What Are Exponential Organizations (ExOs)?
In a sentence, accelerated, almost explosive growth is what makes Exponential Organizations.
The term exponential organizations emerged to differentiate companies that had growth much higher than the market average, in a short period of time.
The expression was created by Salim Ismail, Yuri Van Geest and Michael S. Malone, co-authors of the homonymous work – which we will talk more about at the end of the text.
If you go back to math classes , you will remember that the exponential function is one where the base number is multiplied by itself by the amount of times indicated by the exponent.
For example, 2 4 is equivalent to 2 x 2 x 2 x 2, which results in 16.
That is, the term exponential was used by the authors to denote a type of organization that accumulates gains in an increasing and accelerated way , as in the exponential function.
Main Characteristics Of Exponential Organizations
But what characterizes an exponential organization? Why does she grow more than the others?
Two main differentiators of a company like this are both its ability to innovate (do it differently) and scale (serve many customers at low cost).
That is, the exponential company perceives (before the competitors) a market opportunity and presents an innovative solution, something really unprecedented, either in terms of content or in the way it is delivered.
Let’s use one of the most obvious cases to highlight an example: urban individual private transport.
If before taxis were the only alternative and had the entire market, today the reality is different and new applications are constantly emerging aimed at meeting the demand of those who want to get around in big cities safely, quickly, economically and with full support. that technology offers.
And speaking of technology, it is at the heart of ventures like these.
You will hardly see a company with a large headquarters and many thousands of employees among the top exponential organizations of the moment.
Exponential companies make use of the possibility of remote work and, more than that, connect the workforce to the demand for this work, making use of good contracts, some publicity and an excellent technological base.
At the same time, the idea is to invest in collaborative models, which are independent of formal employment contracts, but which have a clear incentive structure for each of the participants.
A current term that summarizes this relationship is the so-called staff on demand , or if you prefer, staff on demand .
The meaning is nothing more than having only the employees necessary to make the business run, varying the size of the team based on the demand of the moment.
All the rest of the work can be developed using algorithms , the home office or the collaborative economy.
Also, the company will never have exponential growth if it doesn’t generate engagement .
It is quite common for there to be strong feedback schemes and a reward system for brand involvement.
But perhaps the main feature of ExOs is their interfaces.
They start from the idea that every company has heterogeneous consumers , each with their own way and preferences.
A good example of a company that understands this need is Netflix .
Although video streaming is the same, the subscriber profile is unique.
Therefore, you will hardly have the same movie nominations as your friend.
These differences are managed using an algorithm developed by the company itself , which is based on dozens of parameters to offer a customized list not only for each residence that subscribes to the service, but for each person who lives there!
Linear vs Exponential Organizations
Linear organizations, as their name suggests, work in a bureaucratic and predictable way.
Its managers know exactly the limit of their resources and estimate with a good degree of certainty what their gains will be. It is the traditional model and to this day the most common on the market.
An exponential company works with a scalable schema.
In other words, a model that can be reproduced over and over again, serving a growing customer base and with considerable gains in scale (the more we produce, the cheaper each unit).
In addition, linear organizations work with a hierarchical system that has the appearance of the 20th century… In practice, everyone has their job and function, with a title and job description. Therefore, power and decisions are centralized.
On the other hand, businesses that show exponential growth are already born with a culture of decentralization and appreciation of the autonomy and knowledge of the professional, which implies a more flexible production system.
But the main differences between an exponential and linear organization are in adapting to change and in dialogue with the public.
While the second is more resistant to change and communicates with the consumer as a target, the first understands that it is important to be in permanent transformation and that customer needs must guide these variations.
The Future Of Organizations: Predictions, Changes And How To Adapt
Exponential organizations are built on assumptions that help fuel their rapid growth.
In general, we can summarize the performance in seven main points.
Check out what they are:
New (And Relevant) Markets
New niches and market trends as an alternative to seek faster growth.
Maintain this development for a period longer than the duration of the novelty itself.
Therefore, it is advisable to find a solution to an existing problem, even if it is not yet clearly perceived by the target audience.
Thus, the reason for an enterprise ends up being confused with the purpose of serving its market.
How To Increase The Value Of The Offer That Already Exists
A path that has been pursued by entrepreneurs of all sizes is to (re)value a product that is already on the market, either from the company itself or from a competitor – the quest is to improve the offer , in the eyes of the customer.
For this, it is necessary for entrepreneurs to leave the office and test in the field the hypotheses of how to provide a better service, what are the difficulties and objectives of the customers who buy our product.
