In ten years, 40% of Fortune 500 corporations will cease to exist, a study by Washington University has found. [1] Why? Because the business world is rapidly entering an era of exponential intelligence, built on technologies like AI, IoT and machine learning. The problem is, many corporations simply aren’t innovating. They should be harnessing intelligence and data to drive exponential change. Because a company that does not adapt to this new world – which is more agile, volatile and uncertain – runs the risk of being left behind.
Disruptors will dominate
The Fortune 500 is under threat from flexible ‘disruptor’ companies with a powerful growth mindset charged by innovation. These disruptors will act smarter, faster, with fewer people and more automation so, within a few years, the current big players are forgotten. Take Uber’s impact on the traditional taxi, for example – or Netflix on Blockbuster. By advancing with impressive speed, re-thinking processes, analysing data and offering solutions to customer demand, disruptors can undercut the competition to become market leaders.
Adopt the right attitude
‘Mindset’ is key to exponential change. However, business leaders are resisting – an attitude which infiltrates organisational culture. Salim et al. observe that many companies are satisfied with what works, so fail to innovate.[2] According to Ismail, Van Geest and Malone, authors of ‘Exponential Organisations’, this scenario is a direct result of an internal ‘immune system’ which eradicates new ideas before they can be consolidated[3].
Furthermore, business leaders see AI as a threat, not an opportunity. Instead, embracing the possibilities technology offers is fundamental to enabling growth. Crucially, the survival of a company depends on its ability to stay ahead of the technology curve and welcome change in order to stay competitive. No company can keep pace with growth defined by exponential organisations if they are not willing to do something radically new.
Business leaders must open their minds to innovation and the need to invest. This means accepting that some initiatives will fail, but this isn’t reflective of the leader or organisation. It’s a lack of understanding, and fear, that leads to stagnation. Customers realise they no longer need a company’s product or service, find a competitor that ticks their boxes and swiftly leave en masse. Quarter-over-quarter revenues plummet and, by the time reality hits, the organisations that failed to adapt are staring into the abyss.
Initiating change to become exponential
Business leaders must look at their organisation and ask “do we really encourage innovation? We say we do, but is this reflected in our actions?” Companies may pay lip-service to innovation, but how many are proactively changing? Innovation concerns two things; firstly, making something they already do (and have to do) better. Secondly; discovering new products and services that they can generate a need for. The most successful companies bear innovation in their DNA – business leaders and employees alike do it, unconsciously, every day. Again, it boils down to attitude.
Identifying purpose
To drive exponential change, leaders must ask “what is our Massive Transformational Purpose (MTP)?” then communicate this to employees, customers and the wider industry. TED boasts a strong MTP – the ‘ideas worth spreading’ strapline clearly articulates its vision. Once leaders have changed their attitude and prioritised transformation, they can refresh their mission and initiate exponential change. Tesla’s corporate slogan is to ‘accelerate the advent of sustainable transport’ – the very sentiment is one of exponential change, discovery and innovation. Tesla’s MTP is clear – and is why Musk is ending the future for fossil fuel cars.
Use data
Every organisation owns extensive data on both its employees and customers. But rather than banking this valuable insight, corporations should harness the information to improve services and organisational culture. The key here is to look for patterns and take time to understand what the data is telling you. Considering people and clients is integral – how does their experience, in or, with the business make them feel? Is that experience positive? Do they feel valued? Understood? Regardless of the answer, it’s important to assess how to make it better – and how being exponential can help.
This could be digitising tasks that don’t require manpower, then channelling those employees’ skills elsewhere in the business. Customer service, for example; Stefanini’s Sophie is an AI agent capable of assisting with tasks such as triggering workflow, auto escalation and presenting knowledge to users. Sophie’s fast learning process, strong conversational skills and user comprehension removes the need for a real advisor.
Employee experience
We’re all familiar with ‘customer experience’ but ‘EX’ (or ‘employee experience’) is the next big thing. How an employee feels at work isn’t transformed by reading satisfaction surveys. Business leaders must use data and change their culture accordingly. To stay ahead, interact with your people, encourage new knowledge, consider new ideas and co-create. The alternative? Productivity drops. At worst, employees resign and take their skills elsewhere – most likely to a ‘disruptor’ competitor with a clearly articulated, motivating MTP. This only fuels the disruptor which has seen a need, catalyses transformation and, in the process of implementing, undoes the original employer to own the industry.
Becoming exponential lies in the development of an eco-system of innovation. Business leaders need not fear the future. Rather, they should consider what differentiates their business from the competition and fulfil their transformational purpose. Now’s the time to disrupt, before someone disrupts you.
[1] John M. Olin School of Business at Washington University, Digital Marketplaces Unleashed. 2018.
[2] Salim et al, 2011. Organizational Learning, Innovation and Performance: https://pdfs.semanticscholar.org/5571/b708c4bb38e7d3d35267249486f20398b51a.pdf
[3] Ismail, S. Malone, M. Van Geest, Y and Diamandis, P. 2014. Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it)
