David Espindola - The Exponential Era

In the Exponential Era, having access to data and having the ability to understand the information the data is telling us is on every individual's and organization's critical path for survival. It is an era where “knowing” is becoming paramount to surviving. The traditional “have's and have not's,” which referred to one's means, have accelerated, transformed, and become “those who know and those who don't.” 15This is an era that runs on creating, harnessing, intercepting, and integrating technologies at speeds and scales never before experienced in human history.

Our inability to relate to the Exponential Era is most pronounced when we try to grasp the fundamental construct of exponential curves. Picturing in our minds how technologies move imperceptibly across what appears to the brain as distant and slowly approaching horizons – only to be surprised as they suddenly explode in front of us at speed and volume – is one of the great mental conundrums of the Exponential Era. These explosions in the growth and the unprecedented rates of adoption of new technologies are leaving most of us unprepared and in wonder. We find ourselves trying to set our minds to a view that is capable of constantly adapting to the sudden appearance of new technologies and digitally driven transformations.

These digital transformations are the direct result of the confluence of new technologies converging to create entirely new ecosystems. 16These new ecosystems grow at velocities well beyond our primal brain's hunting mode speeds. Calculating where to launch a spear and at what speed to intercept a target remains a difficult task that takes time and practice to master. However, a computer aims, calculates range, fires, and hits a target in milliseconds, again and again.

Humans have difficulty observing and responding to the future. We have trouble extrapolating meaning or even putting energy into understanding a time period that appears to be far away. While some of us can marshal and focus our brain's processing energy on “futures,” most of us can't. In fact, very few of us can focus for extended periods on our future. The reason is fairly simple. Our brains are not comfortable with diverting energy from human self‐preservation and survival. In order to survive, we are careful with how we allocate our finite brain energy; and it is very much “in the moment!”

Research shows that our brains think that concentrating on our current self is rather more important than worrying about our future self, let alone future generations. 17The study of fMRIs overwhelmingly concludes that the energy that our brains put to our current self, relegates the future self to a much lower priority. As Jane McGonigal, director of the Institute for the Future writes: “Your brain acts as if your future self is someone you don't know very well and, frankly, someone you don't care about.” 18It seems only logical. After all, we have survived as a species for a long time by being alert to immediate threats. Our brain activity is largely occupied with operating life‐preserving processes and looking for threats and pleasures right now. This leaves us wide open to dramatically underestimating the real impact of exponential curves over time.

Humans are easily fooled by exponentials. To illustrate the point, we will borrow from the famous fable of the origin of the game of chess. Legend has it that the creator of chess presented it as a gift to an emperor in India. The emperor was so impressed with the ingenuity of the game that he felt compelled to compensate the man and asked him what he would like to receive as his reward. The man humbly responded:

“Oh emperor, my wishes are simple. I only wish for this. Give me one grain of rice for the first square of the chessboard, two grains for the next square, four for the next, eight for the next, and so on for all 64 squares, with each square having double the number of grains as the square before.”

The emperor was astounded that this ingenious man only wanted a few grains of rice as his reward for such a wonderful game. Without much thought, he granted the man his wishes. It wasn't until sometime later that his treasurer came back and advised the emperor that it would be impossible to pay the man the quantity requested, as the grains of rice added up to an exorbitant amount: 18 quintillion (18 followed by 18 zeroes) to be exact, the equivalent of roughly today's entire worldwide crop for a decade. 19

How could the emperor be so easily deceived? Simple. He was thinking linearly like most of us often do, while the ingenious man understood and used the power of the exponential curve. And herein lies the threat, or the opportunity, depending on your point of view. Humans tend to think linearly, but the technology changes we are experiencing now follow an exponential curve.

We introduced you to the concept of the inflection point in the beginning of the book. Some authors refer to it as the elbow of the exponential curve. When exponential growth is plotted on a graph, it appears as if very little, if anything, is happening for a long time. The graph is essentially flat until suddenly an elbow appears. At first glance, that elbow may seem like a single point on the graph where the inflection happens, and the curve starts to go way up. But in reality, the business characteristics of an inflection have three distinct points, as illustrated in Figure 1.1: the Initial Inflection Window, the Turning Point, and the Point of No Return.

Figure 1.1A closer look at the elbow of the exponential curve

These distinct points mark important phases of growth that have significant implications for the development of business strategies. These phases are analogous to what you might encounter in Gartner's hype cycle, to represent different stages of technology development and commercialization. 20

Before the Initial Inflection Window, as discussed before, the graph is basically flat. During this period, new technologies are being developed, new terms are being coined, and the press is starting to pay attention to these developments. Think of artificial intelligence in the 1950s or Bitcoin in the mid‐2010s. This may lead to some initial “hype,” and you may start to hear pundits proclaiming that a new world order has arrived. Inevitably the initial hype leads to disillusionments as these technological wonders fail to deliver on their overhyped powers.

This is when you will start to hear the naysayers remind you how they were right, and how this overhyped change is never going to happen. At this point, only a few initial entrants to the market will have survived as the Initial Inflection Window reveals itself. This is the time period when threats and opportunities become more pronounced.

It is during the Initial Inflection Window that the early signals start getting stronger and clearer. At this stage, it would be advisable to set up several short experiments to explore the possibilities and start putting the proverbial “toe in the water.” This is the time to make initial small investments in capabilities, but it is not yet the time to make big bets.

Subsequently, the inflection point starts to become more pronounced and as those early market entrants start to get traction, we enter the Turning Point. By this stage at least a rough plan should be in place based on assessments of risks and opportunities. A priority list based on early experiments will guide investments as the organization iterates on gathering data, collecting market feedback, and making executive decisions on what initiative to scale or terminate. We will cover this process in detail later in the book.