Lesson 20, Topic 1
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Lessons Learned Implications of ExO’s

UPG Team March 17, 2023
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Information Accelerates Everything: The new information paradigm is causing an acceleration of the development cycle for products and services, leading to explosive market growth as industries shift from material to digital processes. This shift is occurring in multiple core technologies, with data analysis and automation driving the dematerialization of industries.

Drive To Demonetization:

The Internet has cut the marginal cost of marketing and sales to nearly zero, enabling businesses to scale quickly and inexpensively. With the rise of Exponential Organizations (ExOs), the marginal cost of supply is also approaching zero, allowing for near one hundred percent variable costs and scalable businesses. This trend is not limited to information-based industries, as industries like education, automotive, and energy are also likely to experience disruptive change.

Disruption is the new norm:

Disruption has become the new norm and outlines six steps around disruptive innovation. These steps include the domain becoming fully digitized, the marginal cost of supply dropping exponentially, democratization of access to the product/service, hobbyists forming an open-source community, new combinations of technologies converging, and new products/services and business models disrupting the status quo. Disruptive innovation has occured in various industries such as solar energy, drones, DNA sequencing, 3D printing, and blockchain, highlighting the power of democratized, accelerating technologies and engagement techniques like crypto economics in making disruption an unstoppable force.

Be aware of the expert:

In exponential times, beware of “experts” who focus on limitations rather than new possibilities. Innovations often come from outsiders with fresh perspectives, not just industry experts. Data scientists, or “geeks,” are now measuring and analyzing data to provide solutions. Experts still have value in identifying challenges and asking the right questions. The goal is for experts and data scientists to collaborate to find solutions. Experts should shift from being the sole source of answers to being collaborators with data scientists.

Death of the five year plan:

The traditional practice of creating five-year plans is obsolete and counterproductive in an exponential world. Instead, companies should establish a big vision, implement a one-year plan, and course-correct in real-time. This approach was successful for TED in launching its TEDx events, which far exceeded its initial goal. In an ExO world, purpose trumps strategy, and execution beats planning.

Smaller beats bigger:

Larger companies don’t have an advantage anymore due to the information revolution and ExO movement. Adaptability and agility are becoming more important than size and scale. Small teams can take bigger risks than large established organizations. Successful ExOs will build on leverage created by their externalities, turning into platforms that enable other ExOs to emerge. Examples of successful platforms include Google, Facebook, Amazon, and Apple’s App Store ecosystem. The world now belongs to smaller, faster-moving enterprises, and this transformation will occur in non-profits and public sector organizations too.

Rent, don’t own:

The concept of renting instead of owning is a major factor contributing to an ExO’s success, providing agility and flexibility. Cloud computing, fablabs, and the ability to rent employees on demand are all examples of this trend. Business owners have shifted from emphasizing ownership to focusing on profits. Companies like Apple and Alibaba have embraced this trend by renting capabilities and outsourcing manufacturing.

Trust Beats Control and Open Beats Closed:

To succeed in the age of the Exponential Organization, companies must embrace an open environment and trust their employees. Traditional control frameworks are becoming outdated, and collaborative tools are allowing for self-management and maximum autonomy. Trust frameworks are also necessary in an unpredictable world that requires more initiative and creativity from team members. Examples of trust frameworks include Google’s Objectives and Key Results system and collaborative tools like Slack and Teamly.

Everything is Measurable and Anything is Knowable:

The sensor revolution has led to radical transparency, with trillions of sensors recording our every move, and the human body has approximately thirty trillion cells that can be tracked for health insights. The technology of laser spectroscopy is being used to analyze food, drink, and medical conditions, and ExOs are taking advantage of this trend by creating new business models on existing data streams and adding new data streams to old paradigms. In the future, everything will be measurable, and anything can be knowable, and only companies that plan for this new reality will have a chance at long-term success.

Everything Will be Smart:

Artificial intelligence will soon automate every industry and process, including strategic planning, sales, marketing, and R&D. Companies need to prepare for this reality by incorporating AI into their operations models. AI will transform the way companies are structured and managed, including through smart contracts and Decentralized Autonomous Organizations (DAOs). The article emphasizes the importance of getting ahead of the competition by embracing this new reality, as decentralized systems scale and enable anyone to become part of a company or community.

Decentralization and DAOs:

The combination of ExO attributes such as Autonomy, Community & Crowd, Interfaces, and Dashboards drive the creation of Decentralized Autonomous Organizations (DAOs), which are interesting because decentralized systems scale naturally. Smart Contracts or Interfaces allow anyone to self-provision to membership of a DAO. MTP-centric DAOs will be the organizational form of the 2030s, and ExOs will provide a global organizational structure to address Grand Challenges like the UN SDGs. However, governance of DAOs is a significant challenge that needs to be sorted out.

ExOs Create Serendipity and Flow States:

ExOs maximize opportunity and preparation, leading to increased luck and serendipity. The various attributes of an ExO foster a culture of innovation and creativity, increasing the likelihood of making non-linear discoveries. The decentralized nature of an ExO and its community allows it to tap into diverse perspectives and ideas. ExOs also create flow states in organizations, leading to increased serendipity and luck.

Cryptoeconomics and Web3:

Cryptoeconomics and Web3 provide a debt-free alternative to traditional monetary systems, which rely on inflationary prices and increasing debt. Canadian entrepreneur Jeff Booth highlights the unsustainability of growing the global economy by borrowing from the future, and argues that Bitcoin provides a debt-free engine for financial transactions. This combination of crypto and Web3 technology, smart contracts, and gamification is poised to dominate human engagement in the financial sector over the next few decades.

Technological Socialism:

“Technological Socialism” is a term coined by Dr. Harry Kloor, referring to a future in which technology, rather than the government, provides infrastructure and services to its citizens. This concept is already being realized through platforms such as Uber and YouTube, where algorithms match supply and demand without the interference of human bias and corruption. With the convergence of artificial intelligence, sensors, and networks, this model can be applied to essential resources such as energy and healthcare, distributed across decentralized decision-making nodes. This creates a new model for society that achieves small-s socialism without the materialistic soul and obsession with class struggle associated with traditional socialism.

Evidentiary Leadership:

Evidentiary Leadership refers to a more data-driven approach to decision-making, where leaders make decisions based on data gathered from various sources, including in-house experiments, customer feedback, and the internet of things. In the hyper-fast exponential economy, where there is little time for gut decisions, leaders need to be more evidentiary and willing to use the power of technology for high-speed experimentation. Purpose-driven leadership in practice means regularly running A/B testing in all digital interactions and hiring individuals with imagination rather than experience.

Unbundling and Rebundling:

The future of organizations will be centered around Sustainable Development Goals (SDGs) and global challenges, which will require traditional organizations to unbundle their structures and rebundle around their Massive Transformative Purposes (MTPs). This means that organizations will need to break up their existing organizational charts and offer their services in a project-based way that fits their customers’ needs. The once monolithic banking industry has already undergone this process of unbundling, and in the future, AI-driven pieces will be rebundled to fit new interests such as SDGs. Exponential Organizations (ExOs) are best suited to lead the move to unbundled/rebundled enterprises with the help of their communities.

Module is complete, keep up the great work change maker!

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