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The Exponential Framework

March 2019

How to apply sharing economy attributes to large, successful companies

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// Current

Chief Growth Officer / Crypto Lead

// Entrepreneur

SlideRocket

Former Software Developer

// Mentor, Ran Accelerator Programs

Venture Hive

Rokk3r 10xU

Mike Lingle, ExO Works

mike@exo.works

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10x

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What is an ExO?

“An Exponential Organization (ExO) is one whose impact is disproportionately large—�at least 10x larger—compared to its peers because of the use of new organizational techniques that leverage exponential technologies.”

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What is an ExO?

Impact is at least 10x larger vs. peers
Some part of the business is digitized
Leverages accelerating technologies
Unlocks a new business model
Decreases cost of demand
Decreases cost of supply
Is usually a platform

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Scarcity

Abundance

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Access �Abundance

Generate Abundance

Exponential

Technologies

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The ExO Formula

ExO

=

MTP + SCALE + IDEAS

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ExO Attributes

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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Interfaces

Experimentation

Autonomy

Social Technologies

Dashboards

ExO Attributes

Staff on Demand

Algorithms

Leveraged Assets

Engagement

Community and Crowd

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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AWS delivers 2/3 of the parent company's profits and is �still growing at around 50% �per year.

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Morgan Stanley says Waymo could be worth $175B

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P&G used ExO approach to completely remove invoices from a major portion of their supply chain.

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Fortune 100 Company	ExQ
Google	72.9
Amazon	66.2
Apple	62.6
IBM	61.0
Verizon Communications	58.8
General Electric	56.6
Microsoft	55.9
Cisco Systems, Inc.	55.8
The Walt Disney Company	54.8

Fortune 100 Company	ExQ
Costco Wholesale	32.0
Philip Morris International Inc.	31.6
Hess Corporation	31.3
HCA Holdings, Inc.	31.0
Phillips 66	30.7
Tesoro Corporation	30.0
Valero Energy	29.8
Plains GP Holdings, L.P.	27.5
Energy Transfer Equity, L.P.	26.5

IMPACT: GLOBAL

Average S&P +9.9%

Top 10: + 26.7%

Bottom 10: -1.7%

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Ranking of Fortune 100 by Exponential Quotient

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exo.works/exq

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ExO Attributes

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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What’s an MTP?

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Higher, aspirational purpose

Massive Transformative Purpose

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Higher, aspirational purpose

Guiding principle for key decisions

Massive Transformative Purpose

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Higher, aspirational purpose

Guiding principle for key decisions

Positive global impact

Massive Transformative Purpose

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Higher, aspirational purpose

Guiding principle for key decisions

Positive global impact

Guide people both inside and outside

Massive Transformative Purpose

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Organize the world's information and make it universally�accessible and useful

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Radical breakthroughs for the benefits of humanity

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?

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Delivering great entertainment

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A mission statement
Tech-specific or narrowly focused
Representative of what is possible today
Motivated solely by profits
Just a big goal

An MTP is NOT

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The global transformation of business

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ExO Attributes

Staff on Demand

Algorithms

Leveraged Assets

Engagement

Community and Crowd

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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Employee autonomy

7x more customers per employee

Crowd engagement

Global media company in 5 years

Experimentation

The Institutional Yes!

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A $35 billion financial services is able to save up to $1B in lost business by implementing a regulated single-click sign-up process.

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A multinational corporation increased customer satisfaction by 10X and reduced wasted time by 83% at their call centers. They used artificial intelligence to understand each customer’s question and access the right answer from the right database in real time (including ingredients, sourcing, and supply chain information). This allows human agents to focus on building relationships and selling additional products.

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A financial services firm identified a $300 million opportunity to win new customers in an adjacent market. Their approach eased the average 2.5 hour commute for locals in a major city by digitizing and unifying different transportation systems into a single mobile app.

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Staff on Demand

“Most of the bright people don’t work for you, no matter who you are”

Bill Joy

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Rather than ‘owning’ employees, ExOs leverage external people for simple to complex work—even for mission-critical processes.

Staff on Demand

STAFF ON DEMAND

In a 2012 white paper for the Aspen Institute, Michael Chui, a partner at the McKinsey Global Institute, described employment theory in the 20th century as follows:

The best way to harness human talent is

through full-time, exclusive employment

relationships where people are paid for the

amount of time they spend at a common

location. They should be organized in stable

hierarchies where they are evaluated primarily

through the judgment of their superiors, and

what and how they do their jobs is prescribed.

Chui then proceeds to dismantle every phrase in that

paragraph to show how fundamentally out of date that theory

has become in little more than a decade. Literally none of it

applies today.

