8 principles of an exponential organization

An exponential organization is one that systematically orients itself towards hyper growth and innovation. It is actually more comfortable taking risks and experimenting with new ideas than maintaining the status quo. It expects to bet big, and win big, and operates under that assumption in its daily behaviors.

But, don’t be fooled, an exponential organization isn’t the wild west. It isn’t reckless in it’s decision making. In fact, much the contrary. It takes incredible discipline and forward thinking to embrace an exponential mindset across the organization. Here are 8 principles that help form a foundation on which to build that discipline:

• Value ideas: High-performing cultures establish conditions that value and support ideas. An expectation should be set that every employee is not just encouraged to generate ideas (which span external, customer-facing solutions to internal, process-oriented improvements), but are actually responsible for generating ideas. Exponential organizations don’t say “that’s interesting” to good ideas, they say “how can we try that, today?”
• Emphasize speed, but embrace patience: As CEO of Upstart (and former President of Google Enterprise Apps), David Girouard wrote in his article Speed as a Habit, “the fastest company in any market will win.” As barriers to entry, and access to resources, level out, the ability to move quickly in every aspect is often what separates great from good and good from average. However, patience is a key qualifier in the speed equation (as expressed below, from HBR). Exponential ideas often take time to mature, so maintaining a long-term view while accelerating daily progress is critical.

• Distribute authority: Building political hierarchy in an organization isn’t just a bad idea culturally, it’s inefficient. Creating unnecessary levels of hierarchy is time consuming to manage and ultimately stifles the creative potential that is necessary to allow big ideas to thrive. The most exciting organizations today are realizing that building an organizational network, rather than a pyramid, is the key to creating the autonomy and purpose that high-performing employees desire.
• Act decisively: An over-emphasis on consensus is often the killer ingredient that undoes so many great strategies an organization puts in place. Jeff Bezos talks about type 1 (non-reversible) and type 2 (like walking through a door, you can always go back) decisions, and specifically says “As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”
• Harmonize top down and bottom up direction-setting: An incremental mindset says that vision and direction in a company always has to come from the top. That is partially true — leadership should definitely have a vision and inspire others to follow — however, in an exponential organization, it’s understood that great ideas and perspectives that could take the company in new directions exist throughout the ranks. By creating systems, such as OKRs, and just remaining connected to the pulse of the organization, you allow yourself to be open to allowing innovative thinking from anyone in the company to shift the direction of the company as a whole.
• Operate in humility: What separates a high-growth, trendy, company from an enduring, leading, company that can change an entire industry is often the organizational humility. To achieve long-lasting success + high growth, there must be an openness to learn from what is happening in the rest of the industry and remain skeptical about the current position of the company. Put simply, these types of companies are never satisfied. This comes in stark contrast with the trendy company who believes they have “cracked the code” with the new programmatic, algorithmic, blah blah you get the picture (I’m looking at you adtech industry). This humility in the organization trickles down to every level, and builds a culture that values a growth mindset way of working and thinking.
• Establish learning as a habit: Training is a line-item is almost every company’s budget, but shifting your thinking of training as an HR necessity to a cultural fabric of the organization can be a significant differentiator and catalyst for growth. Learning is the backbone of what establishes an environment that is highly oriented towards a “capacity for renewal” (as McKinsey’s organizational health index would call it), which indicates the capacity for an organization to evolve, and even reinvent itself, seamlessly. Would Netflix have pivoted from DVD rentals to streaming content without a high capacity for renewal? Likely not.
• Double down: Exponential organizations focus more time on doubling down on their bets that are working (ideas, people, initiatives, products, etc.), rather than spending a disproportionate amount of time fixing things that aren’t working. Pour gasoline on the fire that you want to burn the brightest.