Salim Is­mail’s book takes a closer look at a ris­ing breed of new or­gan­i­sa­tions char­ac­terised by rapid growth and a strong re­liance on tech­nol­ogy.

Ex­po­nen­tial Or­ga­ni­za­tions

Finweek English Edition - - ON THE MONEY BOOK REVIEW -

do you build a gi­gan­tic or­gan­i­sa­tion very quickly? One that is 10 times bet­ter, faster and cheaper than its peers, and which af­fects an enor­mous num­ber of peo­ple? A tra­di­tion­al­ist would say it is pie in the sky and yet it is al­ready hap­pen­ing around us. Think of Google, Uber, Ama­zon, Tesla and oth­ers that vir­tu­ally sprang up over the past few years.

In the past five years the busi­ness world has seen the birth of the “ex­po­nen­tial or­gan­i­sa­tion”, which is able to elim­i­nate the in­cre­men­tal, lin­ear way tra­di­tional com­pa­nies get big­ger.

It lever­ages as­sets like the com­mu­nity, big data, al­go­rithms, and new tech­nol­ogy for achiev­ing per­for­mance bench­marks 10 times bet­ter than its peers. This new breed of com­pany has rev­o­lu­tionised how an or­gan­i­sa­tion can ac­cel­er­ate its growth by us­ing tech­nol­ogy and open in­no­va­tion.

This was the sub­ject at USB Ex­ec­u­tive De­vel­op­ment (USB-ED) and fin­week’s reg­u­lar We Read For You pre­sen­ta­tion re­cently held in Cape Town and Jo­han­nes­burg. The book re­viewed was Ex­po­nen­tial Or­ga­ni­za­tions by Salim Is­mail with Dr Morne Mostert, di­rec­tor of the In­sti­tute for Fu­tures Re­search at Stel­len­bosch Univer­sity, elic­it­ing the most salient char­ac­ter­is­tics of this new breed of busi­ness.

Ac­cord­ing to Mostert, the book con­firms that our sense of a chang­ing world is ac­cu­rate.

The fol­low­ing trends are note­wor­thy:

Twenty years ago it took 20 years to be­come a $20bn com­pany – now it can take as lit­tle as nine months. The av­er­age half-life of a busi­ness com­pe­tency has dropped from 30 years in 1984 to five years in 2014. This has se­ri­ous im­pli­ca­tions for busi­ness schools, fac­ul­ties of com­merce as well as learn­ing and de­vel­op­ment units in busi­ness. Eighty-nine per­cent of the For­tune 500 com­pa­nies from 1955 were not on the list in 2014. The av­er­age life­span of an S&P 500 com­pany has de­creased from 67 years in the 1920s to 15 years to­day. In the next 10 years 40% of all S&P 500 com­pa­nies will dis­ap­pear from this list. The tra­di­tional 20th-cen­tury way of do­ing busi­ness is to se­cure as­sets, pro­tect them and then sell ac­cess to a scarce re­source. The emerg­ing way is to tap into the abun­dance on the out­side of the or­gan­i­sa­tion or “the world out there”.

This piv­ots on the no­tion that cus­tomers will not just ex­pe­ri­ence the im­pact of a sin­gle busi­ness, but a broad suite of ex­pe­ri­ences in a dy­namic and un­pre­dictable world. Con­scious­ness of how to lever­age such ex­ter­nal ex­pe­ri­ences through tech­nol­ogy is key to the ex­po­nen­tial or­gan­i­sa­tion.

Mostert ex­plains this by point­ing out that it is a sim­ple re­al­ity that there are al­ways more cre­ative and in­no­va­tive peo­ple out­side an or­gan­i­sa­tion than in­side it. For that rea­son, the crowd can be used for in­no­va­tion, val­i­da­tion and fund­ing.

The very no­tion of what it means to be a mem­ber of “staff” is chal­lenged, as new tech­nol­ogy plat­forms em­brace the con­cept of “staff on de­mand”, a fluid ap­proach, con­trasted with tra­di­tional head­count man­age­ment.

It is es­sen­tial to im­prove such en­gage­ment through an MTP (Mas­sive Trans­for­ma­tive Pur­pose) – a call for ac­tive par­tic­i­pa­tion for the achieve­ment of an enor­mous pos­i­tive con­tri­bu­tion to the world. It is in­ter­est­ing how all ex­po­nen­tial or­gan­i­sa­tions think of them­selves as tech­nol­ogy and soft­ware com­pa­nies, ir­re­spec­tive of their in­dus­tries. This is be­cause such or­gan­i­sa­tions are con­stantly us­ing tech­nol­ogy plat­forms and al­go­rithms to ex­per­i­ment and pro­duce rapid pro­to­types.

“The fu­ture is a fac­tor of the qual­ity of our de­ci­sion­mak­ing. Ex­po­nen­tial or­gan­i­sa­tions have found in­no­va­tive ways of tap­ping into the wis­dom of the crowd through tech­nol­ogy plat­forms,” Mostert says.

Dr Morne Mostert Di­rec­tor of the In­sti­tute for Fu­tures Re­search at Stel­len­bosch Univer­sity

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