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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: IEEE Press Series on Technology Management, Innovation, and Leadership
- Sprache: Englisch
Praise for The Exponential Era "The Exponential Era turns strategic planning from a stagnant limited application exercise to an active thoughtful process that can yield benefits for all companies and executives. Every company leader can find a gem in the Exponential Era to apply to their business big or small." --Michael Splinter, Chairman of the Board, NASDAQ and Retired Chairman and Chief Executive Officer, Applied Materials "I count this among the very best business books I have read. The authors have managed to synthesize a vast array of thinking and methodologies and deployed them in a practical and easily understood planning process (SPX) that addresses today's exponential pace of change." --James B. Stake, former Executive Vice President, Enterprise Services, 3M Company and Chairman, Ativa Medical Corporation "The Exponential Era is an essential read for our times." --John Puckett, Owner of Punch Pizza and Co-founder of Caribou Coffee "The Exponential Era does a great job of not only describing exponential technologies, but how they likely converge to transform our world." --Frank Diana, Managing Partner, Futurist, TATA Consultancy Services "The Exponential Era is a must-read for business leaders, entrepreneurs, and virtually anyone navigating our highly complex and rapidly changing world." --General (Ret. 4 Star) Joseph L. Votel, President and CEO, Business Executives for National Security (BENS)
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Seitenzahl: 373
Veröffentlichungsjahr: 2020
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Table of Contents
Cover
Title Page
Copyright Page
ABOUT THE AUTHORS
ACKNOWLEDGMENTS
FOREWORD
Introduction
The Threat of Being Amazoned and Uberized
Elephants Dancing to a Faster Tempo
Where Is My Crystal Ball?
Trillion‐Dollar Platforms
Changing Wheels While the Car Is Running
Dealing with Chaos
Uncertainty Must Be Managed
The Premise Behind SPX
How This Book Is Organized
SECTION ONE
CHAPTER 1: The New Context for Our Future
The Future Is Not Your Brain's Priority
Exponentials Make Fools of Humans
The Phases of Exponential Progression
The Exponential Explosion
Moore's Law: The Observation that Changed the World
CHAPTER 2: Exponential Platforms: Convergences and Megatrends
Megatrends
Exponential Platforms
CHAPTER 3: Animals of the Exponential Kingdom
Flash Boiled Frogs
Disruptive Unicorns
Fast and Furious Gazelles
Dancing Elephants
Dominating Gorillas
SECTION TWO
CHAPTER 4: Introducing SPX: Strategic Planning for the Exponential Era
Convergence Research and Strategic Planning
The Manifesto that Changed How Software Is Built
Iterative Experiments in a Feedback Loop
Thinking Like a Designer
Getting Inside the Opponent's Head with OODA
A New Approach to Strategic Planning
Traditional Strategic Planning versus SPX
CHAPTER 5: Detecting Early Signals
If It Is Obvious to Everyone, It Has No Value
Research and Observation
Removing Barriers to Information Flow
Access Is the Name of the Game
Dealing with Uncertainty
Conducting Research
Predictive Analytics
Timing Analysis
CHAPTER 6: Learning from Experiments
Divergence and Convergence
Starting with Divergence
Moving into Convergence
Short Experiments
Risks and Opportunities Identification
Embracing Chaos and Bad News
CHAPTER 7: Capabilities – The Essential Fuel to Ride the Exponential Curve
Determine Capabilities
Develop Risk–Opportunity–Capability Map
Develop Priority List
CHAPTER 8: Feedback‐Based Strategic Decisions
Determine Scale and Scope
Explore Highest Priorities
Gather Data and Feedback
Scale or Terminate Initiatives
CHAPTER 9: Leading a Culture of Change
Exploration versus Exploitation – the Innovator's Dilemma
Amplifying Flow Through the Organization
Mobilizing the Organization Through an Inflection Point
Knowing When to Quit
Executive Engagement
Culture and Behaviors
SECTION THREE
CHAPTER 10: The Exponential Human – Social and Ethical Challenges in a Chaotic World
The Workless Society
Education Reinvented
Global Synchronous Communications
New Ethics for a New Era
For My Children
A DISCUSSION ABOUT THE USE OF THE TERM EXPONENTIAL
NOTES AND REFERENCES
INDEX
End User License Agreement
List of Tables
Chapter 0
Table I.1 Sample list of products shut down by Google.
