I will turn Gucci into an Exponential Organization.
Marco Bizzarri – President & CEO, Gucci
Exponential Organizations should be required for anyone interested in the ways exponential technologies are reinventing best practices in business.
Ray Kurzweil – Inventor, author and futurist
I have found ExO to be extremely valuable. I've made the book required reading for senior management and we are implementing many of its principles.
Paul Polman – CEO, Unilever
If you are not already in the business of doing ExO Sprints and experimenting, then you're halfway to being disrupted already.
Tony Saldanha – VP, IT and Global Business Services, P&G
We were in the perfect place to be disrupted but didn't know where to begin. The ExO Sprint was the answer. It completely transformed our culture, breaking down boundaries and opening a whole new world of innovation. It prompted us to make the best of ourselves.
Francisco Casanueva – CEO, INTERprotección
I was extremely pleased with the outcome of our ExO Sprint. We will be applying the ExO model to our entire organization.
José Fernando Canasí – CEO, Iké Asistencia
The ExO Sprint turned our white attack blood cells into red life blood cells.
Eugenio Madero – Founder & Chairman of the Board, Rassini
I've been involved as a Coach in three ExO Sprints. I can tell you the methodology delivers.
Augusto Fazioli – Partner, Business Integration Partners
The ExO Sprint allowed us to envision a new beginning for our business, rather than an end from an outside disruption.
Guayente Sanmartin – Vice President and Global Head, HP Large Format Design Business
Exponential Organizations allowed what seemed like lofty goals to become realities by giving us a framework in which to define what changing an industry really meant.
Travis Penfield – CEO & Founder, 49 Financial /AXA
Exponential Organizations is the best thing I've read in the field of organizational design in 20 years.
Len Nanjad – Principal, Nanjad Advisory Services Inc.
ExO is the best, in fact the only, organization I've come across that's good at surfing between what is here and what's to come.
John Kelly – Director of Deliberative Process Design, Civic Makers
The ExO Sprint changed how we think and how we look at innovation. It's really very different from all the innovation we've done up until now, and we've done a lot. It has definitely yielded new opportunities.
Aviv Hassidov – ExO Sprint Participant, HP Inc.
I have always admired and been awed by people who have floated successful businesses and are well known for creativity and innovation. I thought that it was a gift or special talent—more so, a talent that I lacked. My experience with the ExO Sprint has taught me that innovation is not just about having great ideas but also knowing how to convert those ideas into viable, impactful business opportunities. It has made me aware of the unlimited intellectual resources available in the world that we can tap into to solve almost any problem.
Priya Narayanswamy – ExO Sprint Participant, Dubai Electricity & Water Authority
Copyright © 2019 by Francisco Palao, Michelle Lapierre, and Salim Ismail. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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We wish to acknowledge the incredibly talented ExO community of practitioners for their indefatigable commitment to shaping a bright global future, one exponential step at a time!
– Francisco, Michelle, and Salim
Francisco Palao is an award-winning entrepreneur and innovator with deep experience helping corporations transform. After receiving his PhD in artificial intelligence, Francisco launched several disruptive startups that led him to understand the importance of applying the right innovation methodologies together with cutting-edge technologies. He designed the ExO Sprint methodology and has been dedicated to its continual improvement and accessibility.
Michelle Lapierre has made a career of supporting business leadership and senior management in responding to change. As a consultant and business advisor, she has facilitated full-scale transformation in the public and private sectors through leadership, coaching, and implementation support. Her work today empowers organizations to decode industry disruption using the ExO Sprint model.
Salim Ismail is a leading technology strategist who launched the global ExO movement with his bestselling book, Exponential Organizations. After studying ExOs for several years, he distilled their characteristics into the 11 attributes that comprise the ExO Sprint model. Salim provides a captivating framework for understanding how to recognize and adapt in this new age, as well as thrive within it.
