Accelerate September 2015

Why small, fast and free is winning the race

open this image in new window: Salim Ismail

Salim Ismail visited New Zealand in July for Callaghan Innovation’s Mind Altering Substance speaking tour.

He is the founding executive director of Singularity University, a NASA-hosted, Silicon Valley institution whose mission is no less than “solving humanity’s grand problems”.

This type of massive unifying goal is a hallmark of the exponential organisations that Ismail specialises in studying, writing and talking publicly about.

So what makes an organisation exponential? Ismail explains it by explaining the concept of exponential growth.

Linear growth goes 1, 2, 3, 4 and so on. If you take 30 steps, with the first step being one metre, you travel 30 metres. You can see your end point before you start.

Exponential growth goes 1, 2, 4, 8 and so on. In an exponential world, your first step is one metre, your second two metres, and your 30th step takes you 1 billion metres – 28 times around the world.

In real terms, this means the capacity of computation is doubling every year; the price performance of solar energy is doubling every two years. For UAVs (drones), the rate of price performance is even faster – doubling every nine months!

So why do exponential organisations matter? The answer is that in the world of disruptive technology, the small fish eat the big ones – a big company, used to gobbling its small rivals, is instead nibbled to death in a surprisingly swift and efficient manner.

He says a new generation of entrepreneurs is bringing with it not only new ideas, but entirely new ways of doing business.

Rather than create a novel technology and deal in scarcity by selling it exclusively to the highest bidder, exponential organisations are run by people happy to thrive on abundance – open-sourcing their ideas and letting others adapt and improve them.

“Entrepreneurship is not economically rational. Entrepreneurs are driven to solve problems, not make money.”

And this is where the concept of exponential organisations really becomes important.

If the aim is to solve a massive problem, and the reach of technology can be expected to grow faster and faster over time, the scale of problem-solving becomes truly global.

Solar power could resolve the entire planet’s energy needs. UAVs with power and range could make the unreliable road network in rural areas of Africa and Asia redundant, delivering food and medicine to millions at low cost.

And, says Ismail, big organisations find it hard to change. In fact they have what he calls an immune system, set up to neutralise risk-taking and keep the organisation onto its core business path.

"Firms have to create an appetite for risk. At Indian automotive giant Tata, the boss awards prestigious bonuses for the biggest operational risk that failed, reinforcing that trying and failing is less damaging to the company than failing to try.

"At Amazon, the default answer to any new idea has to be yes. A boss trying to nix a concept has to write a two-page business case and publish it across the company, creating stigma around risk aversion."

You can read the full article on the Callaghan Innovation blog.

Read other stories from Accelerate September 2015

Updated: 24 September 2015