Chapter 2
Table 2.1 Convergence of exponential platforms shaping megatrends
Chapter 4
Table 4.1 Traditional strategic planning versus SPX.
List of Illustrations
Chapter 0
Figure I.1 Inflection point.
Figure I.2 Series of consecutive S curves.
Chapter 1
Figure 1.1 A closer look at the elbow of the exponential curve
Figure 1.2 Cost per human genome
Figure 1.3 Moore's law: transistors per microprocessor
Chapter 4
Figure 4.1 SPX: Strategic planning for the Exponential Era.
Chapter 5
Figure 5.1 Patent filing activity in the United States for 3D printing per t...
Figure 5.2 First SPX loop: identify and monitor horizons.
Figure 5.3 Timing analysis of converging technologies.
Chapter 6
Figure 6.1 Second SPX loop: Generate Insights.
Chapter 7
Figure 7.1 Third SPX loop: formulate a rough plan.
Figure 7.2 Risk–opportunity–capability (ROC) map.
Chapter 8
Figure 8.1 Fourth SPX loop: implement; scale, or terminate initiatives.
Guide
Cover Page
The Exponential Era
The Exponential Era
The Exponential Era
Copyright
Dedication
ABOUT THE AUTHORS
ACKNOWLEDGMENTS
FOREWORD
Table of Contents
Begin Reading
A DISCUSSION ABOUT THE USE OF THE TERM EXPONENTIAL
NOTES AND REFERENCES
Index
WILEY END USER LICENSE AGREEMENT
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Praises for The Exponential Era
“The Exponential Era turns strategic planning from a stagnant limited application exercise to an active thoughtful process that can yield benefits for all companies and executives. Every company leader can find a gem in The Exponential Era to apply to their business big or small.”
Michael Splinter, Chairman of the Board, NASDAQ and Retired Chairman and Chief Executive Officer, Applied Materials
“I count this among the very best business books I have read. The authors have managed to synthesize a vast array of thinking and methodologies and deployed them in a practical and easily understood planning process (SPX) that addresses today’s exponential pace of change … and they have thrown in a bonus chapter on disruptions we should all be prepared for in the future.
Strategic Planning for the Exponential Era (SPX) holds great promise to address the extreme challenge of identifying future opportunities and ensuring that all ingredients are in place to launch the products and services that customers will love at just the right future moment.
Highly recommended for today’s business leaders. Espindola and Wright have delivered an extremely valuable guide to the future of business planning … and that future is now!”
James B. Stake, former Executive Vice President, Enterprise Services, 3M Company, Chairman, Ativa Medical Corporation and Member of Board of Directors, public and private companies“
The Exponential Era is a must‐read for business leaders, entrepreneurs, and virtually anyone navigating our highly complex and rapidly changing world. David Espindola and Michael W. Wright offer a great model for a thoughtful and logical way to develop a strategy for environments dominated by innovation, disruption, and rapidly changing market forces. Along the way – Espindola and Wright draw on the already broad subject area to give the reader an idea of not only where we have been but where the art of strategy formation and decision‐making is going. Entertaining, practical, well‐researched, I strongly recommend this book, a primer for navigating the future.”
General (Ret. 4 Star) Joseph L. Votel, President and CEO, Business Executives for National Security (BENS)
“A century ago, a convergence across domains ushered in unprecedented advancements in human development. A look at history is very instructive, as several dynamics from that period have the potential to emerge once again – the biggest being the opportunity for convergence. In this context, convergence refers to a virtuous cycle where events in one domain spur action in another. As a futurist, focusing on the intersections provides a window into the future. Visualizing the building blocks and how they converge is the most effective way to navigate a very uncertain future. The Exponential Era does a great job of not only describing exponential technologies, but how they likely converge to transform our world. Education and dialog are critical to creating a constructive future – this book contributes to that end.”
Frank Diana, Managing Partner, Futurist, TATA Consultancy Services
“The Exponential Era is an essential read for our times. Our values, curiosity and a vision that champions change and improvement (Always Get Better!) embraces many of the concepts captured in the SPX methodology outlined in the book. By monitoring horizons, initiating multiple small experiments and scaling rapidly, we were able to achieve a higher level of profitability and stability despite the chaotic changes all around us. Dynamic planning processes, like those described in this book, when coupled with great cultures, work!”
