Risk & Business Magazine Lovitt & Touché Spring 2016 | Page 18

aren’t trying to figure out why things are the way that they
are. They are trying to figure out why things aren’t better. This
leads from a situation of scarcity to a situation of abundance.
Once something becomes information based, the cost goes
down and the prevalent mindset becomes one of abundance.
The mindset of these individuals is that nothing is impossible.
When speaking with Elon Musk about issues with high-speed
hyperloop bullet train, Salim found that Elon replied that (to
paraphrase), “that’s an issue we have to overcome”. In other
worse, Elon did not consider the problem he was facing to be
impossible; he simply considered it something that needed to
be worked out.
The Internet allows us to drop the cost of demand
exponentially. The issue now is finding a way to drop the cost
of supply exponentially. That solution is what existing ExO’s
like Uber, AirBnB, Zappos, and many others have found.
That is why they are having the success that they are having.
Decentralization and low overhead is the key to success in the
game of exponential growth.

SO WHAT IS IT THAT MAKES AN ExO?
THREE THINGS:
1.

MASSIVE TRANSFORMATIVE PURPOSE

2. S.C.A.L.E.
3. I.D.E.A.S.
The Massive Transformative Purpose is something that is
uniquely theirs. It is highly aspirational and is not narrow or
specific to a given technology. This is aimed at the heart and
the mind and is declared with both sincerity and confidence.
In other wodrs, it is the driving passion behind the company.
Again, it’s not narrow and it’s not specific. It is more like the
ethical and philosophical framework in which the company
operates.

S.C.A.L.E. stands for staff on demand, community
& crowd, algorithms, leveraging assets, and
engagement. Constantly adding information
and having the people on hand to leverage that
information is an extremely important aspect
of ExOs.

I.D.E.A.S. stand for interface processes,
dashboards, experimentation, autonomy,
and social technologies. This is where these
companies begin to really stand out. They
are constantly tweaking their systems and
optimizing all aspects of what they are doing.

If a company is able to implement 4 out of the 10 topics
in S.C.A.L.E. and I.D.E.A.S. then they will see their 10x
improvement and will cross into exponential growth territory.
An example of this would be the way Valve, a popular software
company, operates. They have a very small footprint and tap
into abundance through the use of technology. There is no
middle management, no dedicated teams. People work on
what they wish to work on and, should a problem arise, anyone
who wishes to can fix it. This has resulted in a massive profit
for the company over the last decade. Per worker, they have
one of the highest profit margins in the world.

How Organizations Can Become Exponential

did it by having a dedicated team working on their own to see
wh at they would be able to put together for the long run.
Your business is, of course, your business. With that being
said, there are always ways to improve. Reaching a state of
exponential growth and creating abundance in your industry
is just as far away as your imagination will allow you to go.
All you need to do is have a vision of what is possible and be
willing to do what it takes to get there. Just keep in mind that
companies which have already stood the test of time are also
the companies which will ultimately be the most resistant to
change. Overcoming that resistance through inspirational
leadership and vision is the key to becoming an ExO.

The fundamental change in an ExO model is the
democratization of the business process. So how can a large
existing company take advantage of this and begin to change?
A few things will lead down the path to the right direction.
One is to update the leadership. It is essential that the change
starts at the top and works its way down. If people are not on
board, they will have to be replaced.
Inspiring ExO changes at the very edges of the company is
another key aspect. Partnering or investing with already
existing ExO’s can be a good way to do this. By changing some
of your processes to better leverage or expose data lines, you
can put yourself in a position to change the rest of them in that
direction as well.
Salim suggests, also, hiring a “black ops” team, which stays
both stealthy, and at the edges of the company which can then
find ways to attack other industries. Apple has made good
use of this. Though they were a computer company, they
have snuck their way into mobile phones, tablets, and the
music industry. They did not do this by accident, they

Salim Ismail is the
best-selling author
of Exponential
Organizations and the
Founding Executive
Director of Singularity
University. He is
also the former Vice
President and Head of
Innovation at Yahoo!,
where he built and ran
the company’s internal incubator,
and he sold his last company to Google
in 2010. Salim consults with governments
and the world’s top fortune 500 companies
on innovation and growth, and his work has
been featured in premier media outlets like the
New York Times, Bloomberg, BusinessWeek,
Fortune, Forbes, Wired, Vogue, and BBC.

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