Change has never been as intense and fast as it today. Through rapid advances in exponential technologies such as artificial intelligence, 3D printing, synthetic biology, and nanotechnology, we are dematerializing, demonetizing, and democratizing energy, food, healthcare, and education to the point where each will soon be accessible to every man, woman, and child anywhere at near-zero cost. The concept is called abundance, and its ultimate impact on society cannot be underestimated.
The speed at which these changes are now happening is hard to fathom, yet we see the effects all around us as traditional companies falter and fail, replaced by a new and nimble generation of businesses. “Life Comes at You Fast,” as the saying goes, and technology is making fast even faster. We need new rules in order to adapt, and that's never been so true for business.
Technology is that force that takes things that were once scarce and makes them abundant. What will you do with the abundance being unlocked by emerging technologies? How will you handle the disruption to all of the usual norms in your industry as scarce resources become abundant?
A new breed of company has emerged that knows exactly how to respond. Exponential Organizations (ExOs)—so named for their ability to grow 10 times (10x) as fast as established organizational structures—are not just built to survive the impact of accelerating technologies, they thrive because of them. ExOs succeed by harnessing and managing what traditional companies find chaotic.
I often speak about my 6Ds framework—a lens through which I contextualize all technological change and opportunities. Exponential Transformation provides a roadmap for grasping these opportunities and guides you in leading your organization on a company-wide transformation essential for both survival and success.
If you are ready to embark on a journey of creating a new ExO or transforming your existing organization into an ExO, I recommend following the blueprint expertly presented in this book. It offers proven strategies and tactics for changing your organization into an ExO through an intensive 10-week process called the ExO Sprint. You'll be in good company. Some of the world's most admired brands have taken this journey: Visa, Stanley Black & Decker, and Procter & Gamble have all conducted ExO Sprints to create new companies or dramatically transform existing lines of business.
Transforming an existing organization or creating a new ExO requires knowing two things: what ingredients are needed and how to combine those ingredients successfully. The ExO attributes described in this book are your ingredients and the ExO Sprint is your recipe. What you do with them is up to you!
Exponential Transformation was written by amazing doers who have been commited for decades to working with companies to make a positive difference. Their strategies and tactics have been perfected building innovation labs and running world-class acceleration programs.
Francisco and Salim co-founded ExO Works to test and improve the ExO Sprint methodology. As COO of ExO Works, Michelle oversaw the ExO Sprint in practice with early adopters to find out what was working well and what needed to be better.
Waiting to “get it right”—the right timing or the right offering—won't work. Today, threats are often not perceived until it is too late to act. In exponential times, acting early, experimenting, becoming a data-driven organization that is getting feedback from your customers, and then iterating rapidly is the new mechanism for success.
In writing this book, Francisco, Michelle, and Salim have open-sourced the ExO Sprint methodology to anyone interested in making radical organizational changes that unlock massive potential. It's an extrodinary gesture, governed by the belief that having the best technology is simply not enough if you're not also bringing value to society.
These are the most extraordinary of times, offering the most extraordinary of opportunties. We will create more wealth in the next decade than we have the past century. A total restructuring of the institutions and processes under which we've previously operated is needed. With your commitment to lead your organization through to positive change, the future is even more exciting than the present.
Peter H. Diamandis, MD
Founder, Chairman & CEO, XPRIZE Foundation
Executive Founder, Singularity University
New York Times Bestselling Author of Abundance and Bold
+200 people from +30 countries on all continents
Welcome to the most transformative period in human history! We live today in a world of exponential technologies and accelerating breakthroughs, all of which present boundless opportunity. Accessing that opportunity, however, requires organizational evolution. No enterprise will be able to stay alive—much less thrive—without adapting to the exponential rate of change that accelerating technologies deliver.
This book serves as a roadmap in leading your organization through that transformation process.
In keeping with Moore's Law—which predicted that the processing power of computers would double every two years on average—the performance of anything powered by information technologies is also doubling every two years. Anything digitized realizes the same increasingly rapid, or exponential, growth rate seen in computing.
