David Espindola - The Exponential Era

So how can large companies develop the same capabilities as startups that enable them to detect early signals? How can they “see around corners” as Rita McGrath calls it? How can the leadership team incentivize the organization to pursue new opportunities and create a culture that embraces exponential change, and the chaos that it can create, as a natural part of doing business in this new era?

We believe the answer lies in adopting a robust methodology and a set of tools that the organization can use to guide it through the disruptive nature of the Exponential Era. We call it Strategic Planning for the Exponential Era, or SPX for short.

We will spend a significant portion of the book unpacking the basis of SPX and its fundamental activities. SPX was born out of a set of principles and methods from disciplines as diverse as software development, manufacturing, design, and the military. It applies to strategic planning the benefits that other methods that embrace agility and experimentation have brought to the solution of complex problems when operating in an environment that is uncertain and that changes at fast speeds.

We can't promise you that we will eliminate uncertainty. Nobody can. But what we can tell you with a high degree of confidence is that there are robust methodologies and techniques that have been used effectively in diverse disciplines to manage uncertainty and the complexities associated with change. In the software field, where requirements are constantly changing, and the development of complex algorithms requires collaboration from individuals with diverse skills, the Agile movement brings much‐needed stability to a discipline that tends to be chaotic. In manufacturing, where rapid changes in customer demands, supplier schedules, engineering configurations, and production capacity challenge the ability to plan, Lean thinking provides innovative ways to address those challenges. In the world of design where there are no fixed solutions and no right or wrong answers, Design Thinking comes to the rescue. In the military, where lives are at stake in the battlefield, and leaders must make decisions under time pressure to outsmart opponents in the fog of war, the methodology developed by the US Air Force for air to air combat – Observe, Orient, Decide, Act – known as the OODA loop, provides a helpful framework to deal with such uncertainties.

As we explored how different disciplines deal with the types of challenges that executives encounter in developing strategies amid uncertainties typical of the Exponential Era, what stood out to us was just how much commonality was found in how these disciplines approach the problem. Our belief, and an important tenet of this book, is that the convergence of these principles, methods, and techniques used in multiple disciplines to deal effectively with the uncertainties of fast‐changing environments, connected in unique ways, form the basis of an effective methodology for strategic planning in the Exponential Era.

SPX helps organizations identify, explore, monitor, and intercept “horizons” – the changing trends and the technology convergences that can be hugely advantageous to the business if caught early enough, allowing timely and targeted investments, or disastrous if recognized too late, regardless of how much investment is made attempting to catch up.

The premise behind SPX is that it is possible to detect the early signals of transformative disruptions and to map risks, opportunities, and capabilities, allowing the creation and prioritization of actionable plans designed early enough to keep ahead of exponential change. Let's make one thing clear. We are not suggesting that SPX will help companies predict the future. What SPX does is help companies navigate through this new era of swift changes in technology, business, and society. It does this by monitoring the early signals that help anticipate changes and by mapping risks, opportunities, and capabilities, facilitating the prioritization of actionable plans to keep ahead of these changes.

Table I.1Sample list of products shut down by Google.

Source : Data from Google Graveyard, Killed by Google.

Organizations that want to not only survive but thrive in the Exponential Era will have to embrace disruptive change and discontinuity. As uncomfortable as this may seem to companies with traditional business models and behaviors, with the right support from the senior management team, and the right shared values and frameworks, organizations can develop behaviors and cultures that embrace change. We see this type of culture in relative newcomers, like Facebook, where employees are told to “break things,” or Google, where employees can dedicate a portion of their time to work on projects of their choosing. Google is proud to disclose an extensive list of products and services that they decided to shut down. The website “ killedbygoogle.com” lists 190 of these products and services as of this writing, and you can see a sample list in Table I.1. These shutdowns are not considered failures, but instead, they are indispensable experiments that guide Google in its never‐ending pursuit of what they refer to as “moonshots,” an attempt to create game‐changing products and platforms.

But it is not only newcomers like Facebook and Google that are capable of developing change‐centric cultures. As we have discussed, older, more entrenched organizations can also develop such cultures, albeit, in the cases of IBM and Microsoft it required a change at the CEO level.

Experimentation is an integral component of SPX. We believe that in response to fast changes in technology, organizations must implement small projects that are iterative in nature, and that run continuous short cycles. However, experimentation is not sufficient – it is just one aspect of exploration. We also believe that in order to identify business inflection points, organizations need to conduct research long in advance.

By using Artificial Intelligence to uncover new insights from patent databases, companies can identify leading indicators of emerging technologies that may have a future impact on their business. We will cover this topic in detail in Chapter 4where we discuss the Predictive Analytics component of SPX.