For any ExO, having Staff on Demand is a necessary

􀁆􀁋􀁄􀁕􀁄􀁆􀁗􀁈􀁕􀁌􀁖􀁗􀁌􀁆􀀃 􀁉􀁒􀁕􀀃 􀁖􀁓􀁈􀁈􀁇􀀏􀀃 􀁉􀁘􀁑􀁆􀁗􀁌􀁒􀁑􀁄􀁏􀁌􀁗􀁜􀀃 􀁄􀁑􀁇􀀃 􀃁􀁈􀁛􀁌􀁅􀁌􀁏􀁌􀁗􀁜􀀃 􀁌􀁑􀀃 􀁄􀀃

fast-changing world. Leveraging personnel outside the base

organization is key to creating and running a successful ExO.

The fact is, no matter how talented your employees, chances are

that most of them are becoming obsolete and uncompetitive

right before your eyes.

As John Seely Brown has noted, the half-life of a learned

􀁖􀁎􀁌􀁏􀁏􀀃􀁘􀁖􀁈􀁇􀀃􀁗􀁒􀀃􀁅􀁈􀀃􀁄􀁅􀁒􀁘􀁗􀀃􀁗􀁋􀁌􀁕􀁗􀁜􀀃􀁜􀁈􀁄􀁕􀁖􀀑􀀃􀀷􀁒􀁇􀁄􀁜􀀃􀁌􀁗􀂷􀁖􀀃􀁇􀁒􀁚􀁑􀀃􀁗􀁒􀀃􀁄􀁅􀁒􀁘􀁗􀀃􀃀􀁙􀁈􀀃

years. In his recent book, The Startup of You, LinkedIn founder

Reid Hoffman notes that individuals will increasingly learn to

manage themselves as companies, with brand management

(MTP!), and marketing and sales functions all brought down

to the individual. Similarly, Ronald Coase, who won the Nobel

Prize in Economics in 1991, noted that enterprises are more like

families than industries, and that corporations are more of a

sociological construct than an economic one.

For any company today, having a permanent, full-time

workforce is fraught with growing peril as employees fail to keep

their skills up to date, resulting in personnel in need of greater

management. In our fast-changing global and Internet-driven

marketplace, increasingly desperate organizations are turning

􀁗􀁒􀀃 􀁈􀁛􀁗􀁈􀁕􀁑􀁄􀁏􀀃 􀁄􀁑􀁇􀀃 􀁗􀁈􀁐􀁓􀁒􀁕􀁄􀁕􀁜􀀃 􀁚􀁒􀁕􀁎􀁉􀁒􀁕􀁆􀁈􀁖􀀃 􀁗􀁒􀀃 􀃀􀁏􀁏􀀃 􀁗􀁋􀁈􀁌􀁕􀀃 􀁈􀁛􀁓􀁈􀁕􀁗􀁌􀁖􀁈􀀃

gaps. For example, in an effort to keep the overall skills of the

organization fresh, AMP, Australia’s largest insurance company

requires that half its 2,600-strong IT department be made up

of contractors. According to Annalie Killian, a global executive

at AMP, such a requirement is not just helpful; in this day and

age, it’s mandatory.

While maintaining permanent staff is likely to remain more

important in certain equipment- and capital-intensive industries

such as shipping, mining or construction, in any informationenabled

business a large internal staff seems increasingly

unnecessary, counterproductive and expensive. And the old

argument that freelancers and contractors only increase the

bureaucracy needed to manage them quickly falls away too:

􀁗􀁋􀁄􀁑􀁎􀁖􀀃􀁗􀁒􀀃􀁗􀁋􀁈􀀃􀀬􀁑􀁗􀁈􀁕􀁑􀁈􀁗􀀏􀀃􀁗􀁋􀁈􀀃􀁆􀁒􀁖􀁗􀀃􀁒􀁉 􀀃􀃀􀁑􀁇􀁌􀁑􀁊􀀃􀁄􀁑􀁇􀀃􀁗􀁕􀁄􀁆􀁎􀁌􀁑􀁊􀀃􀁒􀁘􀁗􀁖􀁌􀁇􀁈􀀃

staff drops almost to zero. In addition, due to the rapid rise

in the number of Internet users, the volume and quality of

freelancers has gone up dramatically in the last ten years.

Gigwalk, which relies on half a million smart-phoneenabled

workers, offers an example of how this new world of

employment works. When Proctor and Gamble needs to know

how and where its merchandise is being placed on Walmart

shelves around the world, it can use Gigwalk’s platform to

instantly deploy thousands of people who are paid a few dollars

to walk into Walmart and check the shelves. Results come in

within an hour.

