the noise from the data and ensure that the information can be easily understood and acted upon. The human factor cannot be overlooked for data management, governance, and, ultimately, analytics to be effective. All employees must be empowered to meet data-driven business objectives, and where appropriate, data literacy must be prioritized.
The Exponential Organization
Organizations that have capitalized on technological advances are driven by innovation. They understand the abundance of technologies, resources, talent, and ideas and use them creatively to generate disruptive value by taking advantage of the information. They are identified as Exponential Organizations (ExO's).
A feature that distinguishes them is the ability to leverage state-of-the-art and exponential technologies; they fearlessly bet on the future, are consistently informed on discoveries, and always think about ways to determine how to include them in their projects. But above all, they are obsessed with meeting the needs, concerns, and desires of their customers, so they use experimentation and data to define and constantly improve the value proposition of their services or products.
This does not mean that they are large organizations, but rather that they are the ones that achieve a lot with little. They take a small input and achieve a very large output; in other words, they are organizations designed to scale to the highest levels and solve big business and global problems, such as environmental stewardship.
Salim Ismail, former executive director of Singularity University (SU), says that ExO’s scale by exponentially decreasing the marginal cost of supply. "Airbnb’s marginal cost of adding a new room is almost zero. This happens similarly with Wikipedia, TED, or thousands of other similar ExOs. We've never seen this before in business. When you lower the cost of supply, you lower the denominator, and your market capitalization explodes."
ExO’s are characterized by the way they take advantage of fast-paced technology and social trends to use them to grow exponentially. They are organizations that connect very well with abundance and are also efficiently managed.
But becoming an exponential organization involves delving into understanding the ExO model, whose first and foremost component is developing a Massive Transformational Purpose (MTP), which defines the purpose the organization is striving to achieve. As Albert Einstein put it, "Live with purpose. Don't let the people or things around you get you down"; purpose is the positive thinking that should always be present.
The Massive Transformative Purpose
The Massive Transformative Purpose is the higher aspiration of the organization and is therefore the key ingredient to creating a transformationally successful entity; it is the lifeblood of what employees do day in and day out to keep operations running and customers happy; it guides people both inside and outside the company; and drives away people who are not interested, which saves a lot of time.
Perhaps the best way to understand this is through a clear example: Netflix considers its MTP to be: "Providing the best video entertainment to people, wherever they are." At first, this meant sending people DVDs in the mail, which led to driving Blockbuster out of the market, but Netflix saw that DVDs were going to die, so it started testing streaming and launched it eventually. Then it sensed it would have problems being held hostage to other people's content, so in 2013 it launched House of Cards as its first original show. In 2018, Netflix created 2,500 hours of content versus HBO's 500. Both of these shifts (from DVD to streaming and then to original content) fall under Netflix's MTP.
Surely it is now clear that the MTP functions as a compass for the organization, as it allows it to continue to set the course by allowing adaptability and innovation to always achieve its purpose no matter the obstacles along the way. It reflects the ambition and greatness that the company seeks.
According to Ismail, the aspirations in the MTP are not limited or technology-specific. Rather they are intended to capture the hearts, imagination, and ambitions of those inside and outside the organization (Ismail, 2014).
Key components of MTP are Interfaces, Dashboards, Experimentation, Autonomy, and Social Technologies. Let's briefly look at each:
Interfaces are automated algorithms and workflows that allow routing information to the right internal people at the right time. In the case of an ExO, its interfaces are carefully constructed in a human-centric design to optimize every process the company carries out. Interfaces act as a bridge between the external growth drivers and the internal stability of a company, i.e., they connect the outside world to the company and fall into two main categories:
- User interfaces are how users interact with your product.
- Application programming interfaces (APIs) are the way other applications automatically interact with your product behind the scenes.
An example to understand it better: is Airbnb. On the outside, a user can book a room worldwide by filtering complex data on the website. On the inside, this activity drives a lot of consumer data that Airbnb can view and use to improve its business over time. With quality interfaces, companies can avoid human error and increase their scalability.
