Do You Know The Exponential Growth Secrets (1)?
If you resonate with 1 or more of the 3 categories mentioned below then this series of articles is for you.
1. Established companies that need to make a shift from the past business practices and embrace successfully innovation, exponential growth and the potential of the 21st century.
2. Start-ups that are struggling to scale their business and need inspiration and strategy to scale faster.
3. Anyone who is interested about how to grow a business faster or create exponential growth in the 21st century.
The last 100 years we have moved from the era of manufacturing to the era of distribution, to the information era, with the transparency and connectivity that the internet brought to us we are now in the customer era and soon we are moving to the era of IoT/AI which will be followed from the era of the autonomous entities. The coming generation will be the first generation of adults that will grow up with IoT and AI when the acceleration of innovation and change is and will be exponential. In order to understand better the major changes taking place in the 21st century we need first to understand what are the major megatrends in the world. These trends are:
1. Acceleration of urbanization
2. Accelerating technological change
3. Challenges of an aging world
4. Greater global connections
5. Climate change
As the article is short we will now focus on accelerating technological change as it will have major impact to the world the decades to come. With information technology growing exponentially, every field of science/business that has significant information content and/or is enabled from computing based technologies is growing or will become exponentially more efficient. It took the Radio 38 years to have 50 million listeners, the TV 13 years, the Internet only 3 years and Facebook only 1 year. In the past the product adoption (S) curve was decades long and nowadays we talk only about years. As with any technological innovation what is important is the value that bring to customers, only focusing on technological change with meaningful innovations.
To understand how to enable faster growth we first need to understand what are the impacts of the technological changes. Understanding these impacts and making good use of them is essential for faster growth of any business:
1. Dematerialization: Physical products become digitized and are distributed as bits.
Without any further comments the examples below explain well the concept of dematerialization:
• Consumer electronics product categories (audio, camera, video, GPS… ) have been almost eliminated by smart phones. Hardware has been to a great extend replaced with firmware and cloud software.
• Transportation: Using UBER/DIDI instead of owning a car as the total lifetime cost of vehicle ownership is higher
• Books: From physical hardcopy to online books (bits), from DVD to online streaming
2. Demonetization: Reduction of the value of a market segment (especially service costs) by introducing a new business model.
When a business model changes (e.g from paid to ad based) for the service that has been digitized the cost of replication or transmission is almost 0, resulting finally in demonetization (e.g digital communication and photography). The examples below are evidences of demonetization in a number of market sectors:
• What’s app > Long distance calls
• iTunes > Record stores
• Amazon > Book stores, supermarkets
• AirBnB > Hotel chains and partly travel platforms
• Uber/Didi > Car as a Service, Taxi fleets and more…..
• Netflix and YouTube > Have demonetized entertainment
3. Democratization: Availability of key technologies/applications to almost everybody. Smartphones become the platform to access everything.
Without any further comments the examples below explain well the concept of democratization:
- Power of the Individual
• Individuals with Smartphones have more power in their hands than any president of any country 20 years ago
• Individuals or a few individuals together can build powerful companies utilizing the power of the crowdsourcing and crowdfunding. For crowdsourcing and crowdfunding see extensive explanation later on
• Individuals through social networks have tremendous power on brands and not only the other way around as in the past
- Unlimited computing power (cloud computing)
- Artificial Intelligence (virtual assistants, healthcare)
- Unlimited competences/cost competitive resources (crowdsourcing, crowdfunding)
- Unlimited education (free or low cost > on line universities)
- Free communication (smartphones, internet, What’s app, Skype) and mobile phones changed Africa by facilitating cheap/easy communication and mobile payments resulting in faster economic growth.
4. Industry and market boundaries are fading
In the 20th century the most of the technologies were industry specific making it difficult for a company to make a move to another industry. In the 21st century as many technologies cross many industries, the results are massive changes in market and industry boundaries as well as new business models are emerging:
Re-definition of markets, from product specific to customer-need centric: car market becomes mobility market. The definition of an industry is changing dramatically as digital technologies create new businesses that transcend traditional industry borders (e.g., Google, Apple, Alibaba, Tencent, Amazon…). Because many of the new technologies like cloud, machine learning, data analytics and AI cross many industries, traditional core businesses can capture new value by harnessing these technologies in other applications/market segments/industries to deliver Xponential growth.
• Google: Google is using various technologies (Mobile AI, Cloud Computing Machine Learning/AI, High Speed Internet, IoT, Biotechnology & Genetics and Crowd Sourcing) that cross many industries (Entertainment, Communication, Education, Finance, Transportation, Military, Medical,…) to expand their activities beyond their main revenue generator (Search/Google Ads). Google or better Alphabet, creates value with Google Play (media), Android (handsets) and Google Wallet (retail) and captures value through ad sales (advertising), its core business.