Staff-on-demand initiatives similar to Gigwalk are springing

up everywhere: oDesk, Roamler, Elance, TaskRabbit and

Amazon’s venerable Mechanical Turk are platforms where all

levels of work, including highly skilled labor, can be outsourced.

􀀷􀁋􀁈􀁖􀁈􀀃 􀁆􀁒􀁐􀁓􀁄􀁑􀁌􀁈􀁖􀀏􀀃 􀁚􀁋􀁌􀁆􀁋􀀃 􀁕􀁈􀁓􀁕􀁈􀁖􀁈􀁑􀁗􀀃 􀁍􀁘􀁖􀁗􀀃 􀁗􀁋􀁈􀀃 􀃀􀁕􀁖􀁗􀀃 􀁚􀁄􀁙􀁈􀀃 􀁒􀁉 􀀃 􀁗􀁋􀁌􀁖􀀃

new business model, optimize the concept of paying for

performance to lower customer risk.

For talented workers, working on and getting paid for multiple

projects is a particularly welcome opportunity. But there’s

another angle as well: an increase in the diversity of ideas. The

data science company Kaggle, for example, offers a platform

that hosts private and public algorithm contests in which more

than 185,000 data scientists around the world vie for prizes and

recognition. In 2011, Insurance giant Allstate, with forty of the

best actuaries and data scientists money could buy, wanted to

see if its claims algorithm could be improved upon, so it ran a

contest on Kaggle.

It turned out that the Allstate algorithm, which has been

carefully optimized for over six decades, was bested within three

days by 107 competing teams. Three months later, when the

contest ended, Allstate’s original algorithm had been improved

271 percent. And while the prize set the company back $10,000,

the resulting cost savings due to better algorithms was estimated

to be in the tens of millions annually. Quite an interesting ROI.

In fact, in every one of Kaggle’s 150 contests to date,

external data scientists have beaten the internal algorithms, often

by a wide margin. And in most cases outsiders (non-experts)

have beaten the experts in a particular domain, which shows the

power of fresh thinking and diverse perspectives.

In years past, having a large workforce differentiated

your enterprise and allowed it to accomplish more. Today,

that same large workforce can become an anchor that reduces

maneuverability and slows you down. Moreover, traditional

􀁌􀁑􀁇􀁘􀁖􀁗􀁕􀁌􀁈􀁖􀀃 􀁋􀁄􀁙􀁈􀀃 􀁊􀁕􀁈􀁄􀁗􀀃 􀁇􀁌􀁉􀃀􀁆􀁘􀁏􀁗􀁜􀀃􀁄􀁗􀁗􀁕􀁄􀁆􀁗􀁌􀁑􀁊􀀃 􀁒􀁑􀀐􀁇􀁈􀁐􀁄􀁑􀁇􀀃 􀁋􀁌􀁊􀁋􀀐􀁖􀁎􀁌􀁏􀁏􀀃

workers such as data scientists because the available positions are

perceived as being low in terms of opportunity and high in terms

of bureaucratic obstacles. A study commissioned by Deloitte

found that 98 percent of recent data science graduates went to

work for Google, Facebook, LinkedIn or various startups. That

doesn’t leave much talent left over for everybody else.

That said, even Google’s workforce of 50,000 very smart

employees pales in comparison to the collective intelligence

of the 2.4 billion people online today. We have no doubt that

the extraordinary capabilities of this massive collection of

intellectual capital will eventually emerge. In the words of Chris

Anderson, the former editor-in-chief of Wired magazine:

The reality is that most of the world’s smartest

people don’t have the right credentials. They

don’t speak the right language. They didn’t

grow up in the right country. They didn’t go

to the right university. They don’t know about

you and you don’t know about them. They’re

not available, and they already have a job.

As we conducted research for this book, it quickly became

apparent how easy it is to outsource anything and everything. In

fact, Timothy Ferris, author of the bestselling 4-Hour Workweek,

has pioneered many new ideas around this topic.

􀀤􀀃 􀃀􀁕􀁐􀀃 􀁆􀁄􀁏􀁏􀁈􀁇􀀃 􀀤􀁇􀁙􀁌􀁖􀁒􀁕􀁜􀀃 􀀥􀁒􀁄􀁕􀁇􀀃 􀀤􀁕􀁆􀁋􀁌􀁗􀁈􀁆􀁗􀁖􀀃 􀀋􀀤􀀥􀀤􀀌􀀃 􀁓􀁕􀁈􀁖􀁈􀁑􀁗􀁖􀀃

a fascinating example of how to take the Staff-on-Demand

concept to a whole new level. ABA noticed two issues with

company boards: First, as Jaime Grego-Mayer, a partner at

ABA, notes, “95 percent of all boards are simply not managed,”

since most of a CEO’s attention goes to managing the company.