John Puckett, Owner of Punch Pizza and Co‐founder of Caribou Coffee
“The Exponential Era will help corporations and its leaders see the technical tornados coming and have the courage to experiment and walk toward the storms, emerging on a new path to a successful exciting future. The Exponential Era is a scary place ‐ learn to embrace the change, enjoy it, and thrive.”
Ronald Peterson, PhD, former Vice President of Technology, Honeywell Corporation and Author, Gardeners of the Universe
“The new conventional wisdom highlights the increasing rate of change of business processes and the disruption of product markets driven by Moore’s law. The challenge that many companies face is that by the time competitive threats driven by Moore’s law become visible, it is too late for them to respond. The Exponential Era provides a roadmap for strategic decision making in a digital world. It is a must read for top management teams who recognize the importance of disrupting themselves before they are disrupted.”
Stefanie Ann Lenway, Dean, Opus College of Business, University of St. Thomas
“Whether your business is a ‘flash boiled frog,’ a ‘fast and furious gazelle,’ a ‘disruptive unicorn,’ or a ‘dancing elephant,’ you will find a lot of useful terms and insightful ideas in this book about the exponential growth of digital platforms and technologies that have overturned established companies and entire industries. The book offers a new approach to strategic planning in this exponential era – SPX – that is fast, flexible and iterative, using design thinking and OODA (Observe‐Orient‐Decide‐Act) methods to help companies become the disrupters rather than the disrupted. Read this book and let the experimentation begin!”
Thomas Fisher, Professor, Director of the Minnesota Design Center and Dayton Hudson Chair in Urban Design, College of Design at the University of Minnesota.
“Many organizations cling to what eventually kills them. This book spotlights the root causes and prescribes a new operating system calibrated for thriving in the exponential era. It’s likely to be the book you wish you’d read five years ago!”
Elvin Turner, Author, Be Less Zombie: How Great Companies Create Dynamic Innovation, Fearless Leadership and Passionate People
“Michael Wright and David Espindola have written a Future Shock for the 2020s and beyond. This is a guide not simply for the engineering community, but for the broader society of all organizations, non‐profits, and individuals. They do more than explain new technologies and systems. They explain how these systems are interrelated and will affect our lives. In the end, SPX is a process for asking the right questions.”
Todd Lefko, President, International Business Development Council and Chairman, Russian‐American Business and Culture Council (RABCC)
“If you want to know how culture can add to exponential value, look no further. This is the guide and much more.”
Marcus Kirsch, Author, The Wicked Company
“The authors have been consistently right about capitalizing on ‘What’s next?’ The COVID‐19 environment has challenged CEOs and entrepreneurs to immediately rethink and accelerate their Strategy‐2‐Execution and Ideation‐2‐Monetization value chains. The Exponential Era is an optimistic must read and SPX is a practitioners’ playbook to become an agile, innovative, sustainable and profitable enterprise.”
Murad S. Velani, CEO of Bluespire
A Note from the Series Editor
Welcome to the brand‐new Wiley‐IEEE Press Series on Technology Management, Innovation, and Leadership!
The IEEE Press imprint of John Wiley & Sons is well known for its books on technical and engineering topics. This new series extends the reach of the imprint, from engineering and scientific developments to innovation and business models, policy and regulation, and ultimately to societal impact. For those who are seeking to make a positive difference for themselves, their organization, and the world, technology management, innovation, and leadership are essential skills to hone.
The world today is increasingly technological in many ways. Yet, while scientific and technical breakthroughs remain important, it’s connecting the dots from invention to innovation to the betterment of humanity and our ecosphere that has become increasingly critical. Whether it’s climate change or water management or space exploration or global healthcare, a technological breakthrough is just the first step. Further requirements can include prototyping and validation, system or ecosystem integration, intellectual property protection, supply/value chain set‐up, manufacturing capacity, regulatory and certification compliance, market studies, distribution channels, cost estimation and revenue projection, environmental sustainability assessment, and more. The time, effort, and funding required for realizing real‐world impact dwarfs what was expended on the invention. There are no generic answers to the big‐picture questions either; the considerations vary by industry sector, technology area, geography, and other factors.
Volumes in the series will address related topics both in general—e.g., frameworks that can be applied across many industry sectors—and in the context of one or more application domains. Examples of the latter include transportation and energy, smart cities and infrastructure, and biomedicine and healthcare. The series scope also covers the role of government and policy, particularly in an international technological context.
