This structure also enables an enterprise to scale more rapidly through a staff-on-demand approach, expanding or contracting to meet real-time business needs with focused, target-oriented teams. After all, self-organizing teams don’t require deep management hierarchies. Previously, vertical integration was the pinnacle of enterprise development now it’s leanness and a much flatter structure that comprises one management layer rather than several. In just three years, the company has increased its market capital from US$20 billion to today’s figure of US$60 billion. The structural shift in organization that Van Geest advocates requires a significant change in mindset, especially for larger incumbents hoping to thrive under economic models such as XaaS and the shared and platform approaches, “First, you have to revitalize the core – it's hard, but possible,” he says, “But more importantly, you have to disrupt yourself on the edges.” By this, Van Geest supports a decentralized approach based on small, self-organizing teams with “the decentralized authority to make decisions.” Haier – the home appliance and consumer electronics giant – is a good example of this, having stripped away its middle management layer, reorganized its teams in China into 2,800 self-organizing units of seven employees, and focused its corporate culture on entrepreneurship and platforms, including letting customers take part in front-end design. IDEA and SCALE: The 10 key features of exponential organizations What is an exponential organization?Īccording to Van Geest, “An exponential organization is a new kind of organization that’s at least 10 times faster, more efficient, or more effective than a classic linear organization.” An ExO’s impact is disproportionately large because it adopts an organizational design that’s lean, asset-lite, decentralized, and non-hierarchical, as well as exponential technology accelerators to scale up quickly and expansively. That’s why millennials know names like Netflix but not Blockbusters, Instragram not Kodak, and Amazon instead of Sears.

Typically, these types of companies fell short in one or more of the following areas: anticipating customer trends, the agility to quickly change business models, a top-down commitment to a digital future, or implementing the right technology strategies at the right time. Notably, more than half of the Fortune 500 companies in 2000 ─ entrenched market leaders with years of experience and expansion under their belts ─ have disappeared from the list, either permanently or else they’re reemerging on the peripheries of their vertical with a complete strategic overhaul, like Blackberry and Nokia. The rise and fall of the Fortune 500 empire

Yuri Van Geest, the founder of Singularity University in the Netherlands, believes that only exponential organizations (ExOs) can truly reap the rewards of the new digital paradigm.

The second is that while most CXOs are committed to digital transformation, studies indicate that many are struggling to align investments, organizational adjustments, and priorities. Here are two trends that all CXOs need to know: First, the shelf life of an enterprise’s competency is declining rapidly, down from 30 years in 1984 to just 5 years in 2014.

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