As exponential technologies converge and build upon one another—giving rise to the Fourth Industrial Revolution—they are bringing abundance to every industry and, simultaneously, disrupting them all in one way or another. While traditional business models work just fine in a scarcity-based environment, they are not designed to operate in the fast-approaching world of abundance.
Thousands of hours of real-life implementation of Exponential Organization (ExO) principles have gone into bringing you this new work. The first book to address ExO principles—Salim Ismail's Exponential Organizations—explained why the time was ripe for such organizations and described in detail what makes them tick. Since then, we have established a process for how enterprises of all kinds can use ExO principles to succeed in this new world.
The ExO Sprint is a tested and proven 10-week process that allows any organization to implement the ExO model to address industry disruption and overcome internal resistance to change.
This book will outline the step-by-step process required to run an ExO Sprint and, ultimately, to become an Exponential Organization—to achieve company-wide transformation in terms of mindset, behavior, and culture.
Whether you are an entrepreneur or an intrapreneur, a leader of a large enterprise or a small one, or simply a champion for change, this playbook will help you run an ExO Sprint that is adapted to your goals. You will gain a new understanding of the world around you and be equipped with the processes, tools, and techniques required for your organization to keep pace.
You will also discover that you (as well as those you enlist to accompany you on this journey) will achieve personal and professional transformation. Organizational transformation, in fact, is primarily a matter of personal transformation. Herein lies the secret.
The transformation achieved in running an ExO Sprint will enable you to create an exponential impact that will accelerate your business and change the world for the better.
Welcome to your very own Exponential Transformation.
Let's get started!
Our technology, our machines, are part of our humanity. We created them to extend ourselves, and that is what is unique about human beings.
– Ray Kurzweil
We are in the early days of the Fourth Industrial Revolution, which is bringing much more than just digital transformation. The Fourth Industrial Revolution represents a convergence of technological capability, intelligence, and connectivity. It is a merging of new technologies that blur the lines between what's physical, digital, and biological.
The result: a wholesale overhaul of industries the world over.
Previous industrial revolutions massively impacted society, with innovations influencing almost every aspect of daily life in some way or another. However, as Klaus Schwab, founder and executive chairman of the World Economic Forum, describes in his book, The Fourth Industrial Revolution, this one is unprecedented in its scale, scope, and complexity.
The exponential rate of development of emerging technologies has created a pace and scale of change that is unlike anything humanity has seen before. This is, in part, because so many technological advancements are happening simultaneously while also building upon one another. Across every industry, accelerating technologies are intersecting and dramatically changing the way we live, work, and interact.
These shifts naturally impact how we create and manage companies. It is not just a matter of doing what we already do better, faster, or cheaper. Instead, it is the technology itself that is giving us the ability to build fundamentally different businesses.
Abundance is not something we acquire. It is something we tune into.
– Wayne Dyer
Traditional business models are based on scarcity, where value comes from selling a product or service that is limited in supply. Exponential technologies, however, generate an abundance of everything.
Peter Diamandis, the cofounder and executive chairman of Singularity University, refers to what he calls the 6Ds to describe a chain reaction of technological progress that leads to both upheaval and opportunity.
Once something is digitized, more people have access to it. Everyone has access to powerful technologies, giving individuals and entities the opportunity to create the next big breakthrough.
Entire industries are being impacted as problem spaces shift to new models based on an economy of abundance. When products or services become available through digital means and shed their physical restrictions, they can be produced and distributed at scale to become abundant at zero marginal cost.
Kodak's bankruptcy is an oft-cited example of disruption resulting from digitization as photos moved from the physical format to digital. But consider the specific implication this shift had on the actual business model. The industry moved from a scarcity-based model—just 12, 24, or 36 exposures per roll of film with associated costs for both the film and development—to an abundance-based model in which everyone has access to an unlimited number of pictures at virtually no cost. The problem space changed from an issue of how many pictures to take, to how to share photos, with cost no longer a part of the equation. This shift from scarcity to abundance enabled Instagram, which was acquired by Facebook for $1 billion just as Kodak was shuttering its doors, to achieve success with just 13 employees.
