LIVE FROM WEDO WORLDWIDE USER GROUP 2015: There are four ways in which large, established companies can learn from what have been termed “exponential organisations”, which use new organisational approaches and technology to have a disproportionate – and disruptive – impact on business, according to author and speaker Yuri van Geest.
Van Geest, who co-authored the book Exponential Organisations, highlighted how such companies – such as Airbnb, GitHub, Xiaomi, Uber and Waze, “use less resources and people, but have a deeper impact”, than what he described as “linear organisations”, which have more traditional structures and growth trajectories. “At first you don’t notice these startups, in the first two or three or four years. And then suddenly, boom, they disrupt you,” he said.
Attributes of such businesses include a “massive transformational purpose”, which is a “higher, aspirational purpose” embraced by those inside and outside of the organisation; the ability to make use of the “crowd” to scale, across creativity, innovation, validation and even funding; and a focus on accessing, renting or sharing assets rather than owning them.
And on an organisational level, exponential organisations also feature a decentralised model, with self-organising teams with full decision making capabilities.
For an organisation to benefit from the strategy of these new companies, the first approach is to “transform the leadership”. This can include education from outside sources and creating a more diverse base at a senior level.
The second is to “identify, invest, partner and acquire exponential start-ups in your sector or critical markets, to embrace innovation and disruption,” van Geest said. “Create a portfolio, leave it independent, try not to influence it too much according to your cash cow or core business, leave it alone, but learn from it.”
The third step is what was termed “Disprupt[x]”. “It’s about creating start-ups at the edge of your organisation, not close to your cash-cow or core organisation, because if you try to innovate near your core organisation, you will only inhibit it, or not innovate at all. Why? Because then you activate an immune system or your parent organisation, which will create antibodies and kill the innovative projects in most cases,” he said.
Citing the example of e-commerce ventures set up by vendors and retailers in the past, he said: “Leave it independent on the edges for five to ten years, until it has critical mass, then you integrate it into the core business. But the digital entity is more important. It only works if when you integrate, the emergent innovative department or start-up has more impact, influence and power than the classic linear department.”
Finally, and “the most difficult,” is what he described as “ExO Lite” – “implementing the attributes of an ExO organisation in the core business. It’s very difficult. It’s feasible, but it’s the most difficult.”