ExO Part 1: What is an Exponential Organization?
The Ressolid project is composed of two equally important parts. The first will be the blockchain side of things which will be totally decentralized and in the hands of the community and the second will be the Ressolid Organization which will be a legal entity that will work to advance the whole endeavor on a worldwide scale. And apart from hard work and passion, the way we structure these two sides will make the difference between having a modest impact on the world and disrupting the status quo of collaboration. So one of our most pressing goals is to create a framework in which we can attract talented and visionary people that believe in our mission and offer them the best environment in which they can contribute to the project.
We need to build a value based, technologically enabled culture that rests on radical transparency and truthfulness which will help us build a vehicle for social growth. Luckily, there are a lot of models from which we can learn and find help in facilitating this process, one of these tool is the book Exponential Organizations written by Salim Ismail, Yuri van Geest, and Michael S. Malone, released in 2014. This book explores the ways in which new organizations are ten times better, faster, and cheaper than the traditional ones and gives us insight into the inner workings and structure of the most agile and fastest growing organizations of the digital era. This will be a series of posts which will put the Ressolid project in the context of the structure presented in this book, in an effort of mapping relevant ideas and models on which to build our project.
The goal of this post series is not to build a final structure, but to explore possibilities and also try to enable positive debate and discussion around this subject, so let’s begin.
What is an Exponential Organization?
The definition given in the book is “An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large —at least 10x larger— compared to its peers because of the use of new organizational techniques that leverage accelerating technologies”. But for this to make total sense we need to dive into what exponential technologies are.
Gordon Moore, the co-founder of Intel, made an observation that the price/performance of processing power is doubling roughly every two years. This came to be known as Moore’s Laws, but Ray Kurzweil took it several steps further and created the Law of Accelerating Returns that does not apply only to processing, but a large number of technologies that become information enabled. But this two times improvement with every cycle is not something we can intuitively comprehend because our brains work in a linear way so let’s see a graph and some numbers that put this into perspective.
This difference between linear and exponential growth is the reason why some technologies have skyrocketed in performance while having a very sharp price decrease. Here are just a few examples of such advances:
solar energy: $30 per kWh in 1984 to $0.16 per kWh in 2014, 200 times price decrease in 20 years
full body medical scan: $10,000 in 2000 to $500 in 2014, 20 times price decrease in 14 years
3D LIDAR mapping sensor (used for autonomous cars): $20,000 in 2009 to $79 in 2014, 250 times price decrease in 5 years
DNA sequencing: $10 million in 2007 to $1,000 in 2014, 10.000 times price decrease in 7 years
drones: cost $100,000 in 2007 to $700 in 2013, 142 times price decrease in 6 years
So, an Exponential Organization is basically a model of business that bootstraps itself on technologies that have exponential growth and thus benefits from underlying assets that become increasingly better and cheaper with each cycle. But this is just the technological side, there is also a cultural, humane side that complements everything. Let’s see what these two sides look like.
What constitutes an Exponential Organization?
The first thing that sets this type of organizations apart and is found throughout all of them is having a Massive Transformation Purpose, which is a very bold and fascinating aspiration for the organization. Some examples from the book are:
- TED: “Ideas worth spreading.”
- Google: “Organize the world’s information.”
- X Prize Foundation: “Bring about radical breakthroughs for the benefit of humanity.”
- Quirky: “Make invention accessible.”
- Singularity University: “Positively impact one billion people.”
A great Massive Transformative Purpose is said to impact the company in several benefic ways, namely it enables coherent exponential growth, binds collective aspirations, attracts top talent across the ecosystem, supports a cooperative/non-political culture, and enables agility and learning.
The authors of this book also bring into perspective ten other attributes that relate to the internal mechanisms and externalities that these organizations rest upon to deliver the exponential growth. They divide them into two categories, each with its own acronym, for the internal workings which are related to the left side of the brain and have to do with order, control and stability we have IDEAS and for the externalities which are related to the right side of the brain and are linked with creativity, growth and uncertainty we have SCALE. IDEAS stands for interfaces, Dashboards, Experimentation, Autonomy, and Social, while SCALE refers to Staff of Demand, Community and Crowd, Algorithms, Leveraged Assets, and Engagement. The research done by the authors shows that a minimum of four attributes that have been properly implemented can achieve exponential growth.
This was just a brief overview of what Exponential Organizations are, in the next part of this post series we will dive into the Massive Transformation Purpose of the Ressolid project and bring our vision into perspective.