The truth is that most exponentially successful organizations were born from the perception that it was necessary to improve what already existed.
Again, the example of taxis can be used.
The third way is to try to scale up without losing efficiency, while keeping quality and costs under control – much easier said than done, but this is the way…
For this, it is essential to look for new ways of execution , which even imply going outside the conventional and testing, based on the assumption that the error is part of the learning process.
Offering the best experience at the lowest possible operating expense – this is perhaps one of the biggest challenges to making your idea scalable and profitable.
Dividing powers and attributions is also a way of breaking with the linearity of organizations.
As we have seen, traditional companies have a very demarcated hierarchy, which in many cases hampers the possibility of accelerated growth.
Giving more autonomy to key employees : this is the way to make the most of the potential of each one of them. It’s not technology that is at the heart of an exponential company – it ‘s the people !
Innovation is the most prominent factor of exponential organizations and must be in the brand’s DNA .
Whether through technology or even simple but underused ideas, don’t be afraid to dare and go beyond what other companies have already done.
It’s no use having a great innovative idea if it’s not able to sustain itself financially over time – even if it takes a while to arrive, profit is what keeps the company alive.
Everything takes time, but some projections are necessary to protect yourself from risks and thus attract good professionals and investors.
Of course, when we talk about sustainability , we are also referring to social and environmental balance.
Consumers in exponential organizations are demanding and are concerned not only with the service offered, but also with the social and environmental impacts of its production, consumption and disposal.
Never forget that.
In the subtitle of the book “ Exponential Organizations ” the concept of the last premise is already clear: accelerated growth.
It is written in the form of a question on the cover of the book: “ Why are they ten times better, faster and cheaper (than traditional companies)?”.
The answer is very broad, but we have gone through some of the central points in the items above.
3 Examples Of Exponential Organizations
Want to create your own exponential organization?
After all the concepts, it’s time for inspiration .
The following three examples are very helpful at this point.
Today, Netflix is already the world’s leading streaming entertainment service. In all, there are more than 130 million monthly subscriptions spread across almost 200 countries.
With more and more people connected, the company took advantage of a market opportunity (few options for paid leisure for the family) and left the traditional movie rental companies behind.
In addition to playing existing content, Netflix has started to produce its own series and films and is already a real power in the area, with an investment projected for 2019 of more than a billion dollars on this front.
Its performance in the market had such an impact that even pay-TV channels saw their audience migrate to the platform and had to move.
This phenomenon is also explained by another fundamental point: the price . Netflix’s monthly fee is considerably lower than that charged for closed television packages.
Currently, its contents are starred by the main actors in Hollywood and are even nominated for an Oscar.
More than that, the company specializes in making series and films available from the most varied places in the world, bringing the brand closer to the local audience and inserting a touch of modernity by giving voice to filmmakers and actors from outside the traditional Hollywood circuit.
A pioneer in passenger transport applications in the world, Uber is present in more than 600 cities around the world and has more than 75 million users .
The company estimates that, per day, it makes 15 million trips.
It was yet another exponential organization that took advantage of a demand of global reach: the deficiencies and difficulties in obtaining private individual transport.
That’s how Garett Camp and Travis Kalanick came up with the idea to create the app. The two found it unacceptable to take so long to get a car after leaving a party in Paris (the results of a club are always unpredictable).
Over time, the company has improved its services and increased the number of offers, by identifying niches, listening and observing, through data, the performance of services and the voice of users and partner drivers.
New payment methods were also added and its geolocation system was improved.
The company’s most profitable service today, by the way, is Uber Eats, which operates in tele-delivery of meals, and was far from the target during the company’s first steps.
That’s another lesson: pivot to survive! ExOs aren’t afraid to reinvent themselves.
Sustainability is also in vogue.
Through the Uber Pool – also known as “Together” in some cities – it is possible to share rides , reducing the number of cars circulating and, consequently, reducing pollution. This is also the idea behind Waze CarPool.
Electric cars are also already used by app drivers in some parts of the world.
Bureaucracy and high accommodation prices have always been obstacles for those who wanted to spend their vacations away from home.
Airbnb was conceived with the purpose of changing reality.
Based on the sharing economy, the platform provides travelers with a cheaper option and a unique accommodation experience, very different from the traditional one in hotels or inns.
Hosts can turn empty houses or rooms into a new source of income.
This is an exponential organization that is here to stay – and its numbers demonstrate it.
