David Espindola - The Exponential Era

Eventually the growth accelerates as we get past the Turning Point. At this stage, the benefits created by the exponential growth have become apparent to everyone, and what used to be an opportunity has turned into a threat for those who adopted the wait‐and‐see approach. Those who did not engage in the previous stages of the inflection point or who stubbornly stuck to their now stale “strategic plans” scramble to catch up watching powerlessly and in disbelief as their businesses go into decline. They have now reached the Point of No Return.

At this stage, what seemed like a faraway future has become the new reality, and it bears no resemblance to the past. It may appear as if it happened suddenly, almost magically, like a marvel that came out of nowhere. But in reality, the future does not just happen all at once, as McGrath insightfully noted. It begins to unfold in a cadence that allows you to detect early signals, but only if you are paying attention.

Humans tend to ignore the early inklings, lose patience with the slow progression of change during the early compounding, miss the lift‐off in the inflection window, chase past the Turning Point, and then become exasperated when the curve disappears into the Point of No Return. All of it in what seems like the blink of an eye.

In addition to our natural struggles in seeing exponential change, hierarchies in large organizations also create dangerous blind spots. The early evidence of change seldom reaches the CEO's office or the corporate boardroom. In fact, we know that by the time information filters through several layers of management, the early signals that are so critical to spotting inflection points in the Exponential Era are muted by PowerPoint presentations that lack granularity and clarity. The early signals are usually only visible by those working at the frontlines. It is the frontline employees who first hear about competing startups that are hitting the market; disrupting technologies that are threatening existing business processes; or customers who are migrating to cheaper, faster, and more efficient ways to get what they need. As Andrew Grove eloquently explained in Only the Paranoid Survive , “When spring comes, snow melts first at the periphery, because that is where it is most exposed.” 21

Intuitively, being alert to the early signals that may indicate a potential business inflection point makes perfect sense. Yet, it is surprising to see the number of senior executives whose agendas are filled with urgent matters related to making this quarter's numbers. Instead of being at the periphery, paying attention to the early signals, many spend their time in internal meetings, surrounded by team members who are worried about self‐preservation and don't necessarily want to “rock the boat.”

The danger here is that you may end up building a self‐reinforcing echo chamber that filters any signals contrary to deep‐rooted beliefs. Leaders may have the best of intentions as they communicate their visions and encourage their troops to go out and win more business. Middle managers will “drink the kool‐aid” but will avoid reporting conflicting news up the chain. Frontline employees may unintentionally hide information from their managers in a misplaced effort to give a good impression. Consequently, senior executives become completely isolated from the realities and the signals coming from the edges. They may think that their vision and strategies are spot on because they never get to hear conflicting signals.

Amy Webb, Founder of the Future Today Institute and author of the bestseller The Signals Are Talking: Why Today's Fringe Is Tomorrow's Mainstream , is a great proponent of creating mechanisms that allow organizations to effectively forecast changes so that they can identify risks and opportunities before disruption hits. 22These mechanisms force the organization to be on the constant lookout for signals that are not visible through the usual channels. They bypass organizational hierarchies and introduce processes in which there is a continuous cadence of discoveries and learning opportunities across all layers of the organization, from individual contributors to the CEO.

Such mechanisms are implemented effectively by organizations that have adopted a forward‐thinking, discovery‐based methodology and whose leaders have instilled a culture that embraces changes and risk‐taking. This is the essence of what we are going to explore with you in this book.

“A strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”

Andrew Grove

As we explore fast‐growing technologies that are impacting our future, consider the following exponential curves, their accelerated growth, and consequent cost reductions.

Figure 1.2Cost per human genome

Source : NIH. National Genome Research Institute. Public Domain. https://www.genome.gov/about‐genomics/fact‐sheets/DNA‐Sequencing‐Costs‐Data

In telecommunications we find the following remarkable advancements:

Fixed broadband speeds will more than double by 2023.

Mobile (cellular) speeds will more than triple by 2023. 23

In biotechnology, the costs to sequence a base pair of genes have decreased by half every 18 months for the last decade ( Figure 1.2).

Note that there are approximately 1,000 nucleotide pairs of coding sequence per gene. The human genome contains approximately 3 billion of these base pairs. Thirty years ago, a scientist could expect to spend 20 years exploring the sequence of one gene pair. The first whole human genome sequencing cost roughly $2.7 billion in 2003. By 2006, the cost had decreased to $300,000. In 2016, the cost reached a remarkable and generally affordable $1,000 mark and now a Chinese company claims it can sequence the human genome for $100. 24

Another remarkable area of exponential growth is the amount of knowledge humans have accumulated in less than a century. If you were born in the late 1940s to early 1960s (aka baby boomer), while you were growing up you wouldn't have seen the beginning of the exponential growth of data accumulation and the expansion of knowledge. But by the time you reached adulthood it was changing rapidly enough for you to notice the inflection point. If you are a young adult today, you are experiencing first‐hand the overwhelming growth and impact of knowledge expansion at an exponential rate. IBM predicts that knowledge will double every 11–12 hours in 2020. 25

If the progression of the numbers 32, 64, 128, 256, 512, 1,024 looks familiar to you, it is because you have seen them on your camera memory discs, your computer, your smartphone, and your TV. The fact that specifications for such devices have been doubling is because of an exponential technology called semiconductors. If you have experience in the semiconductor market you will recognize the number progression as nodes along Moore's law.

Moore's law is a prediction made by Gordon Moore in 1965 that the number of transistors per silicon chip would double every 18–24 months. Stated another way, Moore predicted that the size and cost of the devices in our digital world would halve and their computing power would double about every two years.

The impact of Moore's law in the increase in the density of integrated circuit chips is illustrated in Figure 1.3. This increase drives computing power.