With 30 years of corporate experience behind me and about five years now in the role of leading a Management of Technology program at a university, I see a broad‐based need for this series that extends across industry, academia, government, and nongovernmental organizations. We expect to produce titles that are relevant for researchers, practitioners, educators, and others.
I am honored to be leading this important and timely publication venture.
Tariq Samad
Senior Fellow and Honeywell/W.R. Sweatt Chair in Technology ManagementDirector of Graduate Studies, M.S. Management of TechnologyTechnological Leadership Institute | University of [email protected]
IEEE Press Series on Technology Management, Innovation, and Leadership
IEEE Press445 Hoes LanePiscataway, NJ 08854
IEEE Press Editorial BoardEkram Hossain, Editor in Chief
Jón Atli Benediktsson
David Alan Grier
Elya B. Joffe
Xiaoou Li
Peter Lian
Andreas Molisch
Saeid Nahavandi
Jeffrey Reed
Diomidis Spinellis
Sarah Spurgeon
Ahmet Murat Tekalp
THE EXPONENTIAL ERA
STRATEGIES TO STAY AHEAD OF THE CURVE IN AN ERA OF CHAOTIC CHANGES AND DISRUPTIVE FORCES
David EspindolaMichael W. Wright
This edition first published 2021© 2021 The Institute of Electrical and Electronics Engineers, Inc.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse material from this title is available at http://www.wiley.com/go/permissions.
The right of David Espindola and Michael W. Wright to be identified as the authors of this work has been asserted in accordance with law.
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Library of Congress Cataloging‐in‐Publication Data:Names: Espindola, David, author. | Wright, Michael W., author.Title: The exponential era: strategies to stay ahead of the curve in an era of chaotic changes and disruptive forces / David Espindola, Michael W. Wright.Description: Hoboken, New Jersey : Wiley‐IEEE Press, [2021] | Includes index.Identifiers: LCCN 2020044905 (print) | LCCN 2020044906 (ebook) | ISBN 9781119746515 (paperback) | ISBN 9781119746522 (adobe pdf) | ISBN 9781119746539 (epub)Subjects: LCSH: Business. | Business enterprises–Technological innovations.Classification: LCC HF5351 .E76 2021 (print) | LCC HF5351 (ebook) | DDC 338/.064–dc23LC record available at https://lccn.loc.gov/2020044905LC ebook record available at https://lccn.loc.gov/2020044906
Cover Design: WileyCover Image: © ChrisHepburn/Getty Images
First and foremost, the glory belongs to the Lord.Second, I dedicate the book to the people that I love:Dawn, Kayla, Andre, Nair, Lidia, Juliana and Clarice.–David
To all of my daughters who are, and will be,leaders in our global quest to improve our only home, earth.And to my son for being a net contributor to a better future in business and life.–Michael
ABOUT THE AUTHORS
David Espindola is a Partner of Intercepting Horizons, a strategic advisory services firm. He also serves on the advisory board of the Technological Leadership Institute at the University of Minnesota.
As a former CIO, he has developed and implemented global technology strategies to drive business growth and has been part of the leadership team that delivered a business transformation program resulting in 5× revenue growth to more than $4 billion. Previously, as a consulting leader, he managed large and complex engagements at strategic accounts and sold several million dollars in software and services.
Before that, Espindola held leadership roles at two fast‐growing tech startups in Silicon Valley. One spun off into a successful business still operating today. The other grew 5× during his tenure, reaching over $400 million in revenues, resulting in a successful IPO.
Espindola was awarded an MBA from the American University and a BS in Engineering Management from the University of North Dakota. He is also a graduate of Stanford University’s Executive Education program.
Michael W. Wright is a Partner of Intercepting Horizons and the author of the acclaimed New Business Normal. He is an active board member, a Sr. Fellow at the University of Minnesota (UMN), Chairman Emeritus of the Advisory Board for the UMN Technological Leadership Institute, and formerly an adjunct professor at Carlson School of Management where he taught strategic leadership.
In his extensive career, he has served as CEO, COO, and CMO, board member, author, business professor, futurist, speaker, and proven entrepreneur. He has delivered more than three decades of global P&L leadership for diverse public and privately held early stage to mature technology enterprises at scale. Throughout his career he has focused on leading‐edge semiconductor equipment and materials, fluid flow and filtration, instrumentation, software, cost modeling, and simulation product portfolios.