• Amazon: Creates value with Kindle (handset) and Amazon apps (media) and captures value through e-commerce, its core business.
5. High Scalability: At least 10 X Better/Bigger/Faster/….
Xponential technologies are not about incremental improvement. They are about radical and huge improvements in something. Despite the fact we are generally resistant to change we will always continue to adopt things that are 10X or even more better. This means solving problems that make our lives 10X better will be always in demand. Moreover the Xponentially growing technologies allow to make the shift to Better AND Bigger AND Faster AND Cheaper instead of the traditional Better OR Faster OR Cheaper. The examples below explain better the above mentioned principle:
• Smartphones including all functions are better AND cheaper AND easier to use than previous phones and all devices they replaced like IPod, camera, navigation system, video recorder.
• What's app and Wechat are cheaper AND easier to use AND offer more variety of functions than traditional mobile phones.
• Drones for many applications are cheaper AND faster to deploy AND easier to use: Taking pictures for big agricultural areas or for checking progress of big real estate projects versus other methods like helicopter or people.
• Automotive industry: In the future it is expected that autonomous vehicles used for taxi will be cheaper AND better service AND safer than current taxis.
• Upcoming super markets or coffee shops automated with less people and no cashiers etc will be cheaper AND easier to shop AND faster to check out than current supermarkets.
6. Crowd based resources on demand: You can now hire an expert on demand, which is a win-win for both parties.
Many companies make better use of the world’s resources to become a more innovative and better performing company. You can crowdsource almost all organizational capabilities in a very competitive performance/cost ratio:
Design (Website, Logo, Marketing Materials using platforms like Fiverr, Upwork, 99 designs, …), concept design ideas from communities (Kickstarter, Indiegogo), collaborative innovation/ideation (Spigit), concept validation (Reward crowd funding e.g Indiegogo), computational resources (Amazon, Rackspace,… ), on demand workforce (Freelancer), prototypes (Techshop), video commercials (Tongal), incentive competitions for breakthrough solutions with data (Kaggle), virtual assistants and finally funding (Kickstarter, Indiegogo, Crowdfunder).
But beyond riding the waves of the above mentioned impacts to create faster growth you need the right mindset and then a process to follow. Please find below thoughts about the right mindset and the process will follow in the next article. To succeed you need to change and expand your thinking/mindset:
Embrace a transformative purpose, embrace autonomy and speed
Create a networked, outward looking innovation culture
Monitor technology breakthroughs, major customer behavior changes and experiment to find solutions
Search actively for new business models
From competing in own market TO expanding the market
From own industry TO expand to other industries
From scarcity TO abundance
From thinking in OR OR OR terms TO AND AND AND terms (e.g new value creation AND cost reduction, faster AND cheaper AND better)
From product centric TO customer and experience centric
At the same time you need to prepare the team for the journey to become more resilient in order to succeed. Although the prospect of exponential growth is very appealing it needs the right approach as people do not like change, especially big changes associated with exponential mindset and growth, internal politics and divisional silos are major hurdles in established companies and finally change needs the right motivation and determination to succeed. Finding ways to reduce the above major hurdles is essential and the below mentioned actions will help a lot:
- Involve all team members from the beginning, be open, acknowledge that the task is difficult and that with collaboration you will succeed.
- Ensure people discover and experience themselves the need for change as well as talking directly to customers and other ecosystem stakeholders
- Assemble 1 team or teams that will do both strategy and execution to avoid the non invented here syndrome as well as people are motivated to execute the strategy they developed.
- Split difficult tasks in smaller parts to create success and increase motivation
- Create Trust and Flow among team members, see more about Trust andFlow in the attached website (www.businessdynamics.hk), guide people in the various process steps by explaining why we do what we do, what we can expect as well as celebrate small successes during the journey.
- Treat all employees as equally important as all are important to deliver the company promise.
The 2nd article, Xponential Growth 2nd Article will continue from here and describe the basic process how to enable exponential growth after the right mindset and team trust and flow is in place.
I welcome more comments and thoughts. How is this applicable for your company?
Thank you very much. If you like the subject please share and follow me to read more articles.
Mike Mastroyiannis is Business, Management & Executive Coach and Management Consultant for among others, Transformational Leadership, New Business Models and Exponentially Disruptive Innovations. He has served as CEO of business units in Multinationals, founded or lead start-ups and serves in advisory boards. He can be reached through LinkedIn or email mike@TenX2.com