Worldwide, the company gathers more than three million listings in approximately 65,000 cities and more than 191 countries, with more than 180 million guests .
To give you an idea, Airbnb made 2.6 billion dollars last year.
In 2018, the goal is to reach US$ 3.6 billion. At the
What Can We Learn From Organizations That Think Exponentially?
The great lesson of exponential organizations is the quest to serve a purpose that reaches a significant number of people and that can be scaled with very low marginal costs.
The old models are already in the past and new elements need to be inserted in the value equation of entrepreneurs and entrepreneurs . There is no place for the old among the winners anymore – social demand has changed and the winners understand this and quickly adapt to these new times.
Change, pivot, not be afraid of mistakes and be agile in decision-making – all this driven by employees who want to be where they are and who believe in the company’s purpose. What drives them are their hearts and minds, passion and technical competence.
Finding a unique solution to a collective problem is the first step. Use technology to your advantage the second. Testing and tweaking the no-holds-barred offer completes the list.
Examples for inspiration abound.
How To Learn More About Exponential Organizations
Do you want to deepen your knowledge on the subject?
The sources of consultation are the most diverse.
We’ve separated some examples to help you dive into exponential organizations for good: books, movies and courses.
See the works on exponential organizations that cannot be missing from your personal library:
The work is responsible for creating the expression exponential organizations.
It brings complete success stories of the 70 companies that stood out and grew the most in the world over the last six years.
The book invites the reader to reflect on the paths his business is taking.
By bringing a revamped view of organizational and technological trends, the authors offer an unprecedented action model that can be implemented in companies of different sizes.
Abundance: The Future Is Better Than You Think
This world best seller presents a different future than pessimists tend to point out.
The idea brought by the book is that, through development in specific technological areas, such as robotics and artificial intelligence, it is possible to build an exponential growth superior to that of the last 200 years .
This means that all human needs could be met. Authors Peter H. Diamandis and Steven Kotler present examples of this optimistic scenario in different segments.
From the same authors of Abundance , this work talks about how global problems can become excellent business opportunities
That is, how an exponential entrepreneur can reach the future reality projected in the previous book.
It is a true manual that shows professionals step by step how to use technology in their favor and seek an impact on billions of people.
Ideal for those who are starting their careers or those who already have a certain experience and want to take an upward turn, Exponential Opportunities serves to open horizons and go beyond.
It’s about understanding that the main competitors are not always the big companies, and that noise is not always a sign of hard work.
Do you like a good movie? So, learn more about exponential organizations with the following titles:
The Social Network
The film tells the story of the creation of Facebook , the social network with the most users in the world.
It shows, in detail, how a college prank turned into one of the largest exponential organizations in the world.
It is a great opportunity to get to know a little about the North American entrepreneurial culture, which shows a lot of dedication to making a business work .
It tells the story of Steve Jobs , one of the most privileged minds in the world and a forerunner in the field of computing.
Although the film is somewhat shallow in trying to portray the life of the creator of Apple , it allows us to understand the conflicting relationships with his co-workers and the departure – and subsequent return – of Jobs to the company.
It is a great example that loving what you do and dedicating yourself to the fullest in your craft are two priorities for those looking to succeed.
The film shows that, despite some difficulties that appear on the way, the right thing is not to let yourself be discouraged. From a distance, the difference between the resilient and the obstinate is tenuous, but let’s leave that for another conversation…
The secret is to believe in your talent and look for solutions. Of course, focusing on the product and marketing won’t hurt.
Sometimes being a chef at a renowned restaurant and going out to a food truck can represent a career step backwards. But, as the story of the film tells, this is also an opportunity to innovate and seek satisfaction in another way.
Finding professional specialization through courses is a great choice for anyone who wants to build an exponential career.
The Fundação Instituto de Administração (FIA) , for example, has several options for those who are looking for this and many other professional goals.
Discover some of the options:
New Opportunities For Innovation In Products, Services And Processes
Innovating is a fundamental precept of exponential organizations and this FIA course provides all the tools to create ideas capable of transforming reality in an agile and lasting way.
You will learn to use knowledge of four of the most used approaches in Silicon Valley: design thinking , business model canvas, agile and lean startup .
Postgraduate Diploma In Business Management And Company Appreciation
Often, companies have good plans to take the next step and seek new niches within the market.
However, they forget to give due value to what they have already conquered .
As we saw earlier, the valuation of an existing product is also a characteristic of exponential organizations.
This postgraduate course seeks to open the manager’s eyes to this fact.