Wright is a graduate of the U.S. Navy Nuclear Power Program, and a graduate of the Rochester Institute of Technology and Kellogg Executive Programs.
ACKNOWLEDGMENTS
This book would not have been possible without the wisdom, support, and guidance of many incredible people. First, the authors would like to express our gratitude to our families for their love and patience as we spent endless hours immersed in our thoughts in front of a computer. We would also like to thank all the people at Wiley‐IEEE Press who worked diligently to make this project successful. Our special thanks to Dr. Tariq Samad for his guidance, reviews, and insights in the early stages of this venture, and to Mary Hatcher for helping us through the publishing process.
We would like to thank all the reviewers who kindly provided thoughtful input that further guided the development of the book, including Patrick McKinney, Don O'Shea, Jeff Hand, Dr. Alfred Marcus, Dr. Juan Bardina, and Dr. Rob Bodor.
Our special thanks to the University of St. Thomas, and in particular to Stefanie Lenway, Lisa Abendroth, and Carleen Kerttula for believing in us and giving us an opportunity to share our thoughts on converging technologies shaping the Exponential Era, resulting in the conception of the Contex Conference. Our thanks also go to the Technological Leadership Institute (TLI) at the University of Minnesota, its leadership, staff, and the advisory board for the opportunity to turn our passion in technology and education into contributions, as small as they may be, that hopefully will have a positive impact in the education of future technology leaders.
We would like to acknowledge all the organizations and individuals who we have had the privilege to work and interact with throughout our careers. You have allowed us to learn, to experiment, to gather, and to synthesize a lifetime of knowledge and experience, much of which has been shared in the pages of this book.
Finally, we would like to thank all of our colleagues, partners, contributors, and customers at Intercepting Horizons who have supported us and who continue to inspire us to do our work.
FOREWORD
As the Commander of United States Central Command from 2016 until 2019, we confronted unprecedented complexity and change daily. If it was not the adversaries we faced in places like Iraq, Syria, and Afghanistan, it was the deep underlying tensions coursing through the region: corruption, disenfranchisement, poor governance, extreme poverty, toxic sectarian narratives, and malign influences. On a day‐to‐day basis, we navigated near‐term problems reasonably well. Still, the region’s complexity and sheer chaos challenged us in charting a long‐term strategy that would preserve our national interests. Any achievements that we could obtain came on the backs of skilled military planners and policymakers using the best analytic and planning tools available. I suspect if you spoke with any of them, they would tell you that an appreciation and comprehensive understanding was crucial for prevailing in this region.
Complexity reigns in today’s strategic environment. We see it in our domestic and foreign policy discussions. A hyper‐enabled information environment that reshapes facts to new truths fogs clarity for business executives and government leaders. Add to this the emergence of artificial intelligence and machine learning – technologies that are as promising as they are terrifying. Today, the United States is locked in a global competition with a rising China and, to a lesser extent, with a resurgent Russia. The battle is not just about military or economic dominance. The contest is also about the influence and domination of emerging technologies, and the one who gets there first will likely write the rules and enforce the norms. The stakes could not be higher.
The Exponential Era – Strategies to Stay Ahead of the Curve in an Era of Chaotic Change and Disruptive Forces by Michael Wright and David Espindola is a groundbreaking contribution to sense‐making and strategy development. With a revisit to various planning tools and approaches employed over the last several decades, this volume offers a fresh new approach to understanding and assessing complexity and getting ahead of the curve.
Importantly, this book offers a new methodology known as “SPX” – short for Strategic Planning for the Exponential Era. SPX is a norm‐busting approach focused on driving innovation and mapping risk, opportunities, and capabilities to create plans designed to stay ahead of exponential change. SPX is a comprehensive method of looking at exponential change caused by technology, operating environments, and conflicting interests.
The authors are highly experienced and well‐qualified in this field. Michael Wright is a global senior high technology executive and strategist at scale. David Espindola is an accomplished technology executive and consultant. Together they are the founders of Intercepting Horizons, a strategic advisory service that focuses on teaching leaders and organizations to apply SPX to stay ahead of the change and complexity curve. Both serve on the Advisory Board for the University of Minnesota Technological Leadership Institute. I work with Michael on the Board of a small private company in Saint Paul, and through him, I have come to know David. Having spent a career dealing with complexity and chaos, I can attest that these two are onto something new, relevant, and exciting with SPX.
