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Written by Francisco Palao Reines
on October 09, 2019

Every organization needs to adapt to the disruptions happening across its industry. Exponential technologies are changing our world and the way we do business, which can be seen as both a challenge and an opportunity. A new type of business is successfully emerging in this new age: The Exponential Organization. Now is the time to act.

Welcome to the beginning of the 4th industrial revolution, where you still have a chance of surviving — but better yet, maximizing on this massive opportunity on the horizon for every industry.
This new revolution is bringing together several exponential technologies such as Artificial Intelligence, Robotics, 3D Printing, Drones, Biotechnology, and many more. The development and accessibility of these technologies has three major implications on businesses:

  • Democratized access to technology: anyone can disrupt your industry! We are living in a time where what used to be accomplished by nations, is now being done by organizations and, what used to be done by organizations is now being overcome by individuals. For example, the 14-year old boy Jack Andraka who discovered a new method for detecting early stages of pancreatic cancer just by researching Google. This new method is thousands of times cheaper and over 90 percent more accurate than the previous alternatives. Another great example is Danit Peleg, a 20-year-old student who created her own 3D-printed fashion collection at home. Now she is showcasing her designs at international fashion shows and disrupting an entire industry.
  • All industries will be disrupted: beyond digital transformation! Due to digitalization and global access to exponential technologies, all industries are transitioning from scarcity-based business models to abundance-based business models. This is the reason why traditional hotel companies (based in renting a limited number of rooms) are being disrupted by Airbnb (based in renting an unlimited number of rooms, without owning any of them); or why new 3D-printed fashion companies can provide us with access to unlimited designs and clothes. This is not only about digitizing your business; it’s about accessing abundance by leveraging exponential technologies and new business models that will disrupt your industry. As Peter Diamandis, who is the author of the best-seller Abundance, said: “You either disrupt your own company or someone else will”.
  • New breed of businesses: the age of Exponential Organizations! David Rose’s words have never been more true, “Any company designed for success in the 20th century is doomed for failure in the 21st ”. Using new organizational techniques and exponential technologies, there is a new breed of organization taking over industries worldwide and growing 10x compared to their peers. Described and dissected by Salim Ismail in his best-selling book, Exponential Organizations, it’s required reading at the world’s top companies and was named Fortune’s Top 5 Business Books. Some examples of ExOs are Airbnb, which is tapping into an abundance of places to stay and is currently the biggest hotel chain in the world without owning a single room or building; Instagram, which is tapping into an abundance of pictures and is currently the most valuable photo company without producing or selling cameras; Netflix, which is tapping into an abundance of content and is currently the fastest growing television network with no cables; and Uber, which is tapping into an abundance of drivers and is currently the largest taxi company, owning no vehicles. None of these companies existed fifteen years ago.

The solution to survive the 4th Industrial Revolution? To either become an Exponential Organization or adapt current businesses following the ExO principles. It’s key to overcome external disruption and to operate on the same level of the ExOs that may be emerging in your industry.
However, even though we knew the direction we want to evolve our organization, the main challenge for existing organizations is that the immune system always attacks innovation. There are several and great innovation methodologies, but in my experience, none of them tackle the immune system problem. For example, applying Lean Startup or Design Thinking provides us a great way to find out new value propositions that will fit the market, but those methodologies don’t prevent that the immune system of the organization doesn’t kill new ideas.  

The three main principles to tackle the immune system problem in transformation processes are:

  • Support from the top: Wake them up! While innovative ideas can (and actually should) come following a bottom-up generation approach, no transformation process will succeed if there isn’t full support from company leadership. Inspirational talks, books and workshops on exponential technologies and disruption will be key in creating awareness of industry disruptions. It’s up to you to plant the seed and help your organization embrace the transformation process.
  • Do it yourself: keep your DNA! Established organizations usually seek assistance from consulting companies for innovative ideas and initiatives however, once proposed the mothership finds a way to resist (the immune system problem!). Some established and large organizations also try to collaborate with or buy external startups however, once integrated into the main business, issues arise (the immune system again!). The best approach is to train an internal team in the organization to ideate and develop innovative initiatives. This will keep the original DNA prevalent, creating a harmonious process for the future. If there is a need for external help, try to look for consulting companies that offer a coaching-based approach that will help the internal team come up with the initiatives while receiving an external support focused on guidance.
  • Balancing transformation and risk: place disruption on the edge! Let’s face it, transforming an existing organization with a completely new and disruptive business model is almost impossible. Adaption is your best approach, and you can start by implementing incremental innovations that will put your organization at a level playing field with the current disruptive environment. For example, car manufacturers can conceptualize vehicles that adhere to the sharing economy trend, offering connections and API for Uber, Blablacar, Getaround, etc. In parallel to the internal innovations, we still want to launch and build new disruptive business models, but we will do this on the edge of the mothership, away from the immune system, limitations or interferences. And once these new business models succeed on the edge, just let them grow outside of the mothership instead of plugging them back (otherwise the immune system will attack them!).

How to do this? A few years ago, Salim Ismail and myself designed a 10-week process called the ExO Sprint to help organizations to overcome the immune system problem by moving forward the mindset of the organization two years in just ten weeks in order to transform the business into an Exponential Organization. Since then, we have been implementing the ExO Sprint in several organizations around the world with the help of OpenExO, a global transformation ecosystem with 500+ ExO practitioners in 60+ countries. Last, we decided to open source the ExO Sprint methodology in the book Exponential Transformation.

Applying these principles allows organizations not only to adapt themselves to industry disruption, but also to create a new ecosystem of business on the edge, that may lead and transform the whole industry and beyond. Actually, most of organizations are always thinking about how to protect themselves from new competitors or from Google, Amazon, etc. But this approach is quite risky, since the whole industry may be disrupted (so we won’t have a place inside it anymore). Instead, what organizations should do is using their current position to disrupt not only their industries but also other ones where they can play a role.

The point is about transforming people’s mindset so they will transform the organization, and maybe the whole industry.

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