In addition to photography, consider just how thoroughly the old business models for music, movies, accommodation, and transportation have been disrupted. Look at the shifts underway in healthcare, insurance, manufacturing, banking, and energy. In the end, no industry is likely to escape disruption. What's also important to realize is that most of the disruption will come from outside the industries themselves, meaning that those unprepared for the inevitability and pace of change will be taken by surprise.
The biggest challenge faced by all industries is finding new types of business models that work in this new environment. Businesses must adapt when—and in anticipation of when—assets, users, or opportunities shift from a scarcity-based model (limited by how many you have) to an abundance-based model (how to manage a limitless supply).
Most ExOs are already building business models based on abundance. For example, Waze taps into an abundance of GPS on our phones, Airbnb taps into an abundance of available rooms and 99designs taps into an abundance of designers.
While new businesses debut business models designed to eat everyone else's lunch, traditional business models continue to focus on selling a scarce product or service. In fact, most management thinking and organizational dynamics are still set up for a linear, predictable age.
It takes experimentation to find a brand-new business model that leverages abundance and employs service-based thinking. Accessing abundance creates a need for new tools and new practices to manage that abundance. And these new tools and practices are exactly what Exponential Organizations have mastered.
Anything that becomes digitized—representable by ones and zeros—can be accessed, shared, and distributed by computer. It takes on the same exponential growth seen in computing.
Exponential trends aren't easily spotted in the early days. Growth is deceptively slow until it begins to be measured in whole numbers.
Digital technologies outperform previous non-digital models in both effectiveness and cost, disrupting existing markets for a product or service.
As technology becomes cheaper, sometimes to the point of being free, money is increasingly removed from the equation.
The need for bulky or expensive single-use physical products—radio, camera, GPS, video, phones, maps—disappears as these items are incorporated into smartphones.
Once something is digitized, more people can have access to it. Everyone has access to powerful technologies, giving individuals and entities the opportunity to create the next big breakthrough.
Any company designed for success in the 20th century is doomed to failure in the 21st.
– David Rose
A new breed of business proven to be capable of unlocking the abundance provided by emerging technologies and readily adaptable to a rapidly changing business environment has emerged. These companies have been coined Exponential Organizations for their ability to grow 10 times (10x) as fast as traditional organizations.
Salim Ismail's best-selling Exponential Organizations launched the global ExO movement. In it, he offers the following definition:
An Exponential Organization (ExO) is one whose impact (or output) is disproportionately large—at least 10x larger—compared to its peers because of the use of new organization techniques that leverage accelerating technologies.
After studying ExOs for several years, Ismail distilled their characteristics into 11 components, which today comprise the ExO model. This model provides a structure for understanding how to recognize and adapt to the ExO age and ultimately become a leader in it.
What does an Exponential Organization look like? Classic examples include Amazon, Google, Airbnb, Uber, Facebook, and Skype. ExOs are transforming industries across the board, from manufacturing to retail to services—even philanthropy.
The ExO model allows organizations to adapt to the changes brought about by the Fourth Industrial Revolution, since ExOs are built to capitalize on accelerating technologies. Exponential technologies enable abundance, and ExOs are built to take advantage of that abundance.
The ExO model builds upon an iconic line of innovation tools and frameworks.
The ExO model wasn't created as a new concept to try out. It was created to provide a framework for what is already being done—and working supremely well—in the world today. It's the right approach for the Fourth Industrial Revolution, as it builds on the best of previous methodologies and adds elements to address exponential technologies and their 6D implications. The ExO framework is the basis of this book and the methodology it presents.
We are experiencing an exponential rate of change in every facet of our organizations today, far beyond any digital transformation of years past. Our answer to the rush of change is to harness the power of change itself. To do so, you must transform your linear organization into an Exponential Organization.