Second, removing a non-performing board member can be a

delicate and political matter; because it’s embarrassing for the

CEO, it usually doesn’t happen. ABA offers companies a human

resources department for boards, allowing CEOs to outsource

􀁗􀁋􀁈􀀃􀁐􀁄􀁑􀁄􀁊􀁈􀁐􀁈􀁑􀁗􀀃􀁄􀁑􀁇􀀃􀁗􀁕􀁄􀁆􀁎􀁌􀁑􀁊􀀃􀁒􀁉 􀀃􀁗􀁋􀁈􀀃􀁆􀁒􀁐􀁓􀁄􀁑􀁜􀀃􀁅􀁒􀁄􀁕􀁇􀀃􀁗􀁒􀀃􀁗􀁋􀁈􀀃􀃀􀁕􀁐􀀑􀀃

ABA establishes metrics for each board member (for example,

three phone calls per month to open doors) and then tracks

those metrics. If a board member is not performing, and a

􀁇􀁌􀁉􀃀􀁆􀁘􀁏􀁗􀀃􀁆􀁒􀁑􀁙􀁈􀁕􀁖􀁄􀁗􀁌􀁒􀁑􀀃􀁌􀁖􀀃􀁑􀁈􀁈􀁇􀁈􀁇􀀃􀁗􀁒􀀃􀁓􀁘􀁖􀁋􀀃􀁗􀁋􀁄􀁗􀀃􀁐􀁈􀁐􀁅􀁈􀁕􀀃􀁒􀁘􀁗􀀏􀀃􀀤􀀥􀀤􀀃

handles it, relieving pressure on the CEO.

In 2010, the world had 1.2 billion people online globally. By

􀀕􀀓􀀕􀀓􀀏􀀃 􀁗􀁋􀁄􀁗􀀃 􀁑􀁘􀁐􀁅􀁈􀁕􀀃 􀁚􀁌􀁏􀁏􀀃 􀁕􀁈􀁄􀁆􀁋􀀃 􀃀􀁙􀁈􀀃 􀁅􀁌􀁏􀁏􀁌􀁒􀁑􀀑􀀃 􀀱􀁈􀁄􀁕􀁏􀁜􀀃 􀁗􀁋􀁕􀁈􀁈􀀃 􀁅􀁌􀁏􀁏􀁌􀁒􀁑􀀃

more people and their brains will be available to work via

smartphones, tablets or at Internet cafes. The capabilities that

will be unleashed are beyond imagination. Against this onslaught,

what traditional organization, bogged down with permanent,

full-time employees, can endure?

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500 Experts in 35 Countries

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Staff on Demand

Why this is important:

The best people are outside your own company
Allows for agility and flexibility
Cash-efficient
Enables learning (fresh perspectives)
Unlocks rapid global reach

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Paid $10,000 for Kaggle competition
271% improvement in 2 weeks

50% of IT staff are consultants
Not just helpful, mandatory

Need to know where products are in Walmart
Uses Gigwalk app.

Staff on Demand

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Community & Crowd

“If you build communities and you do things in public, you don’t have to find the right people, they find you.”

Chris Anderson

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Communities are groups of people passionate about a cause and devoted to collaborating on it. ExOs leverage their community and crowd in order to scale.

Community & Crowd

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Crowd

Ideation
Validation
Support

Community

Production
Delivery
Operations

Community & Crowd

Crowd

Everyone Else

Staff on Demand

Vendors / Partners

Users / Customers /Alumni

Community

Core Teams

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Community & Crowd

Why this is important:

Increases loyalty to ExO
Drives exponential growth
Validates new ideas and learning
Allows for agility and rapid implementation
Amplifies ideation
Powerful marketing tool

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Algorithms

“If a person can do something, an AI is either already better at it or it will be in the future.”

Francisco Palao

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Algorithms

Algorithms—including Machine Learning and Deep Learning— provide insights into customers and products.

Self-learning software recognizes patterns in text, images, videos, languages etc.

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Algorithms

How to implement

Needs-driven approach (not technology-driven)
Automate repetitive tasks and knowledge workers
Culture management to implement it
Limitations of intelligent agents (i.e. understanding data)

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Leveraged Assets

ExOs access, rent, or share assets to stay nimble—outsourcing even mission-critical assets.

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Leveraged Assets

Why this is important:

Lowers marginal cost of supply to zero
Allows for agility and flexibility
Unlocks rapid global reach

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Engagement

Digital reputation systems, games, and incentive prizes provide the opportunity for virtuous, positive feedback loops—which in turn allows for faster growth.