For those who may be concerned about reading a book on strategy written by technologists – rest easy. The Exponential Era is a logical and easy read, well‐organized, and crisp in its overall presentation. I spent my military career around complexity and strategy development – I not only enjoyed reading this book, but I found it incredibly insightful and fresh in its overall approach. You will find it similarly satisfying.
Joseph L. Votel
General, US Army (Retired)
Introduction
In the fall of 2018, we had the opportunity to engage in a discussion with a board member of a Fortune 500 logistics company. Having recently founded Intercepting Horizons, LLC we shared our thoughts on how we had entered a new era in which strategic trends and converging technology vectors were impacting organizations at unprecedented speeds. We called it the Exponential Era.
We discussed how existing planning cycles were no longer effective in this new environment, and how our services would focus on helping companies identify inflection points and develop an innovative strategic planning process that is responsive to fast‐changing conditions. We would help companies pinpoint not only what strategic trends and converging technologies would impact their business, but equally important, when.
We felt confident in our ability to provide such services because we had learned over decades of successfully chasing Moore's law that it is possible to develop a time‐enriched strategic planning process to intercept business inflection points and stay up with and sometimes ahead of exponential change.
This was enough to get the board member intrigued. He confided in us that his CEO had been contemplating these exact questions – when would these business inflection points impact their industry and business?
This informal conversation led to an introduction, and subsequently we started researching the company, its industry, the competitive forces, and the converging technologies that could represent a threat or an opportunity to this very large enterprise that for more than 100 years had been tremendously successful.
What we discovered in researching new entrants to their industry and identifying technology vectors relevant to their business had us concerned.
The Threat of Being Amazoned and Uberized
Keep in mind that this company was the undisputed leader in its industry. They continued to experience year‐over‐year net revenue growth and healthy margins, rewarding investors with solid dividends, and repurchasing a significant amount of stock shares. The repurchase of shares might have been a sign of uncertainty about the company's prospects and an attempt to boost the share price in the short term. However, the leadership team displayed nothing but total confidence in the company's ability to stay competitive and grow.
What had us concerned, despite the company's position as a category king in its market, was the potential for disruption. For many years this company had operated under the following conditions:
Thousands of employees
Legacy culture, infrastructure, and profit pools
Relatively slow to move
The enormous size of this market and the potential for profits were very attractive to potential disruptive entrants with the following contrasting characteristics:
Access to cheap technology
A low‐cost infrastructure that could be rented
Fast‐moving
Indeed, what we found is that there were several exceptionally well‐funded, fast‐moving technology companies that were entering their markets.
It would be very disconcerting for any company to have its market leadership challenged by the likes of Amazon, Google, Uber, or other highly capitalized fast‐moving companies. No one wants to be in that position.
The number of companies that have been “amazoned” is legendary.1 An entire industry has been “uberized” due to Uber's unrelenting long‐term investments in technology. Now, imagine being in the unenviable position of potentially being susceptible to competition from both Amazon and Uber at the same time – that is the threat level that this company was dealing with.
Our research had also revealed that the convergence of several emerging technologies could completely alter the market landscape that this company operated in. We leveraged Artificial Intelligence algorithms to mine patent databases and discovered, for example, that several large companies like Walmart and Amazon were investing in the ability to manufacture products on demand and on the move. The confluence of 5G, Internet of Things (IoT) and GPS capabilities, and the convergence of 3D printing with autonomous vehicles, is just one of many possible technology‐driven disruptions on the horizon that could completely change their industry.
This additional background information helped us understand what might be driving the CEO's quest for knowing “when.” Despite all their successes, this was a company in the eye of a storm, faced with disruptive forces and competitive pressures unlike any they had experienced before. It was vital for this company to get ahead of the inflection point. They needed to be nimbler and more aggressive than their competitors in targeting converging technology investments. They needed to overcome their history and get their entire culture ready for the disruption and transformation of their entire business.
The CEO was absolutely correct in his thinking as he sought to answer the question of “when.” Bringing an innovative idea to market too early can be just as fatal as being too late. Think about Apple and the Newton personal assistant device.2 Or Lady Florence Norman who introduced the motorized scooter circa 1916.3 These were all great ideas, as proven by Apple's eventual success with the iPhone, and the motorized scooter craze we see around the world these days – they were just timed incorrectly.
Not too long after our discussions, the company announced that it was committing a significant amount of dollars in technology investments over the next five years.