Where do you start? This is the purpose of Exponential Transformation: to provide a series of assignments, direction, support, and guidance for organizational transformation that will deliver exponential results.
They say I'm old-fashioned, and live in the past, but sometimes I think progress progresses too fast!
– Dr. Seuss
The information in this book opens a path to the massive leverage that technology offers. But the path isn't always an easy one to follow. Pushing boundaries further and faster than ever before can be uncomfortable. Rest assured, however: groundbreaking innovation is most likely to emerge from the most uncomfortable of spaces.
One of the greatest challenges you will face on your ExO journey is the organizational immune system, which will almost certainly rally its defenses to try to halt your progress and squelch any attempt at transformation. Every organization has an immune system response, and its primary objective is to preserve the status quo. (You might even be surprised to discover that you yourself are part of the immune system!)
In addition to battling the corporate immune response, organizations face additional challenges when they attempt transformation.
The ExO Sprint cracks the code on how to overcome these challenges and suppress a company's immune system long enough for the enterprise to break through and become an Exponential Organization.
This book teaches you how to run an ExO Sprint. It explains how the ExO Sprint makes use of specific tools such as the Business Model Canvas and our own ExO Canvas. It also details how the transformation your organization will experience as a result of the ExO Sprint begins with people and progresses to the application of advanced processes and technology throughout the organization.
Acceleration will happen in your organization because the people who engage in the ExO Sprint will also transform. It is their change that will seed the organizational transformation you're after.
Depending on the size of your company, transformation may happen all at once, division by division, or even, as in the case of Tesla's origins, from a small tent in the corner of a large warehouse.
In the next sections, you will learn how the ExO Sprint is structured and executed, as well as what preparations are necessary in advance of launching the ExO Sprint. You will also learn how to select the best people to run your Sprint so that it has the highest probability of success.
The ExO Sprint has been successfully run in large, medium, and small organizations around the world. We have used these tools in powerful organizations across multiple industries, including Procter & Gamble (P&G), Stanley Black & Decker, HP Inc., and Visa. Some of their stories are included in the Case Studies section at the end of the book. 
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The ExO Sprints we have run have proven that the model works. More than 200 innovation consultants have participated in delivering ExO Sprints. Their feedback and refinements along the way have led to the version of the ExO Sprint methodology presented here.
The ExO Sprint includes two streams of activity. The first, the Edge Stream, focuses on developing initiatives outside the existing organization and business lines. The second, the Core Stream, emphasizes developing initiatives to be implemented within the current organization. We will discuss later why this distinction is important, as well as the value of each. Choosing which stream to use—or whether to use both—depends on your goals and the needs of your company.
The ExO Sprint provides a learn-by-doing approach to finding a business model that connects with abundance, overcomes the challenges organizations typically encounter when attempting transformation, and builds innovation capability into your teams. ExO Sprints result in actionable ExO projects that, once completed, transform an existing business into an Exponential Organization—or even a set of them.
Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has.
– Margaret Meade
Regardless of whether your current organization is an industry leader or a smaller player, it must transform if it is to thrive in the face of industry disruption from unexpected external sources. (New players should build agility in from the start.) This book, and the process it guides you through, is designed to be applicable to organizations of all shapes and sizes.
Whether you are an entrepreneur or an intrapreneur, a leader of a large enterprise or a small one, or simply a champion for change, the underlying ExO principles are the same.
Are you an entrepreneur or part of a startup team looking to disrupt an industry by creating a new Exponential Organization from the ground up? If so, you are in the fortunate position of being able to start with a blank slate. As such, you'll follow the Edge Stream.
Are you an innovation-oriented leader looking to keep your company safe by adapting it to external industry disruption? If so, you will apply the Core Stream to focus within your existing business.
Are you a disruption-oriented leader looking not only to transform your own business but also the industry within which it operates? Or perhaps even create a new one? Apply both the Edge and Core streams to meet these goals.