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Engagement

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Engagement

Why this is important:

Increases loyalty
Amplifies ideation
Converts crowd to community
Amplifies marketing
Enables play and learning
Provides feedback loops with users

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Interfaces

Experimentation

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Dashboards

ExO Attributes

Staff on Demand

Algorithms

Leveraged Assets

Engagement

Community and Crowd

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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Interfaces

Select, filter and manage the outputs of all external attributes of ExOs (SCALE) as inputs into the internal organization in an effective, targeted, and seamless manner:

UX / UI
APIs

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Interfaces: UX / UI

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Interfaces: APIs

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Interfaces

Why this is important:

Filtering abundance into manageable chunks of input for different internal departments
Bridge between external growth drivers and stabilizing internal drivers
Avoids human mistakes
Allows for scalability

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Dashboards

“Measure what is measurable and what is not measurable make it measurable.”

Galileo Galilei

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Dashboards

In order to measure and manage the performance of an ExO, a real-time, adaptable dashboard with essential company and employee metrics and short feedback loops is implemented – accessible and transparent to everyone in the organization.

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Dashboards

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Dashboards

Why this is important:

Measures critical growth drivers in real time
Enables more learning, motivation, and collaboration
Minimizes errors because of short feedback loops / frequent reporting
Accessible to everyone

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Dashboards

Largest independent provider of data to advertisers about YouTube.

Ingests > 5 billion statistics about more than 400 million videos daily.

Wide range of real-time dashboards to inform its engineering, data science and business teams.

Used extensively by the business teams to spot trends in new content being uploaded to YouTube.

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Experiments

“No business plan survives its first contact with customers”

Steve Blank

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Experiments

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Experiments

“If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”

Jim Barksdale

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Experiments

Why this is important:

Allows rapid learning
Creates crucial data for decisions
Lowers costs
Keeps pace with rapid change
Highlights best areas for investment

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Autonomy

“No person will make a great business who wants to do it all himself or get all the credit”

Andrew Carnegie

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Autonomy

ExOs have a flat structure— allowing self-organizing, multidisciplinary teams and / or individual employees to operate with decentralized authority.

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Autonomy

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Autonomy

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Key Results

Objective

Key Results

What do we have to do?

How are we going to do it?

Key Results

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Autonomy

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Autonomy

Why this is important:

Accelerates growth
Great ideas come from the front lines
Companies that make the fastest decisions win

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Social Technologies

“As we’ve seen repeatedly—

a team composed of a few percent of a

company’s workforce, acting in concert

toward an ambitious common goal, can

change an entire mature industry in less

than two years.”

Google’s Employee Handbook

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ExOs leverage collaborative tools to manage real-time, zero-latency conversations. These tools create transparency and drive collaboration.

Social Technologies

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Social Technologies

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Social Technologies

Why this is important:

Speeds decision making
Fuels autonomy
Allows other people / teams to help

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Interfaces

Experimentation

Autonomy

Social Technologies

Dashboards

ExO Attributes

Staff on Demand

Algorithms

Leveraged Assets

Engagement

Community and Crowd

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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The World’s Youngest Self-Made Billionaire

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13,000

copies

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Experimentation

Staff on Demand

Leveraged Assets

Engagement

Community and Crowd

Dashboards

7 full-time and 5 part-time employees

$360M in annual sales

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Innovation

Risk

Balancing Innovation and Risk

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Steps to 10X Performance

Improve efficiencies in core business
Build new ExOs at the edge
Make the parent company more ExO

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Balancing Innovation and Risk

ExO

Current

Organization

Edge Stream

ExO

Core Stream

Current Organization

(More ExO)

New business models and/or new markets
Leverage unfair advantages
Rapid growth

More efficient
More agile
Incremental innovation

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Balancing Innovation and Risk

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Balancing Innovation and Risk

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Outcomes:

Created new innovation division, learned to run their own Sprints
Launched 25 initiatives in 3 years
8 are on track to deliver $50M+ in value or 10x lift in customer satisfaction
Turned several shared services into revenue generators

Procter & Gamble

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Interfaces

Experimentation

Autonomy

Social Technologies

Dashboards

ExO Attributes

Staff on Demand

Algorithms

Leveraged Assets

Engagement

Community and Crowd

MTP�MASSIVE TRANSFORMATIVE PURPOSE

TAP INTO ABUNDANCE

MANAGE ABUNDANCE

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The rate of change is increasing

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How will you keep up?

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Thank you

Mike Lingle

Chief Growth Officer // Crypto Lead

mike@exo.works