This announcement was a positive sign. It showed that the company understood the challenges ahead. The fact that the CEO was seeking answers to the question of “when” told us he had a significant level of awareness that time enriched decision making is of the essence. However, as we will see in future chapters, we have witnessed and studied several companies that, notwithstanding full awareness and willingness to invest, were unable to make timely decisions, change their culture, and stay apace with the disrupting forces they faced.
The key point in sharing our interaction with this Fortune 500 company is to emphasize that any company, no matter how big or successful, can be subject to the disruptive forces of the Exponential Era. Newly formed ecosystems, powered by easy access to converging technologies, can provide the fuel to rapidly dislocate stagnant or poorly managed companies and industries. Our first word of caution is: do not be deceived by your success.
In the Exponential Era, it is very easy to be caught off guard, because what may look like calm seas, can quickly turn unexpectedly. If you can't foresee a major storm coming and can't prepare for it, it may be fatal.
Elephants Dancing to a Faster Tempo
As we will explore throughout the book, technology investments alone are not sufficient to achieve a successful adaptation to the speed and scale of change. The most challenging aspect of getting companies ready for the fast changes that characterize the Exponential Era is transforming the culture.
As Lou Gerstner said in Who Says Elephants Can't Dance? “Successful institutions almost always develop strong cultures that reinforce those elements that make the institution great… When that environment shifts, it is very hard for the culture to change. In fact, it becomes an enormous impediment to the institution's ability to adapt.”4
Sometimes the only way to achieve a change in culture is by making a change at the CEO level, as was the case with the successful turn‐around experienced by Microsoft. Before Satya Nadella, Microsoft's culture was often characterized as internally competitive and hostile. It prized showing that you were smart, even at the cost of creating hostility and preventing teamwork.
Microsoft was unable to keep up with the fast beat to which it was expected to dance. The company's prospects were quite dire for a while. It lost the mobile operating system war and almost failed to get traction in the cloud. It took bringing in a CEO that understood and emphasized culture to completely turn the company around. “There is something only a CEO uniquely can do, which is set that tone, which can then capture the soul of the collective. And its culture,” said Nadella.5
Where Is My Crystal Ball?
“Predictions are hard, especially those that pertain to the future.” This comical proverb was allegedly first expressed in Danish, but the author remains unknown.
Given the difficulty in making predictions, how do you deal with the uncertainties of the Exponential Era? How do you stay on top of all the emerging trends and converging technology factors? How you do spot inflection points in business before they happen? Rita McGrath has written an excellent book titled Seeing Around Corners, that expands on this subject. In the book, she contends that inflection points, though they may seem sudden, are not.6 In an exponential curve, there is a long period of time in which the curve is basically flat, before the inflection point. Then it hits the elbow and goes straight up (see Figure I.1). It is during this flat period and the beginning of the elbow that, armed with the right perspectives and tools, smart leaders can anticipate changes and leverage them to create competitive advantages. Please note that we are using the exponential curve here for illustrative purposes only and not in its precise mathematical sense. For a more extensive discussion on this subject, please refer to the Appendix.
Figure I.1 Inflection point.
The key is to detect the signals of change and respond early enough, before it is too late. The challenge is always separating the signals from the noise which is often pervasive and distracting due to variations in the data. Startups have to be very good at detecting inflection points and making distinctions between signal and noise in order to survive. Most companies have a difficult time seeing inflection points and positioning themselves to take advantage of the opportunities these changes represent before they become threats. Technology startups tend to be nimbler, closer to the action, and demonstrably more willing to experiment and change directions than their more established counterparts. In the startup world it is very common to pivot to a different business model if the first one tried does not achieve the expected results. But for many legacy companies, it is a lot harder to pivot, partially because of their commitment to past investments, but in some cases also due to their intrinsic belief that what has worked in the past will also work in the future. Many legacy companies are focused on short‐term metrics derived from strategies that yielded results in the past, and their resources are allocated accordingly. However, allocating resources to conduct the necessary explorational experiments intrinsic to growth, but that requires taking some risk, is not common practice in these types of companies.
Trillion‐Dollar Platforms
As of this writing, according to CB Insights, there were more than 400 private companies valued above one billion dollars.7 They are part of the Global Unicorn Club. What is remarkable is that most of these companies are recently formed, technology‐based enterprises. They run the entire spectrum of technologies from Security to eCommerce, Internet Services, Artificial Intelligence, and so on. These are the companies that are able to take advantage of the huge opportunities converging technologies in the Exponential Era represent.