Dashboards are responsible for measuring and managing the organization and customer and employee data. They are essential for ExO because its rapid growth requires the integration and monitoring -in real time- of business, individual, and team evaluations.
Galileo once said, "Measure what is measurable, and what is not measurable, do," or as Airbnb's Brian Chesky said, "What you don't measure, you ignore."
It is important to decide what to measure so that if they contain essential employee and company metrics, dashboards allow you to give real-time visibility into those metrics, which helps drive growth. In addition, when employees are empowered to make quick decisions, thanks to improvements in data organization, they can often outperform their competitors.
Experimentation refers to the constant testing of assumptions that help validate or invalidate the hypothesis through fundamental ideas based on methodologies and techniques such as Lean Startup, developed by Bob Dorf, Steve Blank, and Eric Ries.
Steve Blank says: "No business plan survives its first contact with customers." The biggest mistake entrepreneurs make is to focus 100% on the product and 0% on the customer. Everything, especially human behavior, is a guess until it is tested in reality.
Jeff Bezos, CEO of Amazon expresses, "Most large organizations embrace the idea of invention but are unwilling to suffer the series of failed experiments necessary to get there. Superior returns usually come from betting against conventional wisdom, and conventional wisdom is usually right. If there is a ten percent chance of a 100-fold return, you have to bet every time. But even then, you'll still be wrong nine times out of ten".
As for autonomy, it refers to self-organized, multidisciplinary teams with decentralized authority. Autonomy fosters innovation, creates a culture of trust, increases employee satisfaction and enables readiness for change.
Smart companies empower all front-line staff; teams perform better when they can react to new information and make decisions that benefit the company without interference. This allows for quick and informed decisions, which can be a competitive advantage.
Autonomy accelerates growth because it allows great ideas to emerge from the front line. It allows companies to move faster.
Social technologies enable interaction and connection with the community; it facilitates increased engagement through trust and transparency, accelerated information sharing, improved knowledge and quality of learning, and accelerated decision cycles.
They are the communication tools that enable small, autonomous teams to move quickly and keep companies on top of projects and other work. They contribute to transparency and camaraderie, two facets of teamwork critical to keeping employees productive and happy.
ExO's are Making a Difference
There’s been a response to growing concern about environmental problems related to the rising standard of living of the world's population. n 1983 the UN General Assembly convened an international group of environmental experts, politicians, and officials to form the WCED (World Commission on Environment and Development, also called the Brundtland Commission), which was charged with proposing long-term solutions for achieving sustainable development and continuing it into the 21st century.
The Brundtland Report included chapters covering, among other topics within, sustainable development, the role of the international economy, energy, industry, and proposed legal principles for environmental protection. In addition, the report is known for its definition of sustainable development: "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."
From the point of view of the economy and industry, given the aforementioned examples of organizations that are using disruptive technologies to support sustainable development, there is no doubt that these types of institutions identified as ExO are undoubtedly taking on a responsible role since, due to their conformation and characteristics, they are capitalizing on exponential technologies to achieve more things, in an innovative way, faster and more efficiently in favor not only of consumers but also of the entire planet.
These exponential companies demonstrate that greater efficiency means less use of resources and, since the staff is employed on demand, less mobility is achieved, which translates into less pollution. Also, technology allows for less use of physical facilities, and social technologies facilitate collaboration, linking with others, and greater efficiency.
Now, ask yourself what your MTP is and if you have not yet defined it, think about the following:
Can you determine what needs of your customers (current and potential) you can meet? Again, it's not about pleasing everyone but about being the best at meeting the needs of well-identified groups that will make you grow.
What are the disruptive technology tools that will help you grow exponentially?
Do you have your priorities straight? Remember that your focus should be on the fundamentals of your business.
Do you have measurement dashboards? Keep in mind that data will allow you to make clear decisions. You need real-time information to understand your performance.
I invite you to transform your mindset and adopt a leadership that allows you to put aside the external environment and focus on those actions you can control. Exponential Growth is a decision, not serendipity.
ExO Insight Newsletter
Join the newsletter to receive the latest updates in your inbox.