What is an Exo?

Exponential Organizations - The Book

The concept of Exponential Organizations was first proposed in the book of the same name, written by Salim Ismail, Michael Malone, and Yuri Van Geest. The book, which quickly achieved Amazon bestseller status, proposed that most of the highly performing companies discovered a new way to organize, approach the market, and by it scale and reach for performance ten times better than other companies in their space. Now on its second major rewrite, Exponential Organizations, defined the term.
Through this page, Pacific Northwest Exponential Organizations gives you the opportunity to benchmark your organization against the leading ExOs, utilizing the same exact tool.

The Research

“An Exponential Organization will see powerful outcomes – greater customer responsiveness, higher employee and partner engagement, and better financial performance in terms of revenues, profitability, return on capital, and higher levels of resilience and impact.”
-Salim Ismail

The research behind the book involved gathering experts from 45 countries. 160 individuals worked together, developed and deployed a diagnostics tool, the Exponential Quotient (ExQ), in order to assess companies in their business models and for their maturity in implementing a series of attributes the authors identified beforehand. The diagnostics tool utilized in the writing of the book is the precursor of the one utilized by Pacific Northwest Exponential Organizations and the aggregate score from the responses to  twenty-one questions (now 25) can be used to gauge where an organization stands against the different exponential attributes. The implementation of these attributes correlates strongly with performance that is at least 10x better, bolder, and cheaper, and involves establishing an MTP (Massive Transformative Purpose) and embracing ten additional attributes which correspond to the acronyms SCALE and IDEAS.

ExQ (Exponential Quotient)

In the book, the Exponential Quotient was used to create a list of the TOP 100 Exponential Organizations at the time. The study was heavily based on companies in the USA, but included also 7 from the Netherlands, 4 from the UK, and 3 from China, and also Australia, Finland, France, Denmark, Germany, India, Ireland, Luxembourg, and Sweden; all of them in the Top100 rankings. The study covered a wide range of industries, from Food and Healthcare, to Education and Apparel. The most prominent being Software (21), Social Media (10), Media (8), E-Commerce (7), Finance (6), and Information Technology(5).

Any organization can be an ExO

To be an Exponential Organization, that is, rate high on the Exponential Quotient assessment, it is not necessary to be an established, $billion corporation. Exponential Organizations span all sizes, all the way from the $100’s of billions Amazon, Alibaba, Apple, Facebook, General Electric, and Google, to emerging stars such as Coursera, Coinbase, TransferWise, and Duolingo.  But all of them share a few characteristics among them:

  • All Exponential Organizations have a Massive Transformative Purpose (MTP) which goes above and beyond a simple Mission and a Vision.
  • Most of them aim to create and leverage abundance. Their business model often is not based on scarcity and creating barriers of entry, but in leveraging abundant, untapped resources that would otherwise go to waste.
  • All of them are utilizing or exploring disruptive technologies such as Artificial Intelligence & Machine Learning, 3D Printing,  Robotics, Blockchain, Internet of Things (IoT), and Cloud amongst others driving digitization, dematerialization, democratization, and demonetization across different industries.

Becoming an ExO to break away from your competition

Through the mastery of these attributes, Exponential Organizations -instead of being steamrolled by them- leverage technological change, and business model disruption to lower their costs, increase productivity, and lower their capital investment for a significant increase in their Return on Investment.

Exponential Organizations can achieve unprecedented performance, figures like a 2.6x revenue growth or a 6.4x profitability when compared with their peers, are not uncommon. Some more extreme examples can be seen in the table below:

Becoming an ExO and thriving in a changing world

Another main attribute of Exponential Organizations is their adaptability to change and their resiliency under pressure. Every entrepreneur founder of a startup and business leader of a mid-sized or large incumbent organization, must accept that while failure is not inevitable, it’s certainly very possible.
Today, only 10 percent of the companies on the 1955 Fortune500 list are still part of the prestigious list. 90 percent have either gone bankrupt, merged, or still exist but are no longer in the top 500. Most of the new entrants? ExOs.

The most valuable organizations are on a relentless pursuit of excellence; which in the business world, most of the time means better, cheaper, and faster. Most often than not, this ideal status cannot be attained, much less retained.

Every organization’s battle for survival, even for biological organizations, implies generating more order, more efficiency, and a faster metabolism than the external environment. Our own body’s metabolism is constantly fighting everything that is trying to kill us, and we are alive as long as our metabolism is better, faster, and more energy efficient than the elements, predators, or disease. That’s it, by a relative measure. It is equally bad if we become slower, than if everything elase around us becomes faster.

Change is happening faster than ever, and that the rhythm at which change is accelerating is neck-breaking. Any organization that is not evolving, even if they are doing OK today, will not survive to the tsunami of events, technological advance, and business model disruption that’s coming, and is already happening. Why? Because the ability of externalities to transform the world -the metabolism- becomes faster, better, cheaper; and if organizations aren’t capable to maintain a positive differential, they will succumb.

The best answer is to 10X your organization and set them up to 10X again in a few months. In other words, your organization must become exponential. This is the only way it decouples from the exponential change that is happening in the world. The alternative, is risking to be metabolized by the externalities: the market, the industry, and basically the world.

The real question is: Do you know how to 10X your organization?