And we are just scratching the surface of what is coming. The economic opportunities to be generated by the creation, rapid adoption, and convergence of emerging technologies is truly extraordinary. According to the World Economic Forum there has been no historic precedent to this current phenomenon, which is also referred to as the 4th Industrial Revolution, in terms of its velocity, scope, and impact on everything in our lives.8 You would have to go back to the late 1800s and early 1900s to see just three significant innovation platforms come together over several decades: electricity, the telephone, and the internal combustion engine.
Today there are at least 10 of these platforms, depending on how you categorize them, that have surfaced in the last few decades: Biotechnology, Nanotechnology, Autonomous Vehicles, Robotics, 3D Printing, Artificial Intelligence, Blockchain Technology, Augmented and Virtual Reality, and the Next Generation Internet. The latter contains several sub‐components such as Mobile Payment, Internet of Things (IoT), Online‐to‐Offline (O2O), and 5G. We will discuss many of these platforms in detail in Chapter 2.
These platforms are generating entirely new ecosystems and multi‐trillion‐dollar economies. Their convergences are creating a combinatorial power that is spawning ever‐increasing innovation and economic opportunities and threats across the globe. For example, today we see China leapfrogging to modern technologies like O2O, machine learning, and mobile payment. The latter has created a cashless ecosystem that has grown to 24 trillion dollars, almost twice the size of China's GDP. When these synergistic technologies with multi‐trillion‐dollar scope start converging and feeding on each other as we see in China, the explosive scale, scope, and speed of the Exponential Era become frighteningly obvious.9
There are many imminent threats to slow‐moving companies that insist on operating on outdated business models or are incapable of adapting to fast‐moving changes. But there are also enormous opportunities for both incumbents and newly formed enterprises that see the inflection points before they happen. Today's opportunity, if left untapped, can turn into tomorrow's threat, or as we like to say, “the difference between a threat and an opportunity is the time horizon in which you see it.”10
Changing Wheels While the Car Is Running
Incumbents – the current businesses that are growing profitably in their respective markets – need to be able to continue operating with excellence, maintaining their leadership positions, while concurrently seeking new opportunities in current, adjacent, or brand‐new markets. We see them as ambidextrous, able to execute both exploration and exploitation.
These companies are introducing automation, finding additional efficiencies, and seeking to gain additional share in their existing markets while at the same time discovering new opportunities that in many cases are designed to cannibalize currently profitable but eventually poorly performing businesses.
Companies that successfully navigate through the inevitable turbulence in their markets are able to balance the exploitation vs. exploration equation. Their journey is typically marked by a series of consecutive “S‐curves,” characterized by an initial period of exploration, then growth, and eventually a plateau. For instance, IBM moved through several S‐curves in its long history, starting with counting machines and typewriters, then moving into mainframe computing, client‐server software, consulting and services, and finally cloud computing (Figure I.2).
Ambidextrous organizations are able to traverse several S‐curves, from the plateau of exploitation to the initiation of exploration, because the leadership team can articulate a vision and a set of values of the company that promote a common identity, even if the culture of the exploiting business units is different than that of the exploring ones. These leaders own their ambidextrous strategy and are comfortable designing separate business units that, despite their differences, share common values, and can collectively pursue goals and objectives. They are able to allocate resources and solve conflict, while maintaining alignment with the broader goals of the organization.11
Figure I.2 Series of consecutive S curves.
Dealing with Chaos
So far, we have made the case that we are living in a new era where changes are happening at unprecedented speeds, and where the rapid convergence of technology vectors is creating ecosystems imbued with new threats and opportunities that accelerate with astonishing speed. We have identified the importance of seeing the inflection point in exponential curves before it happens in order to benefit from the resulting changes. We have also recognized that culture plays a critical part in a company's strategy and ability to embrace change, and that the leadership team of incumbents needs to have an ambidextrous strategy, exploiting the existing S‐curve, while simultaneously exploring new ones.
This may seem fairly straightforward on the surface, but the reality is that companies struggle to detect the early signals that warn them of an impending inflection point. Even if they see the signals, unless they have a carefully crafted methodology that guides them through their strategic planning processes, chances are they will not take the actions necessary to leverage the opportunities and mitigate the threats of exponential changes.
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.
Uncertainty Must Be Managed
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
